All posts tagged: Electricity

Electrifying Africa from the Bottom Up: Will Patient Capital Bring Change?

The shooting-star solar provider Mobisol claimed that the private sector could do what US presidents, the UN, the EU, and hundreds of aid organizations had failed at: namely bringing electricity to all of Africa. But this year it filed for insolvency. The French energy giant Engie, however, has stepped in, and wants to make good on Mobisol’s dream. Paul Hockenos reports

When start-ups such as the Berlin-based Mobisol took off around 2013 selling stand-alone solar systems to rural Africans, observers thought that they might have stumbled upon a revolutionary way to finally deliver electricity to the 600 million Africans living without reliable power – a prerequisite for development.

The initial success of the start-ups, run by German, American and British entrepreneurs peddling solar panels on motorcycle in the sub-Saharan outback, seemed to bear out the hopefulness. Companies such as Mobisol, M-Kopa, Off Grid Electric, and Fenix International, among others, were on their way to selling basic, pay-as-you-go PV systems to over two million Africans in less than a decade.

But around 2017 some cold, hard reality – a rash of delinquent payments, the burden of high fixed costs, liquidity logjams, punishing droughts, civil wars, and mismanagement – began to cast a pall over the heady sector. Many of the young companies were forced to rethink their strategies, buff up with market-savvy investors, and reorient toward better-off clients in urban areas. Mobisol, say sector insiders, arguably the most idealistic of the pioneers, waited too long and then declared insolvency in a Germany court in April 2019.  The company’s equity investors, frustrated with Mobisol’s lackluster growth, bought it out and sidelined the founding CEO Thomas Gottschalk.

But the French multinational energy company Engie, which acquired Mobisol in September, refuses to accept the nay-sayers’ dire conclusions. Undaunted by the market commotion, it wants to make good on the start-ups’ original promise: to provide power to all Africans, using above all private sector strategies to do so. Engie is the parent company of Fenix International, another energy access firm, and the mini-grid developer PowerCorner, which have operations in Benin, Côte d’Ivoire, Mozambique, Nigeria, Uganda and Zambia.

“We think there’s a mass market out there for solar,” says Maxime Marion of Engie, referring to Africa’s energy market. “Together Fenix and Mobisol can offer any given customer what he needs, be it a 10 W system or 200 W. We want to be a holistic energy provider. We’re not pushing energy products but energy access.”

According to Marion, it wasn’t Mobisol’s original vision that was faulty – but rather its implementation and choice of financiers. The young start-ups, he says, required a different kind of capital than that the equity investors and venture capitalists dangled in their faces – namely financing with a short leash and high expectations.

Mobisol’s game plan was to sell to Africans the components of a rooftop solar system and a television on lay-away plans. The customer-clients would repay the roughly €850 basic kit by mobile-phone banking, transferring payments of about €20 a month for three years. (The difference in price between Mobisol’s early products and Fenix’s today can be explained in part by Mobisol’s larger products, but also the steep drop in photovoltaics and batteries over the last six years.)

The pitch: the regular installments were less than the monthly cost of the toxic, dirty kerosene; batteries; or diesel, the latter which off-grid Africans rely upon for fueling mini-generators. Better-heeled customers or small businesses – cafes and bars, barber shops, mechanics — could invest in multi-panel systems that cost over a thousand dollars.

In terms of financing, Mobisol soon found that in Africa, where 70% of people live on less than €4,700 a year, many couldn’t make down payments – even as small as €65.  And for those who could, the kits, delivered by bicycle, motor bike, or bus, were simple enough that the homeowner could assemble the most basic ones alone in an hour. The contract came with a service guarantee (repairman on motorbike), and fine print that the system would be turned off by a digital switch should the customer default on the premiums.

“Engie doesn’t have unrealistic expectations,“ Marion says. “By bringing in a higher degree of professionalism, we can make it work.” Mobisol, whose products currently include solar systems for home and business ranging from 40Wp up to 200Wp and perhaps more, is a neat fit for Engie because it complements Fenix’s smaller systems, he says. Moreover, Mobisol also opens the door for Engie in Tanzania, Ruanda, and Kenya, where Mobisol has a 600,000-strong customer base.

Fenix International is currently one of the very few energy access companies that still targets lower-income, off-grid Africans. Its top-shelf product, ReadyPay Power, is a lease-to-own solar system ranging in capacity between 10W and 50W, which can cost as little as €185. Once the customer has paid off the system in 12 to 30 months, he owns it. (In the 18-month plan, customers pay €10 a month.) The basic product includes one panel, an adapter, wiring, lighting, a phone charger, and a radio. The monthly installments are made via cell phone, or mobile money.

Engie, says Marion, is convinced that the Mobisol approach can be tweaked in a way that reaches marginalized communities — in Africa and beyond. Toby Couture of E3 Analytics, a Berlin-based energy consultancy, concurs: “Solar’s much cheaper than diesel and it’s certainly the quickest way to provide energy access to the developing world. The consumer financing of distributed solar still has a bright future in Africa,” he says. “And the reason for this is simple: access to finance is a game-changer.” Engie’s entry into the market will help bring much-needed “patient capital” to the sector, Couture says, as companies like Engie can take a longer view.

Gottschalk and his former Mobisol partner Thomas Duveau have already moved on. Their new enterprise, Access to Energy Institute, is a non-profit think tank that concentrates on helping small African businesses develop using solar-powered machines and appliances.

German wind and renewables overpower filthy lignite and hard coal in 2019

Preliminary figures conclusively reveal that renewables produced over 40 percent of Germany’s electricity in 2019. Combined with offshore production, wind energy overtook both filthy lignite and hard coal, and has now become the nation’s largest energy source. But as fossil gas prices fall and the ruling government’s fragile coalition stumbles its way through the Energiewende it created, 2020 will likely prove a make or break year for the clean energy transition. Only the future will reveal if 2019 will actually be remembered as the year renewables really powered past coal in Germany. L. Michael Buchsbaum explains.

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The Czech Coal Commission: When Will the Heart of Europe Stop Fouling the Air?

Partially inspired by Germany’s version, the Czech Coal Commission met for the first time earlier this summer. Though it’s creation was largely driven by the mass student protests that have fundamentally transformed the Czech debate on climate policy, only two of its nineteen members are from environmental organizations. With its final report due in less than a year, it’s still unclear if the commission will decide upon a coal phase out date or a surge in renewables instead of new nuclear power. To learn more, Klára Schovánková, head of the ecology program at Heinrich Böll Foundation’s Prague office, interviewed Coal Commission member, Jiří Koželouh, who also heads the energy program at Hnutí Duha, Friends of the Earth Czech Republic.

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Fire in the holes: Transforming mined out lands into solar plants

While most post-mining plans, especially for surface mines, calls for pits to be redeveloped into lakes or farm land, an increasing body of research and evidence shows that these ripped-up landscapes can be successfully transformed into clean energy gold mines—whose solar PV resource potential, unlike coal’s, is infinite. L. Michael Buchsbaum reports

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Look to Europe to Improve the Green New Deal: Why Laws Matter

The Green New Deal (GND) pact embraced by scores of US Democrats is chock- full of vibrant ideas and urgent policy considerations. It’s right that with the climate crisis accelerating faster than scientists predicted and our window to curb it narrowing, we have to think big – indeed something at least as sweeping in scope as the New Deal recovery program of the 1930s. Paul Hockenos reports

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How AI and robots will help safeguard our offshore energy infrastructure in the future

The modern world depends on the smooth provision of vital services such as energy, transportation, telecommunications, food, water and healthcare. But the systems underpinning these sectors are increasingly complex and interdependent, interacting at a global scale – which makes them susceptible to potentially catastrophic failures when they come under stress. David Flynn and Valentin Robu report

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