As Nigeria’s power supply situation worsens, millions of small businesses are looking to alternative energy sources to continue to sustain their operations.
Thirty to 40 percent of Small and Medium scale Enterprises’ expenditure goes to alternative power sources, with 41.5 million small businesses spending billions to fuel their generators.
Manufacturers spent N117.38 billion to power their businesses in 2017, according to the Manufacturers Association of Nigeria (MAN).
But Rensource, an energy services company and the latest Nigerian tech startup to attract investment, is bringing hope to small businesses as it plans to connect one-million merchants with solar energy in the next five years.
“We believe that simultaneously greening and decentralising its power infrastructure is the only way to navigate Nigeria out of its current state of energy poverty,” said Ademola Adesina, CEO of Rensource.
“Pursuing this with a focus on the millions of small businesses that drive our economy creates a massive multiplier effect whose benefit accrues to all,” Adesina said.
This is coming on the heels of the company’s completion of a $20 million equity financing round co-led by existing investors CRE Venture Capital and the Omidyar Network, with participation from Inspired Evolution, Proparco, EDPR, I&P, Sin Capital, and Yuzura Honda.
Although Nigeria is endowed with large oil, gas, hydro and solar resource and already has the potential to generate 12,522 megawatts (MW) of electric power from existing plants, most days it is only able to generate around 4,000MW, which is grossly insufficient for its energy needs.
Sunday Oduntan, executive director, Association of Nigerian Electricity Distributors, said in an interview in 2018 that Nigeria needs to generate at least 180,000 megawatts (18 Gigawatts) of electricity to have adequate and stable power supply.
The country’s grid has 12 gigawatts (GW) of installed capacity compared to South Africa which has 50 gigawatts. Despite having 12GW capacity, only one in four Nigerians is connected to the national power grid. And this year, the power grid has even shorter supply time, having collapsed about 11 times and throwing the entire country into darkness. The 11 power grid collapses witnessed this year are among at least 207 of such incidents that have been recorded since 2010.
As a result, alternative power sources have become increasingly attractive for many people, especially for small businesses with limited financial resources. There are now options that are either more affordable and last longer or offer the opportunity of paying in instalment. Fortunately, Nigeria has an abundant supply of sunshine that is yet to be harnessed.
Founded in 2016 by Ademola Adesina and Jussi Savukoski, Rensource has been helping small businesses in Nigeria to bridge the power deficit using renewable-based decentralised energy, focusing primarily on SMEs.
The $20 million investment will be used to expand the company’s footprint of micro-utilities across Nigeria, as well as invest in additional technology infrastructure, as it rolls out new tech-enabled products and services for its merchants, it said.
The company operates its solar hybrid micro-utilities model from seven clusters across six states (Lagos, Kano, Ogun, Ondo, Oyo, and Edo) in Nigeria. The model ensures that the company’s energy services – generation, distribution, and customer service – are localised to each community it serves. Rensource is active in marketplaces that serve over 30,000 SMEs. It expects to expand into 100 markets in the country over the next three years.
“Rensource’s goal is to offer solutions to the many challenges faced by SMEs in Nigeria, starting with power and expanding to other value-added services,” said Pardon Makumbe, co-founder and managing partner of CRE Venture Capital. “It is a bold and worthwhile undertaking that is creating value for all stakeholders. We are excited to continue this journey with the hyper-competent team at the helm.”
Rensource is also expanding its offering beyond energy and entering Nigeria’s nascent offline to online (O2O) space, by offering technology-enabled value-added services to SMEs in the marketplaces it provides power for.
Online to offline commerce as a strategy draws potential customers from online channels to make purchases in physical stores. It identifies customers in the online space, such as through emails and internet advertising, then uses a variety of tools and approaches to entice the customers to leave the online space.
“Our push into O2O is a natural step that leverages our existing infrastructure to further empower the merchants we serve,” Adesina said.
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