Winch Energy Lands $16 Million for African Solar Minigrids

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London-based Winch Energy landed $16 million in funding, through a new financing platform, for solar minigrid projects in 49 villages in Uganda and Sierra Leone.

The deal represents the largest ever minigrid financing portfolio, according to Winch, which is owned by Winch Partners, Total Eren, Al Gihaz Holding and ITOCHU Europe.

Winch

Courtesy of Winch

The funding came through a new financing platform, Winch Energy IPP Holdings, which could grow to $100 million over the next two years. The financing platform was created in partnership with NEoT Offgrid Africa.

NEoT Offgrid Africa is part of NEoT, a Paris-based financing firm focused on off-grid energy and electric transportation that was established by Meridiam, Electricite de France (EDF) and Mitsubishi.

London-based SunFunder, which finances solar projects in areas where people don’t have electricity, will provide an additional $2 million construction loan for the initial project, according to Winch. Two international development finance institutions have tentatively agreed to bring debt into the project.

The United Kingdom’s Foreign, Commonwealth & Development Office is providing subsidies for the projects in Sierra Leone, and the German Development Ministry and European Union are subsidizing the Ugandan projects, according to Winch.

Also, the Deutsche Gesellschaft für Internationale Zusammenarbeit, known as GIZ, is supporting the Uganda projects while the United Nations Office for Project Services is backing the efforts in Sierra Leone.

Minigrids to reach 60,000 people

The minigrids in the Lamwo district of Uganda and in the Tonkolili, Koinadugu and Bombali districts of Sierra Leone will use Winch’s Remote Power Units, which range from 10 kW to 110 kW with 40 kWh to 384 kWh of energy storage.

Expected to be online within 12 months, the minigrids will provide power for the first time to about 6,500 customers representing 60,000 people, according to Winch.

The project includes 6,000 portable batteries to provide electricity to people not directly connected to the minigrids. 

The minigrid communities will gain internet access through partnerships with telecom operators in both countries, Winch said. 

The company, which also operates in Benin, Mauritania and Angola, expects that Winch IPP Holdings will help finance minigrid projects in other African countries as well.

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Winch’s minigrid project pipeline in Africa includes 200,000 new connections, which could supply electricity to 1.5 million people, according to the company. 

“Financing needs for energy access in Africa are huge, but, most of the time, very challenging for private investors,” said Frédéric Pfister, director of NEoT Offgrid Africa.

This deal positions NEoT Offgrid Africa as a key player in Africa for financing minigrids and other off-grid solutions, such as solar home systems and commercial and industry installations, Pfister said.

Minigrids grow in Africa

Minigrids are expected to play a key role in bringing electricity to the roughly 600 million Africans who lack power, but they are in an initial “scale up” phase, according to a report released in mid-August from the Africa Minigrid Developers Association.

The trade group said in the report hat minigrid connections grew to 41,000 in 2019 from fewer than 2,000 connections in 2016, mainly in East Africa. The average price per connection fell from $1,555 in 2014 to $733 in 2018.

However, the average minigrid customer uses only 6.1 kWh per month, making it hard to ensure operational costs can be covered for residential consumers or that a return on investment is possible, the report warned.

A separate report released in June found that minigrids could serve about half the people in the world who lack electricity — about 111 million households — by 2030 at a cost of $128 billion.

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