Acumen is pleased to announce a $1.4 million investment in SolarNow, a company that sells and finances solar home systems in Uganda. We sat down with Shuaib Siddiqui, Acumen’s Portfolio Director to learn more about the deal and why he’s excited about this innovative company.
- What is SolarNow?
SolarNow is a Uganda-based company selling and financing solar home systems. A customer can go into a SolarNow shop and not only get the home system but also get the financing in the same place.
- Why are you personally excited about the solar energy space?
When investing in the energy sector, we look for access to energy provisions. Solar home systems give people access that doesn’t require huge spend. 1.3 billion people lack access to electricity. The traditional solution is to develop and build on-the-grid infrastructure. It’s estimated that it would cost $48 billion per year to just get the consumers that don’t have access to energy access on the existing electric grid, and that’s not including population growth. Do we actually need to build that infrastructure to put 1.3 billion people on the grid?
Solar home systems could change the way power is delivered off the grid. We believe solar energy has the potential to change the way we’re distributing power to base of the pyramid consumers, and in fact we could change the way utilities operate in general. All off grid, all solar, as opposed to spending the billions of dollars to get the infrastructure build to put people on the grid. It is an interesting and pioneering way to change the way that power is distributed around the world and we’re focused on solutions that are innovative and scalable.
- What is especially innovative about SolarNow?
The question is, how do you actually get solar power in people’s homes? SolarNow is an exciting way to learn about how the financing component works. One of the biggest challenges we’ve seen with solar home systems, really any product developed for customers at the base of the pyramid, is the financing component. Typically these product companies have to build relationships with third party lenders, i.e. microfinance organizations. While these organizations have an important role to play, companies become reliant on this construct to scale and provide more customers with access.
This approach ensures quality customer service in that if customers are not satisfied, or service calls need to be made and they’re not getting done, they will stop making payments because the product is not working. So inside the company you have a healthy tension of service providers and loan managers holding each other accountable.
- What impact is this company going to have?
From an impact perspective, it is bringing access to clean energy. Access to energy changes everything. Up to 58 percent of health care facilities in Sub-Saharan Africa operate without electricity. Each year 3.5 million premature deaths are caused yearly from the use of solid fuels for lighting and cooking, which lead to respiratory infections. More than 50 percent of children in the developing world go to primary schools without access to any electricity. So the impact of investing in innovative solutions where aid and markets have failed means that companies like SolarNow are going to grow and scale over time, creating sustainable impact in people’s lives.