PowerGen Renewable Energy, a specialist in developing, building and operating small-scale electricity grids in Kenya and Tanzania, has completed the first close of a USD4.5 million Series A investment.
The round was led by DOB Equity, a Dutch family office, AHL Venture Partners, an impact-focused venture capital firm in Africa, and private investors including Marc Beuls, former president and CEO of Millicom International Cellular, and Billy Harbert, CEO of BLHarbert International.
Over 600 million people in Africa lack access to electricity, of which 80 per cent live in rural areas. Connecting these individuals to national power grids has proven to be time-consuming, costly and often uneconomical because of low population densities.
PowerGen facilitates energy access for communities currently not connected to national electricity networks through the development of micro-grids (small-scale electricity networks operating independently from the main grid), offering communities affordable, reliable and grid-equivalent power.
The investment will enable PowerGen to expand their current micro-grid portfolio, connecting over 7,500 customers, including households and micro-small and medium enterprises and giving power to nearly 50,000 people within the next two years.
Hayo Afman, portfolio manager of DOB Equity, says: “Micro-grids can supply reliable power to a huge market in Africa and vastly improve quality of life for thousands of communities.
“We believe the market is nearing a tipping point with four forces coming together. First, with the continuous decline in solar panel and battery prices, the economics have become attractive for commercial investors. Second, utility sectors across Africa are opening up with a push for more private sector involvement. Third, more and better-tailored capital is coming into the region to fund infrastructure projects and lastly new, often tech-enabled business models are emerging, making development of micro-grids more replicable and scalable.”
Sam Slaughter, CEO of PowerGen, says: “There are strong parallels between the African energy sector today and the African telecoms sector two decades ago.
“Back then, pioneers of wireless telecommunications made a big bet that African consumers would want world-class mobile communication service, and they invested heavily in the infrastructure to deliver it by building thousands of telecom towers throughout the continent. And the result is there: African telecoms have now famously leapfrogged the west, for instance, bypassing obsolete landline infrastructure and building mobile payment systems that many western countries haven’t yet seen. There is a similar opportunity today in the power sector. At PowerGen, we are building the energy system of the future in Africa.”
Charlotte Ward, senior partner and COO of AHL Venture Partners, adds: “PowerGen has been active in the East African micro-grid sector for over five years, and has already built over 40 micro-grids and hundreds of power systems in the region.
“What makes PowerGen stand out is both the deep experience they have building and operating hundreds of energy systems in the region, and the highly talented team they have in place, at both the management and operational level. We are excited about our continued and growing partnership with PowerGen.”
