Solar
Over 50% of Africans do not have access to electricity
Africa has the most potential for solar energy in the world
To achieve access to electricity for all persons on the continent by 2030, experts suggest Africa needs less than 1% of the global energy investment today
Stratford Venture Partners (“SVP”) is a US-based firm that invests in Africa-focused companies. SVP was founded in 2021 by a group of lawyers interested in transforming Africa. Our thesis is simple, we focus on companies in the pre-seed, seed, series A phase in the following sectors: FinTech, CleanTech, Pharma.
This report focuses on solar, which we like because it’s affordable for Africans and has impressive potential for investors. Solar tends to be the cheapest of all renewable technologies and the costs for solar in Africa are declining.
Content:
Market
Opportunity
Risk
Startups to watch
1. Market. Over 50% of Africans do not have access to electricity (~600 - 700 million people). In contrast, in the U.S. only (0.0002 or ~60,000 people) do not have access to electricity. The circumstances are dire - the Rockefeller Foundation predicts Africa will progress at the slowest rate for energy adoption by 2030. Despite Africa having 60% of the world's best solar resources, it currently only harnesses only 1% of its solar generation capacity.
But there’s hope - countries such as Ghana, Kenya and Rwanda are on track for full access energy by 2030, offering success stories other countries can follow. To achieve access to electricity for all persons on the continent by 2030, experts suggest Africa needs less than 1% of the global energy investment today (or $25 billion).
2. Opportunity. The World Economic Forum reports that Africa has the most potential for solar energy in the world. Africa’s current solar production is .6% of available energy sources. However, by 2050, BP predicts that number to jump significantly to 30%. This is a significant opportunity for investors to be involved in the growth of solar in Africa.
The International Energy Agency reports that as its population and incomes grow, demand for modern energy in Africa will expand a third by 2030. The potential for growth in the region and global solar industry is huge. Experts estimate African solar capacity could reach one-third of the current global total by 2030, and he potential for global impact is significant - according to the German Aerospace Centre, a solar farm covering just 0.3% of North Africa could supply the entire European Union’s power demand, which is twice that of Africa.
In addition to the growth potential, countries are providing exemptions to taxes and policies that may restrict foreign investment to support local investment in renewables.
3. Risk. Investing in Africa has many opportunities, but there are risks to consider which are multifaceted and too comprehensive for this report. In short, to safeguard our investments, we look at the political and currency stability, and human capital. We use this to distill potential investment regions. For instance, the following developed markets show potential for solar investments: Algeria, Egypt, and South Africa.
4. Startups to watch. Over the last 10 years startups in Africa’s off-grid solar sector have attracted over $2.3 billion in funding, and with the largest share of the financing has gone to just seven pay-as-you-go (pay-go) Africa-based scaleups (Sun King, Zola Electric, M-Kopa, Bboxx, d.light, Engie Energy Access and Lumos). This year, 86% of the total debt-equity funding raised by startups in Africa’s pay-go solar sector went to SunKing, M-Kopa and d.light, and Bboxx.
Authors: Sunga Mkwezalamba, Immaculate Odwera
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