PE & Fundraising

Renewable energy allure drives deals to N11.8bn in 2018


March 9, 2018 | 11:38 am
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Nigeria’s renewable energy space has played host to two deals worth some $USD 33 million (N11.8 billion) this year alone, according to data compiled by BusinessDay. And there is more to come.

To scale up their capacity, Lumos, an off-grid solar power provider, is said to be in the process of raising $200 million, according to two persons familiar with the matter.

“The company has raised $5 million already from a Nigerian fund manager,” the source who was not authorised to speak publicly said. “The renewable energy space is attracting a lot of attention from fund managers and private equity investors looking to leverage the opportunities in that space.”

Lumos, which offers clean and affordable solar power to a market of 1.3 billion potential customers and raised $90 million in 2016, delivered a combined wattage of 5.6 Mega Watts in 2017 or 10 percent of what Ikeja DisCo gets from the Transmission Company of Nigeria (TCN) on a good day.

Other renewable energy deals this year include a $30 million investment by the African Infrastructure Investment Managers (AIIM) and Helios Investment Partners in Nigeria-based energy services company Starsight Power Utility.

Starsight offers solar-diesel-battery hybrid and cooling and lighting solutions to commercial and industrial clients.

The second deal involves Rensource, another renewable energy provider, that got $3.5 million through a round led by Mauritius-based Amaya Capital Partners, with participation from Omidyar Network and Pule Taukobong‘s CRE Venture Capital.

Founded in 2015 by Ademola Adesina and Jussi Savukoski, Rensource is hinged on a core belief that distributed power generation will be a critical element in solving the power problem in Nigeria.

Despite an installed capacity of around 12,500 MW, Nigeria generates around 4,000 megawatts of power for its 190 million people. African peer, South Africa, generates 40,000 megawatts for a population slightly in excess of 50 million.

The extent of the power deficit across Nigeria and Africa is well known and increasing electricity generation, whether on-grid or off-grid, across the continent is the focus of a number of initiatives.

The African Development Bank’s (AFDB) New Deal on Energy for Africa has set a target of universal access to electricity across Africa by 2025.

According to AfDB, to achieve this, 160 gigawatts of new on-grid generation and some 75 million new off-grid connections will be needed, through a mix of conventional and renewable energy sources.

In Nigeria, leading generator makers including Jubaili Bros, Cummins West Africa and Mikano International are considering morphing into power companies capable of providing power through a variety of means including renewables.

Jubaili Bros, a diesel generator manufacturer and seller is leading the pack, committing to install solar systems at its facilities in Lebanon, Nigeria, UAE and Afghanistan. The total amount of the solar power produced from these facilities, when it is completed will be around 500 KW, the company has said.

“Diesel generators has been the primary solution, we offer to provide quick on demand electricity to our customers. However in a bid to deliver other options, Jubaili Bros has invested and developed renewable energy alternatives, in particular solar with or without a battery backup,” the company said.

The company’s strategy is to combine renewable energy with traditional diesel generators to cut fuel consumption cost, at the same time retaining the flexibility of having on demand power supply anytime of the day or night.

“Our hybrid solutions are optimum for telecom application, off grid remote locations, and even for grid connected application in locations where the utility power supply is unsustainable,” the company said.

This situation is fuelling optimism for the off grid space in Nigeria valued at over $9.2 billion. Damilola Ogunbiyi, managing director of the Rural Electrification Agency (REA), in a recent mini grid conference said the annual investment potentials in Nigeria’s mini grid electricity market is now worth up to $9.2 billion urging investors to cash in on the opportunities presented.

The generator makers clearly have no plans to watch from the side-lines.

BusinessDay gathered that four operators in the offgrid space attracted over N200m in funding in 2017 alone.

These feats have been made possible with support from international development agencies like U.S. African Development Foundation (USADF), an independent U.S. Government agency established by Congress to support and invest in African owned and led enterprises and All On.

In December, USADF and All On announced the creation of a N915 million ($3m) partnership with the goal of expanding access to energy for underserved and unserved markets in Nigeria.




March 9, 2018 | 11:38 am
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