Page 4 - AfrElec Week 33

AfrElec COMMENTARY AfrElec
African mini-grid pioneers agree on merger
PowerGen Renewable Energy’s mini-grid merger with Tanzania’s Ra ki Power blazes a trail for innovative project investment in off-grid power, writes Richard Lockhart
TANZANIA
WHAT:
PowerGen Renewable Energy has bought E.ON- backed Ra ki Power in Tanzania
WHY:
PowerGen gains access to Ra ki’s eight mini-grids and 100-project pipeline
WHAT NEXT:
Developers such as PowerGen are keen
to source new and innovative sources of nancing to drive off-grid power forward
Ra ki Power’s off-grid generation.
Credit: Ra ki Power
AFRICA-FOCUSED mini-grid specialist Pow- erGen Renewable Energy has acquired E.ON O -Grid Solutions, which runs Tanzanian o - grid operator Ra ki Power, in a bid to expand its footprint on the continent and to boost private investment in power projects in rural areas.
e companies are two of the largest mini- grid developers on the continent, and PowerGen has said that the merger will help create greater momentum for innovative private investment in o -grid power in Africa.
“PowerGen and E.ON Off-Grid Solutions have shared a common vision for a long time: to transform lives by building the energy system of the future in Africa,” PowerGen president Aaron Cheng said.
Ra ki Power was founded in 2014 and now provides power to 700 households via eight mini-grids in Tanzania. While modest, it has plans to build another 100 mini-grids over the next three years.
The deal gives PowerGen access to these assets, as well as a project pipeline, software intellectual property (IP) and human resources.
PowerGen says that it has so far connected 10,000 customers and 50,000 people in Kenya, Tanzania, Sierra Leone and Nigeria to power since it was founded in 2011.
Regulatory uncertainty
Ra ki Power nance director Sebastian Rieger noted July 2018 that although governments were supportive of mini-grids in principle, there was still a large amount of regulatory uncertainty.
Mini-grids have the potential to give 490 million
He also noted that both the government and
large donors such as the World Bank were more people access to
comfortable supporting a $100mn grid project than 100 $1mn mini-grid projects.
He also highlighted that while one-o pilot projects could attract nancial support, scaling up investment to back a number of mini-grids was more problematic.
Innovative nancing
With the merger, PowerGen is surging forward as one of Africa’s leading mini-grid developers and operators. It is also forging new innovative funding models that will overcome the barriers
power by 2030 via 210,000 new projects at an investment cost of $220bn
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w w w . N E W S B A S E . c o m Week 33 21•August•2019