Against a backdrop of severe market disruption caused by Covid-19, global inflation and rising costs of capital, Husk Power Systems has become the first mini-grid company to achieve profitability, declaring profits in its Nigeria and Indian operations.
This development means the company has become the first mini-grid company to achieve profitability.
According to a statement seen by BusinessDay, the company became Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) positive in Q4 2022.
EBITDA is one of the most widely used measures of a company’s financial health and ability to generate cash.
Husk says the profitability milestone was achieved because of the firm’s unique platform approach, which addresses the entire rural energy ecosystem.
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Besides electricity and appliance sales, findings showed Husk’s platform approach also installs rooftop solar for businesses and offers energy-as-a-service for drinking water, agro-processing among others
Husk noted that another reason for the firm’s profitability is “its relentless focus on technology and business innovation, which has allowed Husk to boast the lowest cost of delivered energy and highest average revenue per user in the industry”.
“When I took over the reins of Husk in 2014, we underestimated the amount of time and effort it would take to discover the right business model, right team and right technology platform to build a commercially viable mini-grid company on two continents,” said Manoj Sinha, Co-Founder and CEO.
He added, “It took grit and innovation to arrive here – at a profitable and scalable minigrid company”.
In 2022, Husk launched its Nigeria Sunshot Initiative, with a target of building 500 minigrids by 2026 that benefit more than 2 million people, while also displacing 25,000 diesel and gasoline generators used by rural businesses and farmers.
The company currently operates 12 off-grid minigrids in Nigeria, benefiting 50,000 people, and expects to expand 5X nationally by the end of 2023.
“Husk has proven that the rural minigrid business model works, in Asia and in Africa, and in off-grid, under-the-grid, and grid-interconnected communities. It works and it is robust,” said Husk’s Board Chairman, Brad Mattson.
Husk pioneered the rural minigrid 15 years ago using waste biomass gasification, and in 2017 followed up with the industry’s first solar hybrid minigrid.
Since then, the World Bank and International Energy Agency have both recognized the central role of solar minigrids in ending energy poverty by 2030. It is estimated that between 100,000 and 200,000 minigrids need to be built before the end of the decade.
“We have already scaled 10X, and are poised to scale another 10X. We urge the industry to embrace the roadmap Husk followed. If funders and governments embrace the mini-grid sector and this roadmap for success, together we can not only end energy poverty but also lay the foundation for a rural industrial revolution,” Mattson said.
In 2022, Husk signaled its ambitions to do its part in fueling that revolution by signing a UN Energy Compact. It committed to building at least 5,000 minigrids by 2030 that would impact more than 10 million people and avoid 7 megatons of carbon emissions from diesel generators.
