The East Africa power and energy market is an example of how developers, funders, utilities and consumers are evolving and accommodating sustainable solutions. It is a region seeing more IPPs, self-generation, and off-grid projects excelling – not just on a commercial scale, but right down to end users.
Ahead of Future Energy East Africa conference and exhibition, ESI Africa took a sneak peek at this vibrant market through an exclusive interview with one of the conference’s esteemed advisory board members, Andrew Githaiga, the senior investment officer at SunFunder East Africa Limited, on his views on what makes this African region stand out.
Andrew, let’s start with your views on the main opportunities that are transforming the East Africa region.
There are substantial growth opportunities in the commercial and industrial (C&I) sector where currently there is only 15MW of installations in the East Africa region out of a potential installed capacity of 650MW. Other areas that should gain increased traction soon are the development of mini-grids and productive use areas such as agriculture and water. There is an impressive focus from both the private sector and governments on solar PV and its benefits, especially since governments in the region have set clear energy targets.
What in your view are the main challenges in the power sector in East Africa right now?
The main challenges are regulatory risk, repayment risk (from the customers) and performance risk (from EPCs and SHS). In some countries, these regulatory issues are being addressed but we foresee that it will take a while before they are fully tackled. Entry of the private sector with regards to the C&I market is mitigating risk in that most of the customers are well established companies with balance sheets that are able to support installation of the systems.
What is your personal vision for the industry?
I foresee an increase in C&I installations as well as a shift in government focus to the mini-grid space in order to provide electricity for the rural population. More partnerships as well between traditional debt and equity providers (DFIs, Impact Investors, etc.) and credit enhancement entities with specialist debt providers in order to impact more and more people as we are able to cater for a market that they do not traditionally serve but would like to impact.
In terms of this market, please give us a bit of background on the work that SunFunder does.
SunFunder is the leading specialist debt financing partner for solar companies active in the off-grid residential, C&I, mini-grid, and productive use sectors in emerging and frontier markets. We have closed more than 100 loans with over 35 companies (directly impacting over 5 million people), giving us an unrivalled track record and expertise in tailoring lending products for the solar sector. As a senior investment officer, my role revolves around business development and relationship management with a special focus on the C&I and mini-grid sectors.
Can you share any exciting projectsthat you are currently involved in?
Without naming specific companies, we are very excited by the productive use and mini-grid sectors and we are working with about 5-6 companies to provide solutions in these spaces. We were the first financial intermediary to fund (commercially) a mini-grid developer and we believe there is great potential in this sector.
At the upcoming Future Energy East Africa, you are part of the advisory board. Please give us a sneak preview of what your message will be at the event.
We recently reached first close ($42.5 million) on our (Solar Energy Transformation – SET Fund) targeting longer tenor facilities. SET Fund is an ($85 million) fund, which we will use to actively seek out and get involved in the productive use and mini-grid sectors. My message regarding SunFunder, is that we are open to partner not only with developers and SHS providers, but also end users in the C&I sector. Our expertise allows us to be flexible in our structuring processes ensuring that it is a win-win situation for the customers, our co-lending partners and SunFunder. ESI
Are you also passionate about the potential of renewable energy and mini-grids in East Africa? Join your power and energy peers to debate, discuss and develop! Attend Future Energy East Africa at the KICC in Nairobi on 17–18 September 2019.
More information: www.future-energy-eastafrica.com