Kenya’s Microgrid Sector Set To Impact Millions Lacking Electricity Access
Kenya is one of the world’s most significant microgrid labs, but the framework of the country’s regulations pose a hamper to the growth of investments in the market.
There have been signs that the East African country is ripe for substantial private investment, according to a report by German TFE Consulting.
According to the report, Kenya’s GDP nearly quadrupled from USD 16.1 Bn in 2004 to USD 63.4 Bn in 2015, and such growth is twice as fast as the average rate of Sub-Saharan Africa.
Thanks to a relatively stable currency, low inflation, meaningful fuel prices, and substantial public investments and energy transportation, Kenya’s growth rate has been impressive.
But despite these good runs, many of the 49.7 million people in Kenya do not have access to stable power supply, as only about 20 percent have access to grid electricity.
88 percent of this population are registered mobile phone users, and the electricity access figure is a testament to the reality that many still many rely on harmful and unreliable forms of energy generation to charge phones and brighten their homes.
Nonetheless, the sales and installations of mobile PAYGO home solar systems have grown rapidly in the Swahili-speaking nation, as well as across East Africa. This has given rise to a series of ambitious rural and international electrification drives. Chief of them is the United Kingdom’s USD 72 Mn initiative for a solar power plant that will bring clean power to Southeast Kenya.
The most recent investment entry is a significant Series B round that was led by Toyota Tsusho. The corporation which is a general trading company and a member of the Toyota Group joined hands with Caterpillar Ventures, Prelude Ventures, Tao Capital, and Total Energy Ventures in conjunction with Kouros and TO.org to avail Nairobi-based Powerhive Inc a USD 9.3 Mn capital injection.
Founded in 2011 and led by CEO Christopher Hornor, Powerhive leverages a proprietary technology platform to develop and operate portfolios of renewable microgrids that supply affordable, reliable, and productive electricity to off-grid communities in emerging markets.
The company claims a 25-year license to operate in Kenya as the country’s first private utility, aims to serve 100,000 people across 20,000 households by early 2020.
Powerhive will leverage take advantage of Toyota Tsusho’s expertise and footprint in Africa while it searches for partnership opportunities in new African markets, as well as in ancillary products and services to grow with the communities it serves.
Both firms share a vision to build a climate-friendly, sustainable, and profitable business around energy-enabled services for over 640 million people in lack of essential power services. With the funding, it will provide affordable energy and services for the 600 million consumers in Sub-Saharan Africa starting from Kenya.
“We are excited about our investment into Powerhive as it further positions Toyota Tsusho as a pioneer and innovator in Africa,” said Mr. Hirata Tatsuya, Toyota Tsusho’s COO for Power Project Business Unit.
“Having worked in emerging markets for the past 20 years, with 5 years spent living and working in Kenya, I have witnessed exciting energy and infrastructure transitions take place over the years.
The time is right now for Kenya and Africa more broadly to leap-frog the old way of doing things and take a new and better approach to energy independence. As such, we are proud to be part of this transition in partnership with Powerhive to deliver best-in-class, affordable energy, and services for the 600 million consumers in Sub-Saharan Africa.”
“We are thrilled to support Powerhive in its development. Africa is one of the most exciting energy transition frontiers, where the encounter of usages and technology leads to powerful creativity that can inspire other regions of the world. With its platform, Powerhive has a unique and powerful tool to solve energy issues in Africa.” said Florent Bergeret, Kouros’ Head of Investments.
