Solar firm Daystar Power raises N3.6bn to expand services
Solar energy firm, Daystar Power said it has closed a N3.6bn ($10million) equity round with investments from Verod Capital Management and Persistent Energy Capital LLC, in a move that will support the Federal Government’s plan of sourcing 30% of Nigeria’s energy needs from renewables by 2030.
The Lagos-based company also said it has lined up an additional N5.7billion ($16million) in debt financing to accelerate its expansion across West Africa, making it one of the biggest funds to come into the Nigerian off-grid market this year.
According to the company, the investment is significant because Nigeria’s banking sector could save up to N20bn of annual electricity costs by using solar power solutions. One- third of all Nigerian banks are the company’s clients.
“Daystar Power provides solar power solutions to Nigeria’s corporates, including the banking, consumer goods, agriculture and manufacturing sectors. By the end of the year, we expect to have more than 400 solar power sites operational and are eager to deliver to our clients 15-25% and sometimes more cost savings, while maintaining our close to 100% uptime for all systems across Nigeria,” Christian Wessels, a founder of Daystar Power said.
The Nigerian Rural Electrification Agency (REA) says Nigeria’s mini-grid market is worth $9.2billion a year, creating a vast opportunity for off-grid investors to bridge the prevailing power gap from a grid incapable of wheeling all the power generated and sent to it.
This has created a situation where Nigerians spend $14billion annually on diesel and related equipment to bridge the power supply gap according to a study by the Rocky Mountain Institute, a US-based sustainable energy research organisation. These costs constrain competitiveness of Nigerian businesses and growth of the wider economy.
Daystar Power seeks to plug this gap by providing cost effective and reliable solar power solutions to commercial and industrial clients in Nigeria with systems ranging from 20 kWp to 5MWp. It is also hoping to place its stamp across the West African region.
“The additional capital raised by Daystar Power will accelerate our growth and help us satisfy the significant demand we see among West African corporates for solar power solutions and reduce both cost and carbon footprint,” Jasper Graf von Hardenberg, a founder and CEO of Daystar Power said.
Hardenberg further said, “With Verod Capital Management, one of West Africa’s leading private equity investors and Persistent, a leading investor and venture builder in the off-grid sector, we have attracted two major investors who share our excitement for solar power for commercial and industrial customers in Africa.”
Last month, electricity generation fell to 3,456 megawatts losing 1,108MW in seven days, according to data from the Nigeria Electricity System Operator, an arm of the Transmission Company of Nigeria. Total power generation dropped from 4,564.60MW on February 19 to 3,456.20MW on February 24. In October last year, 15 power plants were idle for weeks.
This situation has put paid to any hope that large scale power plants will dent Nigeria’s energy crises. Analysts say decentralised distributed renewable energy, especially solar power solutions, could provide a better alternative.
“Harnessing the power of the sun can be a huge step forward in ending the energy shortage in Nigeria,” Daniel Adeoye, investment manager at Verod Capital said.
Since inception, Daystar Power, founded by Christian Wessels and Jasper Graf von Hardenberg and incubated by African venture builder, Sunray Ventures, has installed 1MW of off-grid solar energy solutions to commercial, and industrial customers across Nigeria and Ghana.
“The commercial and industrial segment presents a credible path to scale and profitability in the off-grid market, said Olu Verheijen, partner at Persistent. “Daystar’s solutions enable companies to redirect significant power cost savings into business growth while reducing their carbon footprint.”