Covid-19 is testing energy infrastructures across Africa, and against this backdrop, off-grid solar is likely to play an increasingly vital role on the continent. “Without energy, we can’t fight this,” said Bill Lenihan, CEO of Zola Electric, a company that develops solar and storage systems in Africa.
“The Covid-19 pandemic is at an earlier stage in Africa. While we don’t know what will happen, we expect the impact to be significant, and we are trying to get ahead of it,” Ryan Levinson, CEO and founder of SunFunder, a solar finance company that provides debt capital to solar enterprises in sub-Saharan Africa said.
At this stage, it is unclear what effect Covid-19 will have on the collective perception of renewable energy as an alternative to coal power, given coal’s impact on respiratory health. What is clear is that that the energy sector will be integral to the post-coronavirus economic recovery.
Any solution that solves Africa’s energy problems during this pandemic is a good solution, but distributed energy resources (DERs) are uniquely positioned.
The importance of energy independence
“The grid can’t be expanded in time to address this. [Covid-19] is showing how critical energy independence is. Demand is more acute than ever,” Lenhian said. Almost one billion Africans lack access to a reliable grid, and most have no grid access at all.
Amid the Covid-19 pandemic, Zola Electric has shifted its mission to focus more squarely on providing power for essential services. With traditional capital sources shut down, Zola has been working with the World Bank, the Netherlands’ FMO, and a host of other national developmental finance companies that are focused on providing capital during a crisis. “We have to win the war [against Covid-19] on every front. We are not going to win if Africa or India lose,” Lenihan said.
Typically, off-grid solar projects, which do not require massive transmission lines, are smaller than grid-tied solar projects. This should facilitate capital raising, accelerate rollout and reduce the complexity often associated with massive infrastructure projects.
As developing countries’ access to capital is more limited and many African governments are also not in a position to deploy much in the way of financial assistance, whole industries will struggle because of the shutdowns. Many small and medium-sized companies in Africa operate with less than three months of liquidity, Lenihan said.
“We’re not going to turn our back on this sector”
“While there are clearly new risks that must be taken into account, we’re not going to turn our back on this sector,” SunFunder’s Levinson said. “We are going to support the industry through this crisis and beyond by continuing with our lending activities,” he added, noting that SunFunder has been able to close four new loans since the crisis hit.
In some ways, the recent history of Africa’s telecom market might offer the continent’s energy sector reason for optimism. When cell phone technology arrived, African telecom companies were able to leap over the telecommunications era that was defined by cables and skip right to cell phone towers. “Based on the rapid development of both solar and battery systems, it is likely that it will be more economically feasible to adopt decentralized energy systems in African markets than to build a centralized grid infrastructure from scratch,” said Nick Hill, vice president in business development at Invictus Capital, which launched an Emerging Markets Solar (EMS) Fund in November.
Right now, Invictus Capital’s EMS fund is not invested in off-grid solar. According to Hill, this is partly due to the fact that battery storage is too expensive at this stage and partly due to the energy credits the projects receive by feeding energy back into the grid. Currently, the EMS fund is invested in a number of South African projects, and in time its scope will expand to include investments in a solar energy projects in additional sub-Saharan African countries and in other developing communities.
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“Typically, off-grid solar projects, which do not require massive transmission lines, are smaller than grid-tied solar projects. This should facilitate capital raising, accelerate rollout and reduce the complexity often associated with massive infrastructure projects.”
The expanses of Africa as a whole has embraced technologies like cell phones. It is much more effective and efficient to have a Cell tower hop every 25 to 50 miles rather than a “spider” web of telephone poles and wires trying to reach every corner of the landscape. Individual home solar PV systems with a couple of batteries and LED lighting with the ability to charge cell phones and electronics devices is a boon to these remote towns and villages. A micro-grid in every town or village with a nominal A.C. utility feed of 33KV could serve several towns and villages with off peak charging services of community micro-grids. A lot of these remote communities in Africa, with just 200 watts of solar PV and battery energy storage, they can enjoy home lighting with LEDs, charge their cell phones, power small TVs. All while not having to buy candles and kerosene to light their homes and run a generator. The home’s air quality is better, less respiratory problems, and the savings of NOT having to buy candles and kerosene helps pay for the solar PV system.
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