The African solar energy market is on the verge of a new wave. Solar energy for productive use by farmers and other entrepreneurs is getting underway. SolarNow wants to be a driving force in this.
Where the sun shines a lot, the chances for solar energy are by definition great. This also applies to Africa. However, that continent is huge, it has a lot of poverty and in many countries, the grid infrastructure is deplorable, especially in the rural areas. The introduction of PV is therefore done in its own unique way. Over the past 10 years, the sale of solar kits – for example in the form of a 15-watt peak solar panel, battery, and LED lamp – has become big business. But that market is now quite saturated according to Boldewijn Sloet, chief executive officer at SolarNow.
About his top ‘I moved to East Africa 13 years ago to work at one of those companies, says Sloet. ‘In the meantime, it has become a large industry. Companies sprang up like mushrooms and raised a lot of money from investors, often tens of millions. The market is huge. Small off-grid systems also have great added value here. They bring affordable electricity to people with few resources and no access to an electricity grid. But the business model of these companies is difficult. They work on the basis of pre-financing and installment. In addition, there are many hidden costs, for example, distribution and maintenance. Achieving growth is therefore particularly capital-intensive. The market seems to be over the top for a few years now, companies are struggling, some have already fallen over.’
New phase Sloet made the switch to SolarNow 1.5 years ago. That also started with the sale of solar kits to private individuals in Kenya and Uganda. It also raised millions from that proposition, including from shareholder Shell. But it had evolved further in the meantime. The solar energy and storage systems it supplied were getting bigger and bigger, so that refrigerators and televisions could also run on them, for example. In 2020, the company made a rigorous turnaround. The residential market was said goodbye, the business embraced. It is up to Sloet to guide the company into this new phase and make it a success.
Leading role Sloet: ‘We now supply and install solar energy systems from 500-watt peak to 50-kilowatt peak, with or without batteries, and also with a grid connection. We do this for schools, hospitals, and companies, among others. We do not currently finance these products, they are simply purchased. There is also a market for that. The prices of solar panels and batteries have fallen considerably over the years, energy prices have risen. This makes generating solar power a financially attractive alternative, just like in rich countries. A grid-connected system pays for itself here on average in just under 4 years. We are really on the eve of a new wave in the roll-out of PV in Africa. SolarNow wants to be a driving force in this.’
The reorientation of SolarNow is not without consequences for the size of the company. At its peak it had 600 employees, now there are still 60. However, the relevance in terms of adding economic and social value has increased, sloet indicates. Where the lower end of the market is overcrowded, there is also limited room for entrants at the top. Large companies realize large solar energy systems. But they are served by international players, for example from South Africa and Europe. However, the midfield of the business market is still underdeveloped. It is precisely in this that great opportunities lie for increasing the well-being and prosperity of people.
Huge step forward Take the small agricultural companies, there are a lot of them here, says Sloet. ‘For example, they can use solar energy to pump up water, grind grains, dry products, or cool them to add value locally. This is a huge step forward in terms of sustainability, food security, and keeping various steps in the value chain in your own hands. This not only benefits those entrepreneurs but also their environment and society as a whole. So SolarNow can make a big difference. But what we do also has its challenges. For a long time, grid operators saw solar power as a threat, so there was a lot of opposition. Now they are beginning to see that the energy transition is inevitable here too and will have to find a new role to also benefit from the rise of solar energy. As a pioneer in the sector, we are actively engaging with grid operators to investigate models of cooperation. In this way, we can accelerate together in the energy transition of Kenya and Uganda.’
Source: Solar Magazine