PowerGen, is a renewable energy company operating in Kenya to facilitate access to energy for off-grid communities. Originally through solar and wind solutions and now micro-grids, they are allowing communities to benefit from energy access as well as assisting to secure finance for its installation.
Working with GVEP’s advisory services team has enabled PowerGen to source and secure project-level capital and win a $47,000 grant from the KCIC ( Kenya Climate Innovation Centre). This capital will be pivotal to the expansion of PowerGen’s pilot micro-grid sites across Kenya, allowing for the creation of two additional micro-grids. PowerGen has been utilising KIVA, an online lending platform operating in over 70 countries to connect lenders with entrepreneurs in need of capital, to raise funding for their growing pipeline of micro-grid sites. The Advisory Services team supported PowerGen to raise their first loan on KIVA, for the construction of a micro-grid in Ololailumitia village.
Raising capital for micro-grids in Kenya is a challenging process and often presents many barriers and constraints due to government restrictions and rigid policies. Most projects of this nature require a significant up-front payment, which is rarely feasible for many communities wishing to install clean technologies or equally for young enterprises with limited capital.
Through a KIVA loan, PowerGen have turned their concept into a reality; a functioning micro-grid, providing power for lighting, TV, refrigeration and also a medical clinic. They raised $9,700 in just 48 hours, indicating both the high level of interest in the concept and also the influence this type of lending platform has.
The Ololailumitia community, located on the edge of the Maasai Mara has a representative; Sammy, whose land houses the micro-grid, he liaises with the PowerGen team and the customers wanting to buy and use electricity from the micro-grid. A connection contract is signed between PowerGen and their customers explaining that they will be able to use the electricity produced from the micro-grid by paying for their energy consumption. The fee will be used to pay back the KIVA loan and also includes the cost of regular services and maintenance for the micro-grid.
One resident in the village, Elizabeth, has used the new energy source to improve her hairdressing business which she had previously run using an old, noisy and expensive diesel generator. Elizabeth now invites customers to enjoy her generator-free salon, saving customer’s long and expensive journeys to neighbouring towns, and herself money on fuel to power the generator. The micro-grid has been so successful that after being installed in March 2014 it was extended to generate more energy and meet demand in April. Furthermore, a second KIVA loan has enabled PowerGen to install a third micro-grid in the neighbouring village of Nkoilal, they have plans for a fourth in July.
‘It’s great to see PowerGen capitalising on a fantastic lending platform like KIVA. Having a successful set of pilots will attract more investment in the future and enable micro-grids to be deployed in off-grid communities throughout East Africa’ explains Davinia Cogan, SME Advisor.
PowerGen has designed a seven year loan plan with KIVA, on behalf of community members. The Advisory Services team has been providing advice on structuring the loan, and carried out site visits to ensure that future micro-grid installations are utilised to optimum levels and that there is enough demand. Furthermore they are working with PowerGen to boost their visibility in the mini-grid sector.
GVEP’s Advisory Services team provides technical, financial, and operational support to small and growing businesses. The team was established through a grant from Swedish International Development Cooperation Agency (Sida), and comprises of experienced professionals who bring experience in energy, impact, and project finance, entrepreneurship, engineering, project development, and management consulting.
Posted by Meghan Smith