africa Economy Energy Financial Inclusion Infrastructure

Soon, Africa’s largest utility will not own any power lines

In a matter of years, the largest electric utility in Sub-Saharan Africa will not own any power lines.

We have seen this trend before. We saw it with Uber, the world’s largest taxi company with no vehicles, and Airbnb, the world’s largest accommodation provider with no real estate. And the same will happen in the energy sector. Soon enough, we will be saying “PAYG Solar, Africa’s largest electric utility, owns no power lines”.

The pay-as-you-go (PAYG) solar sector

PAYG solar systems have revolutionized off-grid, electricity access in Sub-Saharan Africa. PAYG suppliers reach rural customers too far and too expensive for utilities to connect to the power grid. It was only around 2012 when PAYG began gaining traction in East Africa. Since then, a multitude of PAYG suppliers have emerged, and expanded into West and Southern Africa. By the end of 2017, more than 1.6 million solar systems have been installed.

A “new” type of electric utility

To get a feel for the scale of the entire PAYG solar sector in Africa, let’s think of all PAYG suppliers as a single “virtual” utility. What’s really interesting about this utility is that, not only are its customers distributed across all of Africa, but – even more fascinating – it does not own a single kilometer of power lines to supply electricity to 1.6 million customers!

Looking at the Top-15 largest electric utilities in Sub-Saharan Africa today, the PAYG sector supplies power to as many customers as the 10th largest utility – This is fascinating because this is a “utility” that had virtually zero customers a little over 5-years ago! …compared to utilities that have been around for several decades!

Moving forward: Africa’s Largest Utility?

Today, Sub-Saharan Africa’s largest electric utility, Kenya Power, supplies electricity to approximately 6.2 million customers. Over the last several years, the PAYG sector grew at an impressive rate of 70% per year. If we assume the sector will continue expanding at this pace, the number of PAYG solar systems will reach 6.3 million customers before we know it. In only a matter of years, Africa’s largest utility will not own any power lines!

Clearly, a future where more people are supplied electricity by off-grid, solar systems than by power lines is not that far-fetched…

Alvaro Lara

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