When I travel to some of the major capital cities in Africa, the first thing that strikes me is all the roofs and carports that are still not covered with solar panels. The market for solar roofs in Africa is still largely untapped. In Kenya, for example, according to the Clean Captive Power: Understanding the Uptake and Growth of Commercial and Industrial (C&I) Solar PV in Kenya report, there are an estimated 3,900 large corporate consumers who would benefit from solar energy. Currently, however, fewer than 500 of these customers have adopted PV systems to supplement their energy needs.
There is so much potential for rooftop solar in major cities on the African continent. Sunny Australia gives us a great example of the power of rooftop solar to complement the grid. The Australian Department of Industry, Energy and Emissions Reduction reported in March this year that 2021 was the fifth record year in a row for rooftop solar in Australia. In 2021 Australians installed about 380,000 new systems with a combined capacity of 3.2 GW† More than 3 million roofs in Australia now have solar power, bringing the total installed capacity to an amazing 17 GW! “Last year, Australia invested $7.4 billion or $284 per person in renewable energy. This gives us an edge over countries like Canada, Germany, Japan, France, China and the United States per person,” said Secretary Taylor earlier this year.
Obtaining this level of financing in the C&I sector in the main markets on the continent would help unlock the potential of this industry. In the early years, about eight years ago, the adoption of photovoltaic systems by companies in the main centers of Africa was mostly through direct purchase agreements. This slowed down the uptake as large systems of several hundred kW were quite pricey. Later, several solar development companies started offering business PPAs and system leases. Under these facilities, cashless companies can get grid-connected PV systems and then pay monthly lease fees for 15 to 20 years. These monthly payments were structured in such a way that they would offset their daily usage at rates much cheaper per kWh than the utility rate. The availability of such financing options is now helping to drive adoption of these behind-the-meter PV systems as more companies move to reduce energy costs.
One of the industry’s first players and leaders is Cross-border energy† CrossBoundary Energy is a developer, owner and operator of distributed renewable energy solutions for businesses across Africa, providing cheaper and cleaner energy through power purchase and lease agreements. Earlier today, CrossBoundary Energy announced the completion of a $40 million investment in shares of Norfundthe Norwegian Investment Fund for Developing Countries, and KLP, Norway’s largest pension company, through their joint venture KLP Norfund Investments AS.
This commitment will enable CrossBoundary Energy to further scale its investments in renewable energy solutions for commercial and industrial companies across Africa. The $40 million pledge builds on Norfund and KLP’s previous investments in the C&I sector and underlines the scale and maturity of Africa’s distributed generation sector. The secured funding is in addition to $40 million in equity invested in CrossBoundary Energy in 2020 by ARCH Emerging Markets’ Africa Renewable Power Fund.
CrossBoundary Energy provides tailor-made, fully funded renewable energy solutions to its enterprise customers, enabling them to avoid upfront investments and technical risk, while still benefiting from cheaper, cleaner and more reliable power. CrossBoundary Energy currently delivers a portfolio of $188 million in projects for 30 business customers in 14 countries in Africa, comprising 150 MWp of solar PV assets, 50 MWh of battery energy storage and 12 MW of wind energy. CrossBoundary Energy is the renewable energy provider of choice for a number of leading companies in Africa, including Unilever, Diageo, Rio Tinto, Heineken and AB InBev.
Pieter Joubert, President and Chief Investment Officer, CrossBoundary Energy said: “We are very pleased to welcome Norfund and KLP as investors. Their commitment is in line with our belief that businesses across Africa should be able to benefit from cheaper, cleaner and more reliable energy. This investment confirms CrossBoundary Energy’s position as a trusted provider of customer-centric renewable energy solutions to African businesses. We look forward to leveraging Norfund’s significant experience as we strive to deliver an operating portfolio of more than $300 million in assets within the next 5 years.”
Kristoffer Valvik, Investment Manager, Norfund, said: “We believe that distributed renewable energy sources play a vital role in driving clean and sustainable growth of the commercial and industrial sector across Africa. The cost savings offered by renewable energy, coupled with the reliability of battery energy storage systems, enable companies like CrossBoundary Energy to offer businesses immediate cost savings, while significantly reducing their emissions and creating jobs in the renewable energy sector. CrossBoundary Energy has secured a leading portfolio of high-value assets and we are excited to support them as they continue to scale.”
Aage Schaanning, Group Chief Financial Officer, KLP, said: “We are pleased to support the continued development of CrossBoundary Energy’s portfolio of distributed renewable energy systems and are confident that its strong business practices will drive sustainable economic development on the African continent and provide stable and predictable returns for owners of KLPs.”
William Barry, Managing Director, ARCH ARPF, said: “We are delighted with the progress CrossBoundary Energy has made following our investment in 2020, which has seen their portfolio grow tenfold over the past two years. CrossBoundary Energy has established itself as a pioneer and clear market leader in the commercial and industrial renewable energy sector across Africa, and we look forward to supporting the next phase of growth enabled by the investment from Norfund and KLP.”
It’s really good to see this kind of investment in the C&I sector aimed at catalyzing the widespread adoption of distributed solar and battery storage across Africa.
Images Courtesy of CrossBoundary Energy
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