It is a cold and chilly morning in the well-to-do Westlands area of Nairobi on August 16th 2019, when I go to meet Mr Patrik Huber, one of the co-founders and a director of Solarise Africa.
When I meet him on the fourth floor of the startup’s offices at ABC building, his personality is a stark contrast to the weather outside: affable and jovial but serious, as he gives the story about what led him and his two co-founders, messieurs Sakkie van Wijk and Jan Albert Valk, to start the startup.
Mr Hubert is about six feet tall, blonde and blue-eyed, wearing a white work shirt, blue trousers with pink socks and brown shoes. Despite being from Switzerland, he says that he considers Kenya to be home.
“ I have lived in Kenya for the last nine years. My daughter was born here,” he says.
Mr Hubert begins the tale of Solarise Africa as he sips his tea from a classy white cup from a saucer, the sort that is found in five-star hotels. The interview takes place in the Kenyan offices of Responsability Investments, a firm that is headquartered in Switzerland and Mr Huber’s former employer, where he previously worked as the Regional Director and helped to set it up, he explains. Mr Huber says that his for the last 15 years, his experience has been in Finance.
“ We (Solarise Africa) are sub-tenants at Responsability Investments,” he reveals.
The interview take place in a meeting room, which has been furnished with brown but expensive five seater leather sofas. Mr Huber and I are sitted in two-single seater chairs which are facing a larger, three seater one. On the latter’s wall is a rectangular painting showing a tea farm.
In 2018, Mr Huber says, he and two other founders, Jan Albert Valk, who is of Dutch nationality, and Sakkie van Wijk, a South African founded Solarise Africa to provide smart financing solutions to Small and Medium sized Enterprises (SME’s) and corporates across Africa for solar systems and energy efficiency solutions, so that they could save money instead of using their own banking lines.
Mr van Wijk is a former Managing Director for Tsusho Capital, the in-house financer for the Toyota Kenya Group of companies, which has offices in the continent.
“ Jan Albert is also in Kenya but will be leaving the country for South Africa, probably in October or November to create the Africa headquarter operations. He used to be the Managing Director for Alios Finance, a Pan-African leasing company focused on the SME sector,” reveals Mr Huber.
He says that all the three founders of the startup have a background in Kenya. And, the background of the founders in Finance and Leasing, Mr Huber explains, also adds value to Solarise Africa. But, he says that the gap that the startup is trying to fill is that of affordable and flexible financing solutions for solar photovoltaic (PV) solutions.
“ Solar and other renewable technologies work reliably and by now can save businesses. The technological and regulatory environment are fine, but the financing is the problem. I think that the problem of financing needs to be solved,” he says.
Mr Huber says that startup first opened their South African operations this year, in 2019.
While electricity is one of the main energy sources, there is a challenge in the continent when it comes to accessing it. Either majority of the population cannot access their country’s national electricity network, referred to as the national grid, or cannot be able to meet the costs that are required to be connected to the latter.
In Kenya, the situation is no different. According to the World Bank, in its 2019 paper titled Willingness to Pay for Electricity Access there are 1.1 billion people in the continent that are not able to access electricity. In Kenya, the situation is no different. The financial institution states that 63.8 percent of the Kenyan population had access to electricity as of two years ago.
There are two million Kenyans who have access to electricity, though they cannot be able to acquire it well, further states the Off-Grid Solar Market Trends report. But majority of the population, at 32 million, is off the-grid. There is a correlation between those who have a low level of income are likely to be off-the grid, further states the report.
Lack of access to proprietary land in the country, leading to a nomadic lifestyle, has also adversely affected the setting up of core resources, such as electricity, notes the Kenya Power Lighting and Corporation (KPLC).
To its credit, the Kenyan government has been trying to provide electricity access to everyone, with the Last Mile Connectivity Project, being an example. As a result, over 578, 000 customers were connected to the resource, as of last year. Electricity has earned the Kenyan government revenue worth Kshs 95 billion, but still other challenges persist, notes the 2018 annual report by the KPLC.
For instance, that of customers failing to pay their bills, or, those that resort to stealing electricity transformers. Inadequate infrastructure has also meant that the government has had to turn private sector partnerships.
What happens to those people who are off-the grid? Renewable energy has become the answer, with biomass, geothermal, hydro, wind and solar becoming alternative solutions. According to the Off-Grid Solar Market Trends Report, the solar market in Africa is huge, with Ethiopia and Kenya being one of its proponents.
In Ethiopia, for instance, where the national electricity network is one of the most solar energy has proved useful for both homes and enterprises, states the International Finance Corporation (IFC). The 2019 Solar Africa Report observes that the number of solar installations keeps on rising in sub-Saharan Africa, at 35 MW in 2018, up from one five years ago, with majority of such projects being concentrated in the manufacturing industry.
According to Mr Huber, the business model of Solarise Africa is such that it provides easier access to solar financing to SME’s and Corporates,, so that they can be able to save the cost of electricity when they use solar energy, at a rate that is “ 30 to 40 percent cheaper than that of KPLC.”
“ We partner with solar companies such as Premier Solar Group, and together we act as a one-stop shop for the design, construction, operations and financing of the system. The advantage is that the client can be sure that we sell and finance a high quality solar finance system because we take a solar system as a collateral,” he says.
Mr Huber says that the startup also offers an operating lease solution, an asset finance solution as well as a power purchase agreement. Smart financing for solar systems, Mr Huber says, is a model that has been successfully applied in other countries, such as the United States of America (USA) and India.
He says that Solarise Africa seeks to provide smart financing solutions so that its clients do not have to resort to use their own banking lines.
“ We decided to unlock solar photovoltaic energy and provide the right type of financing to make Kenya’s industry more environmentally friendly and cost-effective so at to make businesses more globally competitive,” he says.
It has not been easy to run Solarise Africa, Mr Huber admits. This is because the startup, like all African ones, has struggled to raise capital.
“ In October 2018, we found great support from Energy Access Ventures and another investor called ElectriFI, in May 2019. The investment to finance solar systems is worth $ 5 million,” he says.
Mr Huber says that another challenge for the business has been to find the first clients to believe in our business idea.
“ To find your first clients, that you are happy with and can give you a good reference that can enable you to move to the next client has not been easy,” he says.
But with its partner, Premier Solar Group, Solarise Africa has been able to find big clients such as Menengai Oil and on one of the biggest flower companies in Kenya, Oserian. Mr Huber says that their third client is a packaging firm, though he declines to mention which one at the clients’ request.
But the startup also targets manufacturers, rose farms, vegetable farms, safari camps, hospitals and schools, Mr Hubert says.
One of the milestones that Solarise Africa has been able to achieve, Mr Huber says, is that it have been able to build and finance 2 megawatts (MW) of solar photovoltaic (PV) system, both on the ground as well as on rooftops within a short period after commencing operations. He says that Solarise Africa begins to finance companies that have 100 kilowatt (KW) system. to those with a 3 MW system.
The pricing for Solarise Africa depends on the size, complexity of the solar system as well as the credit risk of the company, Mr Huber says. The aim of the startup is to offer electricity costs that are lower than those that are offered by KPLC whilst focusing on quality of the solar system.
The startup has a total of seven employees. While the startup has competitors in the solar energy sector, the differentiating factor, Mr Hubert says, is that they focus on Kenyan SME’s and corporates, but not international companies.
He says that the startup has a strategy to diversify into the pan-African region.
“ We want to grow in Kenya. We are opening in South Africa and expanding to other East African countries, as well as expand into other renewable technologies in the future,” says Mr Huber.
His advise to aspiring entrepreneurs is that they should be able to believe in their idea and spend time with their investors.