Bringing Solar Power to Off-Grid Communities in Africa Is "As Hard as It Gets"
Renewable energy “is a really hard industry,” says Bill Lenihan, President and CFO of Off-Grid Electric, a company that brings affordable solar power to houses and small businesses in sub-Saharan Africa. And according to Lenihan, a former private equity investor, his company’s mission to get clean power to rural off-grid communities is “as hard as it gets.”
But it could have a huge impact. While many areas of Sub-Saharan Africa provide ideal conditions for implementing solar power, according to the International Energy Agency more than half a billion people in the region do not have access to electricity. Because of poor infrastructure, for a company like Off-Grid to work, it has to cover every aspect of its customers’ electric upgrade, “designing the systems and connecting with the customer, installing it, servicing it, financing it,” says Lenihan. Currently operating in Tanzania, Ghana, Rwanda and Ivory Coast, the business even supplies its own high-efficiency lights and appliances to help households make the switch to electric power.
Lenihan says that since the company’s founding in 2012, nearly one million people (coming from the sale of 160,000 systems) have gained access to energy via Off-Grid Electric. And that can have a dramatic effect on people’s lives. “It’s incredible,” says Lenihan. “[Energy access] allows them to see and read at night ... It allows them to access information, because now they can watch the news.” It also affords economic opportunities. “We power small kiosks, and bars, and barbershops.”
Off-Grid Electric customer Amina Salim Omari explained the difference that having electricity in her home at night made on her grandchildren’s education: “It used to be they’d eat, then struggle [to read] with the lamps. But these days … they study until they get sleepy,” she said in a video on the company’s site.
The introduction of solar also means locals can drop the health, safety, and environmental risks of kerosene lamps, frequently used when electricity is unavailable. According to the World Health Organization, burning kerosene can irritate the eyes, skin, and respiratory system. It can also cause accidental burns or fires. A study from UC Berkeley found that a global push to replace kerosene lamps with other light sources could make a significant contribution to slowing global warming. Off-Grid Electric reports that “each new household we reach means an additional 140 kg of carbon dioxide and 1.45 kg of black carbon in avoided emissions per year.”
For Off-Grid Electric’s target customers, owning rooftop solar panels is more reliable and less expensive than connecting to an electricity grid. “The ownership side is really important,” says Lenihan. “From the U.S. or U.K., we think of energy as almost an entitlement. It’s a provision by the government or a utility. It just happens, and you pay for it. We have no need for ownership because the utility is reliable and it’s relatively inexpensive. But in these [African] markets, energy provision is super unreliable and really expensive.”
Power grids in sub-Saharan Africa are subject to frequent power outages—the World Bank estimated in 2015 that blackouts in the region result in a 2.1 percent annual loss in GDP for these countries. On top of that, the cost of electricity from the grid is up to 10 times higher than the U.S. average. The electricity generated by these solar panels, by contrast, is completely free. It’s the panels that cost money.
To that end, financial access is also an important consideration for the company. Off-Grid Electric reports that only 34 percent of people in sub-Saharan Africa have a bank account, and credit is rarely available. So, the company offers its own financing program to its customers, to help them pay for the solar panels and appliances. Customers make use of popular “mobile money” smartphone apps to make payments on their systems, usually over the course of two to three years. Despite these customers’ lack of access to traditional bank services, “they’re showing that they can pay these systems off,” says Lenihan. “Now, I guarantee that what’s going to happen is that the financial world is going to wake up and want to allow these people to borrow.”
Then there’s the issue of actually getting the solar packages to rural areas. “Unfortunately, we don’t have a UPS or a FedEx – someone who can just nicely drop it off at the front door. So, we have to build that,” says Lenihan. From a central warehouse, Off-Grid Electric has a network of regional distribution facilities and hundreds of locally employed distributors. The networks aren’t just there to install systems, but also to troubleshoot and provide maintenance.
In 2016, Off-Grid Electric won the $1.5 million Zayed Future Energy Prize in the small and medium business category, with the organization hailing the business as “ the world’s first massively scalable off-grid electric company.” Off-Grid has built a headquarters in Tanzania and a lab in San Francisco, and has plans to expand further in Africa. But despite the recognition, hard-won progress, and boasting investors like Elon Musk, Total SA, and DBL Partners, Lenihan says he considers success to be something they will still be working towards for a long time. “Success for us is if we build a company that solves this problem, that provides energy in a really unique, solutions-oriented way.”
Providing widespread solar services in Africa wouldn’t, of course, just mean success for the company itself—it would mean cleaner air, reduced emissions, and a million small victories for those who could now power businesses, pursue their pastimes after dark, and lead safer lives. As Omari demonstrated, something as simple as light in the evening can go a long way toward helping people in rural, off-grid communities realize their dreams.