The funding came through a new financing platform, Winch Energy IPP Holdings, which could grow to $100 million over the next two years. The financing platform was created in partnership with NEoT Offgrid Africa.
NEoT Offgrid Africa is part of NEoT, a Paris-based financing firm focused on off-grid energy and electric transportation that was established by Meridiam, Electricite de France (EDF) and Mitsubishi.
London-based SunFunder, which finances solar projects in areas where people don''t have electricity, will provide an additional $2 million construction loan for the initial project, according to Winch. Two international development finance institutions have tentatively agreed to bring debt into the project.
The United Kingdom''s Foreign, Commonwealth & Development Office is providing subsidies for the projects in Sierra Leone, and the German Development Ministry and European Union are subsidizing the Ugandan projects, according to Winch.
Also, the Deutsche Gesellschaft für Internationale Zusammenarbeit, known as GIZ, is supporting the Uganda projects while the United Nations Office for Project Services is backing the efforts in Sierra Leone.
The minigrids in the Lamwo district of Uganda and in the Tonkolili, Koinadugu and Bombali districts of Sierra Leone will use Winch''s Remote Power Units, which range from 10 kW to 110 kW with 40 kWh to 384 kWh of energy storage.
"Financing needs for energy access in Africa are huge, but, most of the time, very challenging for private investors," said Frédéric Pfister, director of NEoT Offgrid Africa.
This deal positions NEoT Offgrid Africa as a key player in Africa for financing minigrids and other off-grid solutions, such as solar home systems and commercial and industry installations, Pfister said.
Minigrids are expected to play a key role in bringing electricity to the roughly 600 million Africans who lack power, but they are in an initial "scale up" phase, according to a report released in mid-August from the Africa Minigrid Developers Association.
The trade group said in the report hat minigrid connections grew to 41,000 in 2019 from fewer than 2,000 connections in 2016, mainly in East Africa. The average price per connection fell from $1,555 in 2014 to $733 in 2018.
However, the average minigrid customer uses only 6.1 kWh per month, making it hard to ensure operational costs can be covered for residential consumers or that a return on investment is possible, the report warned.
A separate report released in June found that minigrids could serve about half the people in the world who lack electricity — about 111 million households — by 2030 at a cost of $128 billion.
Fortunately, with the advances of solar electricity, communities in Sierra Leone who have been beyond the reach of the state’s power supply for decades finally have power to call their own.
Financed as part of the UK’s Rural Renewable Energy Project (RREP) in the wake of the Ebola outbreak, the 32 solar microgrids totaling 1.7 megawatts by the name of the Movamba Project will provide power to communities totaling 80,000 people—including 23 health centers.
“Light is right and every Sierra Leonean should have access to electricity," said Hon. Alhaji Kanja Sesay, Minister of Energy for the country back in February at the commissioning of the microgrid, who added that the provision of electricity at Foredugu and other sites is strategic—as light is bringing economic development and improves the livelihood of people living in rural areas.
Regarding the Minister’s claim, the Movamba Project is already seeing remarkable advances in rural progress. Currently, 21 of the solar microgrids financed by the RREP have either been started or finished, totaling 630 kilowatt hours for 30,000 people.
“These people include Kadiatu Maseray, who with affordable and reliable electricity has increased the profits of her cold drinks business by 300% and the Conakry Dee Junior School, which has seen a 25% increase in attendance and a 235% increase in students passing since being connected to its local mini-grid,” said Nicole Poindexter, CEO and Founder of Energicity Corporation, the West Africa-based renewables firm in charge of the project.
The RREP money received was just £1.25 million ($1.72 million), or what amounts a rounding error in the books of big governments like the UK, and shows just how much impact grants like this can have when handled correctly.
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