Renewable initiative will provide electricity to poor communities – and may generate billions in income

THE ECOLOGY Foundation, a Dublin-based green business group, working in collaboration with the GSM Association (which represents global mobile phone networks), the Irish charity Concern and Hanley Energy, an Irish energy solutions company, is developing and financing a new renewable energy company in Africa with the potential to generate billions of dollars in income for its poorest regions over the coming years.

This year, the new venture, Afrigen Community Power will bring power to the first 100 communities using a combination of batteries and fuel cells, solar and wind power, having begun operations in Tanzania, Burundi and Kenya.

Next year, the aim is to provide electricity at 1,000 sites, some of which will be in several other African countries.

The energy solutions will reduce fossil fuel use by communities in developing countries, specifically charcoal and kerosene, which are expensive and harmful to people’s health and the environment. Over the past three years, the foundation has invested $1 million (€700,000) in establishing the business.

This company is in the middle of raising $5 million and this year it will invest $2 million (€1.4 million) in developing the new venture. All future funding will be from cashflow and debt finance.

The further rollout of the business over the next five years will require up to $1 billion (€700million) in debt finance to achieve the company’s aim of bringing sustainable energy to 10,000 communities in 16 countries, which could amount to one million homes.

Opportunities may also exist to bring the business model outside Africa to poorer regions of Pakistan, India and Bangladesh. There may also be opportunities to bring new partner companies into the alliance from the clean technology and international engineering sectors.

Afrigen is in talks with governments, the World Bank and the International Finance Corporation about the possibility of providing guarantees for the financing of the company’s ambitious growth plans.

“The returns will be very substantial and from the outset, we have insisted that the communities to which the renewable electricity will be provided will benefit through a community revenue share. In each community we will be providing a medical kiosk and a learning kiosk. There is already interest from community groups in occupying and operating these,” said Declan Murphy of the foundation, who is also the founder of Afrigen.

The poorest communities in east Africa have no electricity and use kerosene for light, spending on average $8 per home, which would be a large proportion of their total monthly incomes.

Afrigen will supply power and light to communities at a lower cost, boosting their standard of living, saving them money and reducing their carbon emissions.

In 2009, the International Energy Agency estimated that 1.5 billion people – approximately 22 per cent of the world’s population – had no access to electricity. Of that figure, 85 per cent live in rural areas. In some major African countries, the rate of electrification is as low as 11 per cent.

Key to Afrigen’s business model is an intelligent meter and control device, designed by Clive Gilmore of Hanley Energy and made in Ireland. When installed at mobile phone network base stations, this enables about 10 per cent of the electricity supplied – by diesel generators with a massive carbon footprint – to be drawn off, and either transmitted or stored in batteries and transported to nearby communities.

This electricity can then be sold to communities at an affordable price – either to power lighting – battery-powered LED lamps - or to charge mobile phones. In parallel with this, where a demand is identified for it, it then becomes feasible for Afrigen to install wind or solar power adjacent to the base stations. This reduces their carbon footprint, operational costs and diesel consumption, while freeing up more power for the nearby communities.

As the communities gradually become more economically active, they will evolve into a linked small electricity grid of batteries, base stations and renewable power sources in each region, completing the evolution of the community power network.

“In a way, we’re aiming to do for Africa what the ESB did for Ireland 80 years ago. There is zero risk and zero cost to the mobile phone networks that own the base stations. But they benefit from increased phone usage and goodwill to their brand.

“We expect to create new jobs in an RD and design team based in Ireland, from where back office data management for the community power grids will also take place. New jobs in Africa, in the kiosks and as energy agents, will also be created, and we will also need technical support and management staff to cover multiple sites,” said Murphy.

The company has recently recruited country managers in Burundi and Kenya.

“While we don’t expect to be the largest player in this sector, we aim to be the Bord Gáis of off-grid community power systems across Africa,” he added.