ABIDJAN (Reuters) – Standing by a towering equatorial forest, Jean-Noel Kouame’s new breeze-block house may be beyond the reach of Ivory Coast’s power grid, but it’s perfectly located for solar power entrepreneurs.
Buoyed by success in East Africa, off-grid solar power startups are pouring into West Africa, offering pay-as-you-go kits in a race to claim tens of millions of customers who lack reliable access to electricity.
At least 11 companies, including leading East African players such as Greenlight Planet, d.light, Off-Grid Electric (OGE), M-KOPE Solar, Fenix International and BBOXX, have moved into the region, most within the last two years.
With a potential market worth billions of dollars, major European energy companies such as French utilities EDF and Engie are taking notice too.
“It’s important to be there now, because the race has already started,” said Marianne Laigneau, senior executive vice president of EDF’s international division.
The main challenge facing smaller companies now is how to raise enough capital to supply the expensive solar kits in return for small upfront payments from customers.
Mobilizing funding for firms providing home solar systems is also part of the U.S. government’s Power Africa initiative. Major power generation projects have been slow to get off the ground so Power Africa has partnered with startups such as OGE, M-KOPE and d.light, among others, to accelerate off-grid access.
In Abidjan, Kouame doesn’t know when, or if, the national grid will reach the outer edge of the urban sprawl, but thanks to his new solar panel kit he has indoor lighting, an electric fan and a television.
But it’s the light bulb hanging outside his front door that he values the most.
“At night we were scared to go outside,” the 31-year-old taxi driver says as his pregnant wife watches a dubbed Brazilian soap opera. “Where there is light there is safety.”
Some 1.2 billion people around the world have no access to a power grid, according to the International Energy Agency (IEA). Lighting and phone charging alone costs them about $27 billion a year and some estimates put their total annual energy costs at more than $60 billion.
While governments in much of the developing world are extending access to national networks, Africa is lagging, with less than 40 percent of African households connected, IEA figures show.
But what has long been decried as a major obstacle to Africa’s development is viewed as an opportunity by entrepreneurs such as Nir Marom, co-founder of Lumos Global, the Dutch startup that built and sold Kouame his kit.
“I read an article about people paying 50 cents a day for kerosene and candles, and that just didn’t make sense,” said Marom. “I said I can give them four kilowatt hours for the price of kerosene. And that started everything.”
Lumos Global’s kits, which cost about $600, include a solar panel linked to a battery that supports power sockets, a mobile phone adapter and LED light bulbs.
Kouame, who paid 30,000 CFA francs ($57) upfront for his kit, is now leasing-to-own. A digital counter on the yellow battery pack tells him when he needs to top up his account using his mobile phone.
If he doesn’t pay, the kit, which also houses a global positioning system, shuts down. But in five years, he’ll own it outright and his solar power will be free.
“Five years is nothing,” he says, already weighing the option of another system to run a large freezer sitting empty and unplugged in the corner of his living room. “So my wife can do a little business.”
Pay-as-you-go solar home systems (SHS) like Kouame’s have been the main driver of off-grid power expansion in Africa.
In 2010, when most purchases were limited to simple lighting systems, customers spent $30 to $80 on average over a product’s lifetime, according to GOGLA, an independent off-grid industry association.
Now it’s $370 to $1,120.
Global revenues from the pay-as-you-go SHS sector were $150 million to $200 million in 2016, GOGLA estimates. That should jump to $6 billion to $7 billion in 2022.