Husk Power Systems announced earlier today that it has achieved profitability, three years after it began operating in Nigeria.
A statement by the renewable energy firm said the major milestone is a testament to the sustainability and viability of the company’s business model. A part of the statement read:
“Husk, the owner of the largest fleet of community solar mini-grids with 150 in operation, was earnings before interest, taxes, depreciation, and amortization (EBITDA) positive in its primary markets of Nigeria and India in the fourth quarter of 2022 (Q4/2022).
“This is a significant achievement, especially considering the challenges posed by the COVID-19 pandemic and rising costs of capital. Husk’s unique platform approach, which addresses the entire rural energy ecosystem, and its relentless focus on technology and business innovation have allowed it to boast the lowest cost of delivered energy and highest average revenue per user in the industry.
“It also sends a clear signal to the market that rural mini-grids are an asset class whose day has arrived, as well as an important contributor to net-zero growth for nearly 500 million unserved and under-served people in Sub-Saharan Africa and Asia.”
More insights: In an emailed response to Nairametrics’ enquiry on Tuesday, Husk Power Systems explained that it was able to reach the milestone by being laser focused on reducing inefficiencies across the mini-grid value chain. Also, the company said it created an environment for frugal innovation to thrive.
“Our focus on what we can do to support people to use the power we generate and distribute has also played a major role in our customers’ trust in us as a reliable partner.”
Husk told Nairametrics that it is the first mini-grid player in Nigeria to achieve profitability and since it began operations in Nigeria in 2020, it has impacted the lives of 50,000 people so far.
Two weeks ago, Nairametrics reported that Husk Power Systems had kicked off the year 2023 with a $750,000 loan from Germany’s development finance institution (DEG), to fund 8 new community solar microgrids in Nasarawa state. The loan is payable in five years.
Why this is important: The profitability status of Husk will give stakeholders increased confidence in the mini-grid sub-sector, which will further increase the set-up of mini-grids across rural communities across Nigeria.
In December 2022, Husk Country Director, Olu Aruike told Nairametrics that Nigeria’s unreliable national grid as well as rising diesel prices propelled the solar mini-grid industry into the spotlight in 2022.
He also said that mini-grids proved that they can do a much better job of providing clean, affordable, and reliable energy to off-grid communities, in a much shorter timeframe.
At the time, Aruike maintained that mini-grid players like Husk grew quickly in 2022, and that pace will accelerate even faster in 2023.
Renewable energy adoption is growing rapidly in Nigeria due to efforts from private players like Husk, government-affiliated players like the Rural Electrification Agency (REA), and multilateral institutions like the African Development Bank (AfDB) and the World Bank.
For the record: Husk Power Systems currently has 12 operational microgrids and a target of building 500 mini-grids by 2026.