The transformative potential of productive uses of energy in rural Africa

In June, stakeholders and experts gathered online for the webinar “Productive Uses of Renewable Electricity in Africa”, an initiative of the European Union–funded RePower Project. The session highlighted innovative approaches to using renewable energy to drive significant economic growth and electrification across rural Africa.

The webinar showcased how productive uses of energy (PUE) can break the cycle of poverty and low electrification by transforming local economies through enhanced business operations and increased electricity consumption.

Speakers shared insights and case studies demonstrating the impactful role of renewable energy in fostering local business growth and sustainability.

Local business empowerment through renewable energy

Lucia Kamati from Africa GreenTec highlighted the company’s innovative approach to providing last-mile connectivity and comprehensive solutions beyond electricity. Africa GreenTec has established 27 ImpactSites (pictured), reaching more than 61 000 people in remote areas and supporting nearly 1 000 small businesses. Its containerised micro-grids offer electricity, clean water and Internet access, driving socio-economic development and significantly reducing CO2 emissions.

Success stories include that of Modibo Traore, a welder who has been able to quadruple his working hours, increase his staff from two to 20, and reduce his energy costs by a third once he replaced a diesel generator with renewable electricity from Africa GreenTec’s renewable micro-grid. Another beneficiary is Diessira Diallo, a shop owner who reduced costs by 34% and doubled her revenue.

Both illustrate the profound impact of access to sustainable energy and productive-use appliances in improving quality of life and economic opportunities.

Powering Africa’s entrepreneurs with renewable energy

Carlos Miro from GIZ discussed strategic approaches for PUE in rural power utility projects. He emphasised the importance of evaluating PUE potential in both existing and new projects, distinguishing between small and large projects to support local entrepreneurs and industries. Promoting productive activities stimulates per capita consumption, diversifies utility revenues and enhances business model viability. This approach supports local businesses, value chains and economic growth, leading to broader impacts such as women’s empowerment, poverty reduction and financial inclusion.

He highlighted the necessity for micro-grid companies to create separate entities or partner with other organisations to manage projects effectively. Solid business cases and financing are crucial, with sources including grants, debt, equity and guarantees.

He presented two case studies: the WeLight project in Madagascar, which increased energy consumption by 35% among local entrepreneurs; and the ANKA agricultural innovation project supporting a women-run groundnut oil factory, demonstrating the potential of larger initiatives to bolster local industries and value chains.

The importance of supporting the adoption of new technologies

Tina Möller from Nefco presented the Beyond the Grid Fund for Africa (BGFA), a significant initiative managed by Nefco to enhance off-grid energy access. Since its commencement in 2019, BGFA has signed 29 contracts, with a focus on sustainable, high-quality energy services and solutions, particularly in standalone systems and mini-grid systems.

Möller highlighted the rapid development and significant impact of PUE projects in transforming rural livelihoods across Africa. She emphasised the transition of technologies like solar water pumps and refrigeration systems from emerging concepts to commercially viable solutions. These advancements are evident in BGFA’s portfolio, which now includes equipment that not only meets basic energy needs but also enhances economic opportunities for communities.

Möller underscored the critical role of awareness raising in the adoption of productive use technologies. She pointed out that educating potential users about the benefits of such equipment can significantly increase their income, fostering broader economic development.

Moreover, she discussed the necessity of comprehensive technical support, from installation to ongoing training and remote diagnostics. This support helps users maximise the utility of their investments, ensuring sustainable growth and the long-term success of PUE initiatives. These reflections are pivotal as BGFA continues to advance off-grid energy solutions, aiming to create lasting impacts in its countries of operation.

Bridging the financing gap in PUE

Anita Otubu, representing Sustainable Energy for All, provided a detailed exposition on the Universal Energy Facility (UEF). UEF operates as a result-based, multi-donor funded financing facility that awards grant subsidies to private sector firms. These firms develop or deploy standalone systems that enable significant economic activity across underserved regions. Launched in five countries – including Madagascar, Sierra Leone, Benin, the Democratic Republic of Congo and Nigeria – UEF has successfully signed 70 grant agreements with 55 developers.

This initiative, involving an investment of $22.8 million, is set to achieve over 25 000 connections, impacting around 125 000 individuals – highlighting UEF’s dedication to widening energy access and improving life quality and economic opportunities in these areas.

Otubu delved into two major programmes under the UEF: the mini-grids programme and the Stand-alone Solar for Productive Use (SSPU) programme, with the latter currently operational in Nigeria. This SSPU programme showcases how effectively PUE can boost the productivity of businesses by providing dependable electricity for various commercial activities, thereby supporting the growth of micro, small and medium-sized enterprises and promoting broader community prosperity through enhanced business operations and income generation.

She emphasised the necessity of sustainable business models such as energy service and lease-to-own, to ensure the long-term viability of these energy solutions. Moreover, she discussed plans to expand UEF’s impact by designing a new programme in Zambia, aimed at incentivising mini-grid developers to deploy PUE appliances, reflecting UEF’s strategy to tailor programmes that meet specific regional needs and help close the energy access gap in Africa.

The World Bank’s ASCENT project

Annette Omune from the World Bank provided an overview of the Accelerating Sustainable & Clean Energy Access Transformation (ASCENT) project, which aims to deliver 100 million energy connections as part of the World Bank’s commitment to connect 250 million Africans to electricity by 2030. The project targets 20 countries in East and southern Africa, focusing on solar home systems, mini-grids, clean cooking and PUE technologies.

Omune highlighted the importance of examining PUE through the entire value chain, encompassing production, aggregation, storage, processing, marketing, distribution and consumption.

The ASCENT project emphasises integrated planning, policy and regulation, business development, technology and financing as key building blocks for accelerating PUE. Financing remains a significant challenge, with approximately $66.9 million invested in the PUE sector between 2014 and 2023.

The project provides various support mechanisms including debt, results-based financing and technical assistance facilities through country programmes, and regionally through the Trade and Development Bank and Common Market for Eastern and Southern Africa. Equity facilities and risk mitigation strategies will also be introduced in later phases.

Conclusion: A sustainable future for rural Africa

The webinar highlighted the transformative potential of PUE initiatives in Africa, illustrating how comprehensive support, innovative solutions and strategic partnerships are key to driving economic development and improving the quality of life through renewable energy. As these initiatives continue to evolve, they promise sustainable growth and development across the continent – paving the way for a future where rural communities can thrive economically and live sustainably.

A video recording of this webinar is available here.

Image credit: Africa GreenTec