Husk Power Systems, a leading clean energy company that has been at the forefront of rural electrification since 2008, has signed a voluntary agreement with the UN to expand the clean energy market in Sub-Saharan Africa and South Asia. The commitment is embodied in the 24/7 Carbon-free Energy Compact (CFE), which was launched by major energy buyers, suppliers, equipment manufacturers, and government officials. The Compact represents a global effort to accelerate the adoption of carbon-free electricity as a means of mitigating the potentially catastrophic effects of climate change.
The renewable energy start-up, which is currently active in India, Nigeria, and Tanzania, has set a target of installing at least 5,000 solar mini-grids by the year 2030, with a specific focus on establishing 500 new mini-grids in Nigeria by 2026. Husk Power System launched six hybrid solar mini-grids in Nigeria’s Nasarawa state last November, supplying electricity to 5,000 households and 5,000 businesses. Within two years, the company expects to have 100 mini-grids operational across the country. Manoj Sinha, the company’s CEO and co-founder, told TechCrunch that “Husk is committed to supplying energy to households, but our primary focus is on micro, small, and medium-sized enterprises (MSMEs) and public institutions such as hospitals and schools.” Sinha added that “micro, small, and medium-sized enterprises (MSMEs) are the engines of African economies, thus, nurturing existing small businesses and encouraging the formation of new MSMEs contributes to the kind of economic growth and social benefits that trickle down to households, creating more opportunities and jobs.”
Husk Power has committed to establishing 1 million connections, supplying electricity to 500,000 MSMEs, and providing benefits to 11 million people under the terms of the compact. In addition, the company intends to install 500 MW of rural commercial and industrial (C&I) solar, sell 5 million energy-efficient devices, and reduce CO2 emissions by 7 megatons over the next five years. Sustainable Energy for All (SEforALL), an international organization, was the driving force behind the Energy Compact initiative, which was a key outcome of the United Nations High-Level Dialogue on Energy and the United Nations Climate Change Conference (COP26). Kanika Chawla, UN-Energy and SEforALL Program Manager, said, “We welcome the Energy Compact commitments made by Husk Power and appreciate their leadership. It showcases the business opportunity presented by the global energy transition and how private enterprises can drive accelerated action on ending energy poverty, expand renewable energy solutions for consumptive and productive loads, and improve the adoption of energy efficiency solutions by end consumers.”
The mini-grid industry in Africa is expanding and demonstrating a significant positive impact on the local economy. Husk’s signing of the UN-Energy Compact represents a more ambitious vision not only for the company but also for the entire mini-grid industry, and it is expected to result in increased levels of climate finance as well as more supportive government policies. The renewable energy company is looking for growth opportunities in the eastern, western, and southern regions of Africa, as well as countries that have a “supportive regulatory environment” to serve as its current markets.
As part of its expansion plans, the company is looking into growth opportunities in the West, South, and East regions of Africa, with a particular emphasis on countries that have a “conducive regulatory environment” similar to that of its current markets. Mini-grid operators in Nigeria, for example, are “largely exempt from permit requirements for off-grid stand-alone mini-grids or interconnected mini-grids,” according to the country’s government. The Mini-Grid Regulations (2016) of the Nigerian Electricity Regulatory Commission provide for the transfer of assets and financial compensation for mini-grid operators in the event that the national grid eventually connects the regions where the private mini-grids are operational. In addition, Husk is one of the companies participating in the Nigeria Electrification Project, which provides performance-based grants, which are a type of capital grant, to mini-grid developers as part of the country’s national effort to address the country’s chronic problems with electricity supply.
In terms of policy and regulatory frameworks, the states in India where Husk operates (Uttar Pradesh and Bihar) have policies that are favorable to the company. These policies are actually the foundation of the Nigerian mini-grid policy, which has been enhanced with additional features. The country is considered to have the most favorable policies in Sub-Saharan Africa at the moment, and this includes its Nigeria Electrification Project (NEP), which is administered by the Rural Electrification Agency and funded by the World Bank and aims to provide capital grants to mini-grid developers while also accelerating market development, Sinha explained.
Nigeria and India are the two most important markets for the company at the moment. Households and small businesses, particularly those in rural areas, benefit from an enabling environment that encourages investment by private players such as Husk and meets their energy needs.
Husk has raised a total of $40 million to date from a variety of investors, including the energy company Shell and the Dutch development bank FMO. The startup, which also finances home and commercial appliances, was recognized as the only mini-grid developer with more than 100 community sites in operation by the 2021 Global Renewable Energy Status Report last year.
Feel free to contact the Energy Transition Centre today with questions.
· Julius Moerder, Head of Energy Transition Centre julius.moerder@centurionlg.com
· Oneyka Ojogbo, Head of Energy Transition Centre, Nigeria & West Africa oneyka.ojogbo@centurionlg.com
· Leon van Der Merwe, Head of Energy Transition Centre, South Africa leon.vdmerwe@centurionlg.com
