Nigeria’s renewable startup, Rensource, announced today that it has raised a whopping $20 million in Series A equity round – the largest ever for a Nigerian renewable energy start-up! This is based on information contained in a press release sent to Nairametrics.
The release read;
The round was co-led by existing investors CRE Venture Capital and the Omidyar Network, with participation from Inspired Evolution, Proparco, EDPR, and other investors.
Despite being Africa’s most populous country, Nigeria only has 12 gigawatts of installed grid capacity, with just one-in-four Nigerians connected to the national power grid. In contrast, South Africa has 50 gigawatts. Rensource launched commercially in 2016 to address West Africa’s power crisis, starting with Nigeria.
This round will see the company expand their offering beyond energy, with the launch of a new B2B platform, “Spaces O2O”, a project created to address the holes in the country’s fragmented supply chain. This will ultimately help SMEs and microSMEs, working in the regions they have a presence, access services that accelerate their productivity growth.
Why it matters: The firm is bridging Nigeria’s power deficit through the delivery of renewable based decentralized energy, focusing primarily on SMEs.
Operating in seven clusters across six states in Nigeria (Lagos, Kano, Ogun, Ondo, Oyo and Edo), the company builds and operates solar hybrid microutilities. Solar hybrid micro-utility is a type of energy services provider that localizes energy generation, distribution, and customer service to each community it serves.
The company is active in marketplaces that serve over thirty-thousand SMEs and it is expected to expand into 100 markets in the country over the next three years.
With the financing secured, Rensource is now expanding its offering beyond energy and entering Nigeria’s nascent offline to online (O2O) space, by offering technology enabled value added services to SMEs in the marketplaces it covers. With the launch of this new B2B platform, “Spaces O2O”, merchants will be able to access services that accelerate their productivity growth.
On the development, Founder and CEO, Rensource, Ademola Adesina, said, “We believe that simultaneously greening and decentralizing power infrastructure is the only way to navigate Nigeria out of its current state of energy poverty.
“Pursuing this with a focus on the millions of small-businesses that drive our economy creates a massive multiplier effect whose benefit accrues to all. Our push into O2O is a natural step that leverages our existing infrastructure to further empower the merchants we serve. We aim to bring connect over one-million merchants in the next 5 years.”
As Rensource has grown a leading foothold in the Nigerian market, it has identified gaps in the distribution value chain regarding lack of access to credit, expensive transportation and warehousing, inaccurate data and limited product availability, underpinned by a highly fragmented and multi-layered value chain.
Impact on Discos’ operations: No doubt, the emergence of renewable energy in Nigeria would take a tow on the operations of the Distribution Companies across the nation.
Its inexhaustible, clean and longer term benefits’ feature are threats to the operations of the Discos. Going by the increasing rate Nigerians that had subscribed to renewable energy like solar, wind, and small hydro among others, Discos’ operations are at great risk.
The “feed-in tariff regulations for renewable energy sourced electricity in Nigeria” law is another threat to their operations. The law requires Discos to source 50% of the electricity from renewable energy like biomass, small hydro, wind and solar energy.
“With renewable energy, we can be sure of good health, sustainable communities, clean water, responsible production and sustainable environment. The mix of energy will enhance sustainability, lower costs, reduce pollution, improve wellbeing make the world a better place,” a petroleum engineer, Martin Onovo said.
However, lack of affordable and reliable electricity in Nigeria creates a massive real and opportunity cost to Africa’s largest economy.
For perspective, the West African country is roughly the size of Texas, with a 200 million population larger than Russia, and generates less gigawatt hours of electricity annually than the U.S. state of Connecticut.
Nigerian businesses (and citizens) adjust for these power deficiencies by spending on diesel fuel and generators.
The IMF’s 2019 Nigeria report quoted economic losses of $29 billion in Nigeria due to unreliable electricity supply. On global Doing Business rankings, Nigeria ranked 169 out of 190 countries in the category of “Getting Electricity”.
Rensource began commercial operations in 2016. It is a leading renewable energy and merchant services company revolutionizing energy provision in Africa by building and operating clean energy based microutilities for SME clusters in Nigeria. It is Nigeria’s fastest growing provider of off-grid energy, powering the productivity of small and medium size enterprises.