Local flair transforms clean energy funding in Somalia

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Despite areas in Somalia having high solar potential, the country’s electricity access rate stands at around 16%, according to analysis by the AfDB in 2015. To uncover the harsh reality for Somalians, Albert Mbaka, energy researcher at the Centre for International and Security Affairs, spoke with Guled Wiliq, the CEO and founder of Power Offgrid Somalia, on the inspiring local activity geared to advancing change.

This article first appeared in ESI Africa Issue 1-2020.
Read the full digimag here or subscribe to receive a print copy here.

In Somalia, businesses and rural communities have had to dig deep into their pockets to invest in generators and to meet monthly fuel costs in order to have access to power. This plight motivated Guled Wiliq to join the ranks of entrepreneurs playing a significant role in enabling access to power. This Somali American, practising in the US in engineering and real estate investments, has a professional background in civil engineering and a master’s degree in water resources management.

Let’s start by painting a picture of the Somalia energy landscape.

In 1966, in Mogadishu – the capital and most populous city of Somalia – only 11% of its residents had access to electricity and less than 1% had access to water. Today, those figures have risen marginally with approximately 30% having access to water and electricity.

In 1988, the un-subsidised electricity tariff was $0.25/kwh while inflation was 92% vs. today’s $1.5 to $2/kwh. Currently, the Somalia government has no national electrification policy in place including waiving taxes on solar products such as solar pumps and solar panels. The national development plan NDP-9 developed by the Ministry of Planning and Investments failed to prioritise electrification investments and has yet to publish data and roadmaps to achieve the SDGs.

An unsustainable 94% of Somalia’s population use charcoal and wood for cooking, which causes high indoor pollution resulting in the deaths of 5,000 people a year, making it the #2 killer in Somalia. The country sorely needs concrete electrification policies based on holistic local solutions, which are focused on energy for growth and evidence-based with proven track records, using a public-private partnership (P3) approach to finance Somalia’s four infancy sectors: namely energy, agriculture, fisheries and water infrastructure.

Off-grid is a key topic at the African Utility Week and POWERGEN Africa conference. Click here to register to attend or for more information about the event.

As the founder of Power Offgrid Somalia, what was your inspiration behind its formation?

I formed the company while in the US and seven years after President Obama launched the Power Africa Initiative – a programme aimed at increasing access to reliable, affordable and sustainable power in Africa through its $2.5 billion pledge, which partially contributed to my inspiration to start Power Offgrid in Somalia where 85% of the population don’t have access to electricity. [Ed: see page 68 for an update on Power Africa]

In the US, where I currently reside, my daily electricity consumption is between 90 to 125kwh per day, which is equivalent to what an average person in Somalia making less than $2/day will consume in 2-3 years. Some people may call it energy-poverty, but I call it an energy-trap stemming from poor governance, lack of policies, lack of technology, lack of human capacity development, and corruption. I was purposely driven by the desire to come out from this trap; hence the inspiration to bring the know-how, investment, new innovations to fill the developmental gap that could lift the economy out of the 18th century into the 21st century, and halt youth migration and high unemployment by providing greentech job opportunities through renewable energy.

Off-grid solar PV making its mark on Somalia’s agribusiness.
Source: Power Offgrid

To date, what has been the impact of introducing off-grid solutions in Somalia?

The company has played a major role in disrupting Somalia’s energy sector. We introduced the first-ever asset and innovative equity financing pay-as-you-go solar system – affordable for last-mile households, pastoralists, small enterprises and farmers – using a solar electric system and highly efficient portable solar bucket pump with a pump rate of 2,500 litres per hour (L/h).

In general, due to the high upfront cost, affordable off-grid renewable energy services in Somalia are non-existent, other than projects funded by NGOs as aid freebies which are unfortunately not a sustainable solution. We have installed more than 170kW of solar systems for residential and commercial use, powering over 3,500 households. In Jowhar City, we have also enabled more than 15,000 people with access to safe water and sanitation.

Another achievement is the shift of 70 farmers from primitive rain-fed and expensive diesel pump irrigation to smart-climate irrigation. These farmers now use our local innovative in-house built Kakud Solar irrigation with a pump rate of 30,000 L/h, which increased their irrigated area by 80% and expected income growth close to 70% – improving food security and increasing women participation in farming by 30%. These efforts have reduced 250 tonnes of CO2 carbon emission.

Tell us about your innovative business model, Goat4Solar.

In Somalia, the livestock population is 40 million versus 15 million people. Realising the hidden capital opportunities, Power Offgrid found an innovative process to beat the challenge of access to capital by exchanging goats for solar power: Goat4Solar (aka Goat4kWh). It’s a unique model specifically for the last mile agro-pastoralist in Somalia who don’t have cash in hand or is unable to access financing institutions (banks) that could provide loan services.

The opportunity is ideal for nomads to exchange their assets (livestock) for capital to use as down payment for a Pay-Go solar system. It is even suitable for enterprises such as a cold-chain for ice cream, battery mobile charging hub business, or solar pumps for irrigations.

Is solar power the main solution for clean energy access in Somalia?

I don’t really believe solar is the only solution for energy access in Somalia. In fact, our sister company, Jiko Biogas, diversifies our energy investment portfolio by tapping into animal and food waste, converting it into renewable natural gas for clean cooking and electricity.

With the international community and donors spending close to $1 billion annually on aid – if just 3.5% of the funding were used effectively through P3 and grants for electrification purposes, 50% of the population that need a 50-100W solar panel could be powered in five years. This will result in a reduction of people who have no access to electricity from 85% to 40%.

However, for Somalia to achieve specifically SDG7, investing in a smart, diversified and hybrid energy solution is a must. The energy mix must include biogas, natural gas, decentralised hybrid wind grids, bio-grids, and mini-grids to increase energy access both in rural and urban communities at an affordable rate.

Somalia has the highest potential to harness wind energy of up to 45TW in East Africa. Power Offgrid has already introduced wind power in the productive sector in Mogadishu for small enterprises and is currently planning to install 10-50kW wind-grid for cold-chain projects within coastal cities to boost the fishery and dairy farming industries.

As an investment entrepreneur in off-grid solutions, what advice do you have for entrepreneurs on how to reduce investment-related risks?

Make sure you recruit or hire somebody better than you, at least technically. Understand your customers’ problems and find your customers before they find you, because by the time they find you it’s too late. Spend 80% of your time doing research and experimenting to collect data to get information needed and analysis to make smart decisions. At the start, prepare to be the doer-of-all marketing, financing, recruiting, training, and volunteering.

In order to reduce the risk, be flexible and diversify your business model. In our example, we did several things: introduced biogas; allowed farmers/nomads to exchange their assets (livestock or their harvest) as payment for our solar systems; we used farmers’ idle land for poultry, beekeeping (honey), and brick manufacturing to generate additional income to finance our business. ESI

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