Nigeria requires about 200,000 megawatts of electricity and an investment of over $100 billion in the next 20 years to sufficiently provide energy and make the daily supply of 24-hour electricity to every Nigerian. For a country that currently manages to only generate about 4,000MW, it may appear like a very tall reality to achieve.
However, for Femi Adeyemo, the founder of Arnergy, Nigeria’s energy poverty can be turned around by leveraging technology and alternative energy sources. A report by BloombergNEF (BNEF) released in June 2019, showed that global investment in renewable energy hit $288.9 billion in 2018, with the amount spent on new capacity far exceeding the financial backing for new fossil fuel power. Although the investment was 11 per cent down compared to the previous year, 2018 was, however, the ninth successive year in which it exceeded $200 billion and the fifth successive year above $250 billion.
Investors are clearly seeing opportunities to invest in new energy sources and in Nigeria, technology-enabled startups like Arnergy has attracted significant investments which they are deploying to solve Nigeria’s energy problem.
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“We believe that energy needs in Nigeria have surpassed rudimentary requirements of low power utilization and our product offerings are solving for reliability and not just access,” says Adeyemo in a statement announcing that his startup which he founded in 2014 has raised $9 million in a Series A round.
The investment was led by Breakthrough Energy Ventures, a global group of 28 high net-worth investors from 10 countries, spearheaded by Bill Gates. Bill Gates has a personal $2 billion investment in the firm. Other participators in the $9 million funding include the Norwegian Investment Fund for Developing Countries (Norfund), EDFI ElectriFI and All On which invest exclusively in Nigerian energy startups.
Arnergy’s strategy is a distributed renewable energy system that harnesses the combination of power, superior storage solutions and proprietary remote management technologies to deliver scalable, reliable and affordable energy solutions that are tailored to tackle issues related to intermittency and grid unreliability.
Arnergy, in a statement, said since it began operations it has delivered over 2MW of installed capacity and over 5MW of storage capacity to business and residential clients across Nigeria. It also has over 5MWh of storage capacity to business and residential clients across Nigeria.
2MW may look like scratching the surface of energy poverty. To be sure, watts are a measurement of power, describing the rate at which electricity is being used at a specific moment. A 15-watt LED light bulb draws 16 watts of electricity at any moment when turned on. One kilowatt (kW) equals 1,000 watts and one kilowatt-hour (kWh) is one hour of using electricity at a rate of 1,000 watts. On the other hand, one megawatt (MW) equals 1,000 kilowatts which equal 1,000,000 watts. The amount of electricity consumed per year in the average UK home is approximately 4,000kWh.
Adeyemo said there is no one-size-fits-all solution to the energy problem but by focusing on small businesses which contribute significantly to the Nigerian economy and leveraging solar energy, the company intends to cut a huge footprint in the energy market.
With solar energy, there is every reason to be optimistic. Unlike fossil fuel which is said to be fast depleting (projected to run out in next 52 years at the current rate of production), the sun which is the solar’s primary source will never stop shinning.
Technology research in solar technology is also on the increase. In 2018, $139.7 billion investment went to solar projects around the world. Emerging markets continued to attract the most investors’ attention with investment rising by 6 per cent to $61.6 billion to make it the highest of any year.
Mark Davis, EVP Clean Energy from Norfund, said solar energy’s attraction goes beyond just powering offices and homes in Nigeria, as it also provides access to clean and stable energy which is a prerequisite for job creation and development.
“This is a deal that is particularly exciting for us at All On as a Nigerian impact investor because it reinforces our belief that local energy companies like Arnergy with innovative technology and business models can attract investments from global giants like Breakthrough Energy Ventures, Norfund and ElectriFI, and are ready and able to compete on a global stage,” said Wiebe Boer, CEO of All On.
With the new investment, Adeyemo said Arnergy plans to include new business models and tap new partnership opportunities, as well as consumer financing and channel expansion activities. Targeted verticals for the company’s 5kW modular systems will include small businesses, healthcare, hospitality, financial services, agribusiness and education.
The company is already providing energy services to health businesses and plans to scale this up as it sees huge opportunities in lighting up the health sector.
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