Africa Greentec - Insights into a Social Impact Venture

As anticipated in our other article on Africa Greentec, here is where we will give an overview of how this company manages to not only supply Sub-Saharan villages with an energy production system, but also with an entire business model that delivers change in a more sustainable and transformative way.

What is the market?

A study by the World Bank from 2019 found that about 1.2 billion people will need to gain access to electricity to achieve universal access by 2030. In achieving this, mini-grids play a huge role, as they would provide electricity cost-efficiently to half a billion people. These grids are defined as electric power generation and distribution systems providing electricity to just a few customers in a remote settlement or up to bringing power to hundreds of thousands of customers in a town or city. Modern mini-grids also pave the way for more financially viable future grid expansion, as by the time the main grid arrives, significant demand for electricity already exists and customers have a greater ability to pay. In fact, nearly all electricity grid systems in high-income countries started with isolated mini-grids, which gradually interconnected.

For our fact-loving readers, here are some more hard stats from the study:

• Status quo (2019): 19.000 mini-grids connect 47 million people with electricity (mostly in Asia).

• In Africa, only 1.500 mini-grids exist, but 4.000 are planned.

• Global goal by 2030: 210.000 mini-grids connect 500 million people with electricity.

• Required investment volume: 200 billion euros

Disconnected from the national power grid, many rural communities need to rely on polluting diesel generators.

Africa Greentec's Impact Solution

AGT's mission is to participate in the rapidly growing off-grid market and enable people to achieve more self-determination and growth.

How? Africa GreenTec AG develops, manufactures and installs Solartainers in African village communities disconnected from the national power grid. AGT develops and produces the Solartainers and subsequently sells them to local operators. These are subsidiaries of Africa Greentec, and they take care of technician training and maintenance of the mini-grids. Furthermore, the sale and installation of integrated solutions such as cooling systems, water treatment and energy-efficient equipment which will form a so-called "ImpactSite", are planned. Thus, Africa Greentec takes over the entire value chain for these sites.

The initial investment for the ImpactSite is mainly financed by AGT itself. Currently, they are in a financing round where the capital raised will be used for scaling up production and entering new markets. In fact, just on December 4th AGT announced they will expand into yet another country, this time Chad. Additionally, AGT also uses crowdfunding, with its own crowdfunding platform, enabling “outsiders” to support the growth of this social venture. At the time of writing, 421 investors have contributed over 900.000 Euros. The investment horizon is set for about 15 years. If you are interested in crowdfunding in general, here is a very helpful overview by the European Commission about the topic. Early in Africa Greentec's history, individual solar containers were also financed by crowdfunding. In addition to classic financing and crowdfunding, it is typical for the mini-grid sector that parts of the mini-grid are financed through grants, in this case from the German government or through contracts with the governments in Mali and Niger.

For the operator, this investment is financed by selling electricity to local customers. The revenue covers the capital and operating expenditures. In the cooperative model, the village itself is the operator and the revenues are available for the maintenance of the ImpactSite and the further development of the village. This at least in part self-sufficiency avoids overreliance on charity and potentially irregular donations. There is however another aspect which proves that AGT not only provides a "good enough" solution to the lack of energy infrastructure but also strives to maximize its impact in every way: the rates that the operators charge for the electricity are income-level dependent, starting from a base rate.

What is the impact of this?

As the name already says, every ImpactSite is there to help households, small businesses and schools operate better. More specifically, these are just some of the ways they help the communities they are built in:

• Providing efficient electricity access for a rural community and social institutions for productive, income-generating use, as well as supporting the local economy through growth of up to 400 SMEs.

• Improving health and increasing household safety by preventing air pollution and accidents through the use of solar energy instead of diesel generators, candles, kerosene and oil lamps.

• Reducing crime thanks to light also during darker hours.

• Improving access to clean water by providing a water purification system.

• Increasing agricultural productivity and reducing food losses by cooling post-harvest products in solar-powered storage.

• Reducing greenhouse gas emissions by up to 70 tCO2/year by replacing diesel generators.

• Providing internet access via Wi-Fi through a modern, reliable and secure Satcom system.

Access to electricity helps small and medium businesses operate better

What can you do?

• First and foremost, you can of course always share this post or even better, Africa GreenTec's content on social media, check out AGT's Impact Blog and Instagram.

• If you like, you can also check out their current crowd investing campaign, through which they aim to scale their business and of course, their impact.