Getting Off-grid Energy to Work for Agriculture
Jeannelle Blanchard, vice president, was part of a Tetra Tech delegation that attended the Africa Energy Forum (AEF) in Copenhagen, Denmark.
As part of a panel discussion on Powering Africa Off-the-Grid, Jeannelle discussed her experiences working with early stage companies selling energy-agriculture (energy-ag) off-grid solutions. All opinions expressed in this post are the author’s own.
At the AEF in Copenhagen, Denmark, in June, discussions about off-grid energy focused primarily on the potential impact of mini-grids and solar home systems for the 625 million people who lack access to electricity across Africa. During the “Powering Africa Off-the-Grid” panel, I discussed off-grid solutions for productive uses based on Tetra Tech’s experience supporting the Powering Agriculture grand challenge. In Sub-Saharan Africa, off-grid solutions can be transformational for small farmers, who produce 80 percent of the overall food supply using 65 percent manual labor and just 35 percent animal and machine power. Africa’s agriculture productivity remains the lowest globally.
While companies offering energy-agriculture off-grid solutions are still in a nascent stage, an array of energy-ag off-grid solutions already are available for individual smallholder farmers; intermediaries such as associations, cooperatives, and collection centers; and the business-to-business market. Many solutions scale down or adapt proven technologies or bundle different components and technologies to create hybrids. End users of these energy-ag off-grid solutions to date have reported increased income, production, and sales; reduced agricultural losses; and small side businesses from the generated power.
Solutions currently in use in Africa include solar hydroponics; solar-powered irrigation (drip and pumping); solar- or biogas-powered cold storage and dryers; microgrids providing decentralized power for fish hatcheries, irrigation, and other agricultural businesses; solar-thermal passive aeration systems for aquaculture; and various hybrid systems including hybrid-powered tractors. The solutions also integrate services such as remote monitoring, Uber-like scheduling, mobile money, and various pay-as-you-go models (e.g., rent-to-own, leasing, service for fee, and agricultural extension support).
As companies refine their business models, they are learning that market analysis needs to focus on mapping agricultural value chains in the specific geographic areas where their off-grid solutions will be used. Knowledge of potential customers is key—from how their financial context influences ability to pay, to how their literacy levels may impact ability to use the product. Successful companies have taken a human-centered design approach to developing energy-ag off-grid solutions, with multiple iterations based on successive rounds of piloting with early adopters. With many potential customers in remote communities, logistics, transportation and maintenance costs have to be factored into the final price of these off-grid solutions. To reduce these costs, some companies have formalized relationships with local partners early, trained service representatives in each community, or used a distributor model.
Energy-ag off-grid providers face challenges with securing financing to grow their companies and customer base. The nascent state of their business models means that they typically seek financing from impact investors, accelerators, incubators and development institutions. Their customers, primarily small-holder farmers, are regarded as risky by the banking sector because of their invisible income, lack of collateral and credit, and high exposure to market and weather risk. To address the challenge of making the solutions affordable to these potential customers, some companies are pursuing partnerships with financial institutions such as community savings and credit cooperatives (SACCOs) for customer asset financing to allow payments over time.
To truly grow the sector and to contribute to increasing agricultural productivity, companies pioneering energy-ag off-grid solutions need to ensure technology reliability, solidify their business models, build their customer base, demonstrate that they can survive commercially, and strengthen their customer service to keep customers. As energy-ag off-grid solution companies evolve, they will provide significant opportunities for smallholder farmers across Africa to access off-grid power for productive use.