Infrastructure | Engie Seeks to Tap Off-Grid Solar to Power Millions in Africa

LAGOS, Nigeria, Capital Markets in Africa: Engie SA is seeking to become a player in the off-grid solar industry, one of the first major utilities to work directly in that niche of the energy system.

“It could be a sizable part of the market,” Bruno Bensasson, chief executive officer of Engie’s Africa business unit, said in an interview in London. “Solar home systems are part of an energy proposal for countries, as well as national grids. We want to be part of it.”

About 60 percent of the African continent lives in rural areas, according to data from GeoHive, making up 695 million people. Electrical grids are largely non-existent in these areas. Small solar panel systems that can generate enough power for a few lights, a mobile phone charger and an energy-efficient TV are growing in popularity in Africa and parts of developing Asia. Bloomberg New Energy Finance estimates that one in three energy-lacking households will have some kind of solar-powered device by 2020.

The French utility formerly known as GDF Suez has signed an agreement withOrange SA, the French telecom company, to jointly develop off-grid products that would be paid for through mobile phone credit. They are working on pilot projects in West Africa, Bensasson said, declining to give more details.

Tanzania Pilot
The company has also built a pilot miniature grid in Tanzania. The small electricity system powers a 100-household village with its own generation source. Engie is working on lowering costs and prices with plans to scale up to other countries, he said.

Until now, the off-grid solar industry consisted of about 100 small developers including Off Grid Electric, Mobisol GmbH and BBOXX Ltd. These companies have installed thousands of rooftop systems in Kenya, Tanzania and Rwanda.

“We’re definitely seeing institutional players getting interested,” said Erica Mackey, chief operating officer of Off Grid Electric. “The positive side to this is that it validates the sector.”

Utility Investors
Her company counts Total SA and Electricite de France SA among its investors. Italy’s largest utility Enel SpA is also backing a minigrid project in Kenya.

Engie expects a growth rate of at least 10 percent in Africa, Bensasson said. It currently has about 3 gigawatts of power plants in operation or under construction, mostly in South Africa and Morocco. The company recently opened offices in Ivory Coast and Kenya, seeking to expand to West and East Africa. It aims to have a “well-established, sizable market share” in five to 10 countries in these regions by 2020.

“The world is changing. Our chairman used to say that we are building power plants with 1,000 megawatts. With solar and wind farm, we have gone down to just 1 megawatt,” Bensasson said. “With solar home systems and mini-grids we are going down to kilowatts or watts. As a power company we can and we must accompany this shift.”

Engie has set a target to provide electricity to 20 million people without energy access by 2020.

Source: Bloomberg Business News