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Poor Power Supply: Startups to the Rescue

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Solar power - Investors King
  • Poor Power Supply: Startups to the Rescue

Poor power supply is affecting economic growth. Tech startups are tackling the problem, reports Daniel Essiet.

Energy is an essential factor for reducing poverty and boosting economic growth. But across Nigeria, there is inadequate energy to spur the much- needed development.

About 70 per cent of households are either off-grid or have a ‘bad grid’ connection with less than four hours of electricity per day, according to a report by Dalbery.

To this end, analysts say expanding electrification is an important step towards building an economy. This has created opportunities for tech startups, which are preoccupied with delivering transformative change through solar and other forms of alternative energy.

Now, there are entrepreneurs powering solar street lights and solar projects. Some are processing waste into biodiesel and solar energy.

One of them is Quaint Global Energy Solutions. The firm develops renewable power projects and provides solar energy solutions to rural Nigeria. The company has been given a grant by the United States Trade and Development Agency for a solar power project that they are developing in northern Nigeria.

Quaint Global Energy Solutions is working with California-based Tetra Tech. On its completion, the project is expected to bring 50 megawatts of clean energy to Kaduna State and generate more than $160 million revenue.

Another one is Rensource Energy, aimed at delivering affordable solar energy to households and businesses to replace the use of generators.

It introduced a segmented subscription-based business model in March 2017 that enabled customers prepay for energy, rather than own the infrastructure. This means customers can save a lot of money by switching to solar energy. The system uses a combination of long-lasting lithium-based batteries and solar energy. The service is offered through a mobile-based user interface that allows its customers to pay their bills, and to understand how they use their power.

Since its inception in 2015, Rensource has managed well over 1,500 customers.

Last year, the firm secured a loan of €500,000 from Trine Financial Limited.

Early last year, the renewable energy startup also secured $3.5 million in bridge financing to expand the business. In 2016, Rensource had secured a previous funding of about $1.1 million, bringing its total investments from external funding to $5.5 million.

Other startups have also entered the sector. But that of OneWattSolar, a startup based in Lagos, has been significant. It allows Nigerians to pay for solar energy with Blockchain tokens.

The company allows customers to purchase tokens in naira using the platforms of third party tech finance firms.

It seeks to help people pay for the energy using Blockchain without owning the solar infrastructure that provides the power.

OneWattSolar uses blockchain in three ways: raises funds to buy and install the solar systems, helps users track energy use and allow users buy energy credits for their homes.The startup targets customers who spend about N10, 000 monthly or more on their energy bills. There are plans to target other customer segments.

So far, it has a target of 12,000 homes or businesses with clean solar energy.

OneWattSolar systems comprise solar panels, internet-enabled meter system and inverter battery technology. The system components are being custom-designed specifically to meet the needs of its customers as against buying ready-made solar panels and equipment. OneWattSolar pays for, installs, owns and operates the Solar Residential Energy Unit (SHS). OneWattSolar is working with independent solar installers within GoSolar Africa’s network.

OneWattSolar was founded by GoSolar Africana renewable energy startup also based in Lagos that provides clean energy to households, businesses, schools, non-profits and government organisations.

GoSolar Africa is led by Femi Oye who founded the company in 2010.

Another firm is AllOn, an impact investing firm established to stimulate the development of collaborative partnerships for innovative solutions that facilitate increased access to affordable, reliable and sustainable energy sources in Nigeria.

AllOn CEO, Dr. Wiebe Boer Boer said: “The energy gap in Nigeria is the foundation for so many of the country’s economic and social development problems.”

He said power distribution is a major stumbling block to development with firms seldom making it beyond big cities due to high costs of installation.

He said the huge energy access gap in the country means the opportunities to address the gap were also considerable.

With limited grid coverage, the Allon chief noted that many Nigerians relied on electricity generators.

He stated that with Nigeria’s increasing energy requirements to achieve its developmental goals, there was the need to find and support clean energy innovators to build successful and sustainable businesses around their solutions.

He said many small scale firms and startups have ventured into the sector and can explore its vast amount renewable energy potential.

Boer explained that many entrepreneurs were rising to the challenge of leveraging the off-grid power revolution to provide electricity for millions of people in parts of the country through innovative and adaptive technologies and business models borrowed from outside.

One area that offers sustainable investment opportunities for entrepreneurs, he said, is solar energy due to advances in technologies.

Boer said the mini-grids and solar home systems that will save Nigerians billions yearly.

He said the company focuses on energy efficiency and renewable energy and aims to help startups develop practical solutions, test-bed the solutions in actual projects, and build their track record.

He said his organisation is ready to support startups to bring lighting solutions to off-grid communities who live in informal settlements and rural areas across the country.

According to him, there are opportunities for small businesses to invest in solar cells, earn income and help bring electricity to areas in need.

He said startups could provide low-cost, environmentally-friendly power sources for lighting, cooking, among others.

Boer said the company would invest in entrepreneurs that could provide electricity to households without going through the complexities of building a big generation and transmission infrastructure.

He said funders were searching for innovators in the sector, to expand off-grid energy access for underserved markets, through solar, wind and biogas technologies.

Is the CEO/Founder of Investors King Limited. A proven foreign exchange research analyst and a published author on Yahoo Finance, Businessinsider, Nasdaq, Entrepreneur.com, Investorplace, and many more. He has over two decades of experience in global financial markets.

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Economy

Nigeria’s Plan to Review Oil Companies’ Gas Flaring Strategies

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Oil

Nigeria is ramping up its efforts to address environmental concerns in the oil and gas sector with a comprehensive plan to review gas flaring strategies of international and indigenous oil companies.

The Minister of State for Environment, Dr. Iziaq Salako, announced this initiative during a national stakeholders engagement meeting on methane mitigation and reduction held in Abuja, Investors King reports.

Gas flaring, a common practice in the oil industry, releases methane—a potent greenhouse gas—into the atmosphere, contributing to climate change and posing health risks to communities near oil facilities.

Nigeria aims to end routine gas flaring by 2030, aligning with global climate goals and commitments.

Dr. Salako explained the importance of reducing methane emissions and highlighted the detrimental effects on public health, food security, and economic development.

He outlined practical steps being taken to tackle methane emissions, including the development of methane guidelines and the engagement of government institutions.

The ministry, through the National Oil Spill Detection and Response Agency, will conduct periodic reviews of oil companies’ plans to ensure compliance with the gas flaring deadline.

Deloitte management consultants will assist in conducting comprehensive forensic audits to scrutinize the legitimacy of forward-contracted transactions.

President Bola Tinubu’s commitment to environmental sustainability underscores the government’s dedication to addressing climate change and fulfilling its multilateral environmental agreements.

The engagement event served as a platform for stakeholders to discuss methane mitigation strategies, existing policies, and implementation challenges.

Collaboration and dialogue among diverse sectors are crucial in charting a unified course towards sustainable methane reduction in Nigeria’s oil and gas industry.

As the country navigates its environmental agenda, ensuring accountability and transparency in gas flaring practices remains paramount for achieving a greener and healthier future.

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Economy

Interest Rate Jumps to 24.75% as CBN Takes Aggressive Stance Against Inflation

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Dr. Olayemi Michael Cardoso

The Central Bank of Nigeria (CBN) has announced a significant increase in the monetary policy rate, known as the interest rate, to 24.75%.

This move disclosed by CBN Governor Olayemi Cardoso during the 294th Meeting of the Monetary Policy Committee press briefing in Abuja, represents a bold step by the apex bank to address the mounting inflationary pressures faced by the country.

With inflation soaring to 31.70% in February, the CBN aims to moderate this upward trend by tightening its monetary policy stance.

This decision follows the previous hike in the interest rate to 22.75% in February, showcasing the CBN’s commitment to combatting inflationary forces.

While the bank opted to maintain the Cash Reserve Ratio at 45%, the significant increase in the interest rate underscores the urgency of the situation and the need for decisive action.

Governor Cardoso emphasized that these measures are essential to stabilize the economy and safeguard the purchasing power of the Nigerian currency.

The 294th MPC marks the second meeting under Governor Cardoso’s leadership, indicating a proactive approach to addressing economic challenges.

The next MPC meeting is scheduled for May 20th and 21st, 2024, highlighting the ongoing commitment of the CBN to navigate Nigeria’s economic landscape amidst inflationary pressures.

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Economy

Nigeria Braces for 10th Consecutive Interest Rate Hike by Central Bank

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Central Bank of Nigeria (CBN)

As Nigeria grapples with persistently high inflation, the Central Bank of Nigeria (CBN) is gearing up to implement its tenth consecutive interest rate hike in a bid to curb the soaring prices and attract investment.

Analysts surveyed by Bloomberg are anticipating a substantial 125 basis-point increase in the key rate to 24%, marking one of the most significant adjustments in the current tightening cycle.

The decision, expected to be announced by Governor Olayemi Cardoso on Tuesday at 2 p.m. in Abuja, comes on the heels of inflation accelerating to 31.7% in February, far surpassing the central bank’s target range of 9%.

This surge has been primarily attributed to the sharp depreciation of the naira, prompting authorities to devalue the currency twice since June to narrow the gap with the unofficial market rate and encourage investor confidence.

While these measures have seen the naira strengthen in recent days and bolstered investment inflows, including a fourfold increase in overseas remittances and significant foreign investor portfolio asset purchases, there remains a palpable need for more decisive action.

Giulia Pellegrini, a senior portfolio manager at Allianz Global Investors, emphasized the necessity for the CBN to intensify its tightening efforts to regain foreign investors’ confidence in the local bond market.

While acknowledging the positive strides made by the central bank, Pellegrini stressed the importance of a more assertive approach to prevent the diversion of investor attention to other frontier markets.

As the Nigerian economy navigates through these challenging times, the impending interest rate hike signals the CBN’s determination to address inflation head-on and foster a more stable economic environment.

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