Paris-based EAV in a Sh2.6bn Tanzanian solar power plan

What you need to know:

OGE generates solar power and then distributes the electricity to rural households that are mostly far from the main grid.
EAV says it is also negotiating a similar deal for a Kenyan-based firm but finer details are expected in the next two to three months.

Energy Access Ventures (EAV), a Paris-based impact investment firm, has invested in a company that connects power to rural households in Tanzania.

EAV is part of a consortium that have made a $25 million (Sh2.6 billion) equity injection for an undisclosed stake in Off-Grid Electric (OGE). This is the first investment by the €55 million (Sh5.9 billion) fund raised in February.

DBL Investors, Zouk Capital, Vulcan Capital and SolarCity were other partners in the investment.

Arusha-based OGE will use the money to increase its customer base to one million households over the next two years and to expand into Rwanda.

“OGE has a proven business model that can deliver economic and social benefits across Africa. We are delighted to be partnering with EAV to continue to unlock growth in the energy access sector,” said OGE chief executive and co-founder Xavier Helgesen.

OGE generates solar power and then distributes the electricity to rural households that are mostly far from the main grid.

EAV said it sees great potential in investing in sub-Saharan Africa where there are low electrification rates.

“As the only venture and impact fund wholly focused on bringing energy access to the 600 million people in Africa who do not yet have it, I am very excited that we have found such a great company for our first investment,” said EAV managing partner Michael Gera.

Mr Gera said the investment firm is also negotiating a similar deal for a Kenyan-based firm but finer details are expected in the next two to three months.

A utilities report by Exotix says the East African region has the lowest electrification rates in sub-Sahara Africa.

“The average electrification rate in EA is a lowly 19 per cent. Sudan has the highest rate at 35 per cent while South Sudan has the lowest rate at one per cent. Ongoing efforts to utilise natural resources in order to build on generation capacity seek to progress EA towards universal connectivity,” it said.

Kenya has an electrification rate of 30 per cent, Tanzania (24 per cent), Ethiopia (23 per cent) Rwanda (17 per cent), Uganda (15 per cent) and Burundi (10 per cent).
Investors are warming to solar energy companies offering power solutions to rural areas.

Greenlink, a Dutch-based solar firm operating locally, recently bought another solar company, RIWIC, for an undisclosed amount.

In February last year M-Pesa-linked solar dealer, M-Kopa, received a Sh1.72 billion loan from Bill Gates and Commercial Bank of Africa to light rural homes.