Husk Power Systems’ $103 million Series D solar mini-grids – With ambitions to install 500 solar mini-grids in Nigeria over the next five years, Husk Power Systems, a clean energy business that has been leading the way in rural electrification since 2008, has received $103 million in Series D debt and equity to accomplish its goals.
Husk Power claims the capital injection as the largest-ever fundraising of its kind in the mini-grid business, consisting of $43 million in stock and a $60 million loan transaction. The equity agreement involved participation from Shell Ventures, Swedfund, and FMO in addition to new investors STOA Infra & Energy, the US International Development Finance Corporation (DFC), and Proparco. However, a number of financial organizations supplied the debt, such as the European Investment Bank (EIB) and the International Finance Corporation (IFC).
For Husk Power, what does this mean?
With an AI-enabled platform of renewable energy services, the 15-year-old cleantech company said in a statement that the investment solidifies its position as the leader in energizing communities in rural Sub-Saharan Africa and South Asia.
By the end of this decade, mini-grids (including those exploiting overloaded grids) might supply clean energy to half a billion people, according to the World Bank, if the proper laws are put in place. They also provide less expensive and more environmentally friendly energy options, which have the potential to improve the lives of millions of people who are currently in the dark.
Seventy-five percent of people on Earth live in Sub-Saharan Africa and do not have access to electricity or renewable energy sources. A clean energy source like solar or wind power might help nations like South Sudan, Burundi, Chad, Malawi, Burkina Faso, Madagascar, and Tanzania—some of the least electrified in the world.
Husk Power, encouraged by this fresh funding, plans to assess growth into several markets in the coming years, such as the Democratic Republic of the Congo (DRC), Zambia, and Madagascar. According to co-founder and CEO Manoj Sinha, the company has already installed more than 200 mini-grids in Nigeria and India.
Husk Power first entered the community mini-grid market in 2008, helping to pioneer this category of distributed renewable energy infrastructure that gives people access to clean, affordable, modern power for the first time. Since then, the company has changed its business model to include energy transition from fossil fuels to renewables in addition to energy access.
Thus, Husk claims to have evolved from a pure-play mini-grid operator to an integrated platform that offers more than just electricity sales. These services include the financing and sales of energy-efficient appliances, turnkey rooftop solar for commercial and industrial (C&I) applications, and a variety of low-carbon and climate-resilient energy services like e-mobility, agro-processing, and cold storage. According to the company, the application of AI and IoT is driving this strategy’s progressive automation and intelligence.
“We have evolved our technology in multiple aspects. Firstly, our mini-grids are now powered by an artificial intelligence platform. That means we can synthesize demand patterns and data from a historical perspective to predict future demand because our customer patterns are not predictable,” Sinha told TechCrunch.
“We also have a customer-facing app that people use in rural India and Nigeria to make payments online. So that’s a small component, but people are using digital payment, eliminating the need for cash. Most importantly, people can use that app to monitor energy usage, optimize, and even reduce energy consumption if and when needed. Last but not least, we also have our e-commerce platform, which sells energy-efficient devices on the app,” added the CEO, who noted that these devices are delivered to customers within 72 hours.
During the interview, Sinha stated that Husk Power raised a $25 million Series C in 2018, which it utilized to expand its fleet from approximately 12 to 200 solar mini-grids. With that number, he asserted, cleantech is now the largest community mini-grid operator and owner in the world. India is the market leader with 188 mini-grids compared to Nigeria’s 12.
Husk Power said in a statement that it has so far serviced over 10,000 micro, small, and medium-sized enterprises (MSMEs) and prevented 25,000 tonnes of carbon dioxide emissions through those mini-grids. In order to serve 300,000 additional connections and prevent producing 350,000 tonnes of carbon dioxide, the company plans to extend its fleet over the next five years, as said in the statement.
Husk Power plans to utilize this additional funding to expand its mini-grid footprint to 1,500 units after achieving a CAGR of 60% and sustaining a retention rate of over 90% over the years. Sinha claims that two-thirds of the funding will go toward expanding the company’s reach in Sub-Saharan Africa so that the number of mini-grids there is comparable to what has been installed in India thus far. Over the next five years, Husk Power projects that there will be 500 mini-grids in Nigeria, a 40x increase from the current number.
According to the World Bank, the quickest and most economical way to electrify all 380 million people in Africa by 2030 is through distributed renewable energy, which is often achieved through mini-grids. In light of this, Husk Power envisions itself taking a more prominent part in the rollout of more mini-grids throughout rural sub-Saharan Africa via “Africa Sunshot,” a cleantech initiative that aims to install 2,500 mini-grids within five years (1,000 in Nigeria, 500 in the Democratic Republic of the Congo, and 250 in each of the remaining four countries that have not yet been named). To finance the Sunshot, Husk plans to raise $500 million in debt and equity, which it hopes to do either privately or through an IPO by 2027.
“This Series D paves a path for us to raise the next half a billion dollars in the coming years. Of course, we will have our heads down for the next 18 to 24 months and deploy several 100 mini-grids,” the CEO noted. “And then we will be out in the market to look for either the next round of financing from private capital markets, or we will also strongly consider a path to an IPO to list the company publicly and raise money from public markets.”
Husk Power’s estimated numbers are a drop in the ocean in a market that, despite its ambitions, requires more than 100,000 mini-grids to achieve universal electrification in Africa; as a result, many cleantech firms offering mini-grids in various marketplaces around the continent are required. CrossBoundary and Nuru are two of the cleantech platforms that Husk must contend with. Sinha contends that Husk is unique among platforms in that it focuses on tiny villages, whereas Nuru and other platforms are more interested in larger towns. In addition, he asserts that Husk has the lowest levelized cost of energy (LCOE) in the world and operates using an algorithm driven by AI.
Although every cleantech platform has a distinct advantage over the competition, Sinha pointed out that if they wish to grow more quickly, they could have to work with several governments rather than going down separate paths.
“I think it is possible for us to exceed even 2,500 mini-grids over the next five years. But we need to change the scaling strategy that we have had so far to get there. Our [Husk Power] strategy is to get into five or six countries simultaneously. But that cannot happen without public-private partnership arrangements with governments,” he stated.
Compared to typical methods that use poles and wires, we can deploy a mini-grid asset for an area with far less capital. Because of this, the World Bank is implementing its program in several nations, including Nigeria, the Democratic Republic of the Congo, and soon others. In order to electrify half a billion people over the next seven years, these companies must collaborate to find a solution. Is it possible that we will arrive there? To at least move the needle in that direction, a lot of companies like ours will need to come to the platform and execute at a rate more than ten times the scale-up rate. I hope so.
In the final quarter of 2022, Husk Power turned a profit, as reported by Sinha. With over 500 people, the cleantech company anticipates growing its workforce to over 2,500 over the next five years as it grows into Asia and Africa. Over the last eighteen months, investors from both local and international markets have shown renewed interest in Africa’s cleantech sector, as seen by the company’s expansion in all facets of its operations.