Economy

Poor Power Supply: Startups to the Rescue

Published

5 years ago

June 26, 2019

Samed Olukoya

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.

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Samed Olukoya

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

Federal Government Set to Seal $3.8bn Brass Methanol Project Deal in May 2024

Published

1 week ago

April 18, 2024

Samed Olukoya

The Federal Government of Nigeria is on the brink of achieving a significant milestone as it prepares to finalize the Gas Supply and Purchase Agreement (GSPA) for the $3.8 billion Brass Methanol Project.

The agreement to be signed in May 2024 marks a pivotal step in the country’s journey toward industrialization and self-sufficiency in methanol production.

The Brass Methanol Project, located in Bayelsa State, is a flagship industrial endeavor aimed at harnessing Nigeria’s abundant natural gas resources to produce methanol, a vital chemical used in various industrial processes.

With Nigeria currently reliant on imported methanol, this project holds immense promise for reducing dependency on foreign supplies and stimulating economic growth.

Upon completion, the Brass Methanol Project is expected to have a daily production capacity of 10,000 tonnes of methanol, positioning Nigeria as a major player in the global methanol market.

Furthermore, the project is projected to create up to 15,000 jobs during its construction phase, providing a significant boost to employment opportunities in the country.

The successful execution of the GSPA is essential to ensuring uninterrupted gas supply to the Brass Methanol Project.

Key stakeholders, including the Nigerian National Petroleum Company Limited and the Nigerian Content Development & Monitoring Board, are working closely to finalize the agreement and pave the way for the project’s advancement.

Speaking on the significance of the project, Minister of State Petroleum Resources (Gas), Ekperikpe Ekpo, emphasized President Bola Tinubu’s keen interest in expediting the Brass Methanol Project.

Ekpo reaffirmed the government’s commitment to facilitating the project’s success and harnessing its potential to attract foreign direct investment and drive economic development.

The Brass Methanol Project represents a major stride toward achieving Nigeria’s industrialization goals and unlocking the full potential of its natural resources.

As the country prepares to seal the deal in May 2024, anticipation grows for the transformative impact that this landmark project will have on Nigeria’s economy and industrial landscape.

Economy

IMF Report: Nigeria’s Inflation to Dip to 26.3% in 2024, Growth Expected at 3.3%

Published

2 weeks ago

April 17, 2024

Samed Olukoya

Nigeria’s economic outlook for 2024 appears cautiously optimistic with projections indicating a potential decrease in the country’s inflation rate alongside moderate economic growth.

The IMF’s revised Global Economic Outlook for 2024 highlights key forecasts for Nigeria’s economic landscape and gave insights into both inflationary trends and GDP expansion.

According to the IMF report, Nigeria’s inflation rate is projected to decline to 26.3% by the end of 2024.

This projection aligns with expectations of a gradual easing of inflationary pressures within the country, although challenges such as fuel subsidy removal and exchange rate fluctuations continue to pose significant hurdles to price stability.

In tandem with the inflation forecast, the IMF also predicts a modest economic growth rate of 3.3% for Nigeria in 2024.

This growth projection reflects a cautious optimism regarding the country’s economic recovery and resilience in the face of various internal and external challenges.

Despite the ongoing efforts to stabilize the foreign exchange market and address macroeconomic imbalances, the IMF underscores the need for continued policy reforms and prudent fiscal management to sustain growth momentum.

The IMF report provides valuable insights into Nigeria’s economic trajectory, offering policymakers, investors, and stakeholders a comprehensive understanding of the country’s macroeconomic dynamics.

While the projected decline in inflation and modest growth outlook offer reasons for cautious optimism, it remains essential for Nigerian authorities to remain vigilant and proactive in addressing underlying structural vulnerabilities and promoting inclusive economic development.

As the country navigates through a challenging economic landscape, concerted efforts towards policy coordination, investment promotion, and structural reforms will be crucial in unlocking Nigeria’s full growth potential and fostering long-term prosperity.

Economy

South Africa’s March Inflation Hits Two-Month Low Amid Economic Uncertainty

Published

2 weeks ago

April 17, 2024

Samed Olukoya

South Africa’s inflation rate declined to a two-month low, according to data released by Statistics South Africa.

Consumer prices rose by 5.3% year-on-year, down from 5.6% in February. While this decline may initially suggest a positive trend, analysts caution against premature optimism due to various economic factors at play.

The weakening of the South African rand against the dollar, coupled with drought conditions affecting staple crops like white corn and geopolitical tensions in the Middle East leading to rising oil prices, poses significant challenges.

These factors are expected to keep inflation relatively high and stubborn in the coming months, making policymakers hesitant to adjust borrowing costs.

Lesetja Kganyago, Governor of the South African Reserve Bank, reiterated the bank’s cautious stance on inflation pressures.

Despite the recent easing, inflation has consistently remained above the midpoint of the central bank’s target range of 3-6% since May 2021. Consequently, the bank has maintained the benchmark interest rate at 8.25% for nearly a year, aiming to anchor inflation expectations.

While some traders speculate on potential interest rate hikes, forward-rate agreements indicate a low likelihood of such a move at the upcoming monetary policy committee meeting.

The yield on 10-year bonds also saw a marginal decline following the release of the inflation data.

March’s inflation decline was mainly attributed to lower prices in miscellaneous goods and services, education, health, and housing and utilities.

However, core inflation, which excludes volatile food and energy costs, remained relatively steady at 4.9%.

Overall, South Africa’s inflation trajectory underscores the delicate balance between economic recovery and inflation containment amid ongoing global uncertainties.