PowerGen, an Africa-focused energy startup that provides alternative renewable energies to African homes has closed its series B funding round led by Shell New Energies, the renewables arm of the fossil fuel giant which made headlines recently related to its lobbying activity in the EU. With electricity consumption low in most African villages previously without power, the benefits of even small amounts of electricity provided by PowerGen are significant.

Here Is The Deal

• This latest funding round saw Shell New Energies become PowerGen’s primary stakeholder. 
• Other PowerGen backers in this round included the U.S.-based philanthropic Omidyar Network of eBay founder Pierre Omidyar; fellow U.S. impact investor Acumen; London-based Renewable Energy Performance Platform; the EU-funded Electrification Funding Initiative; Japanese conglomerate Sumitomo Corporation, DOB Equity and Micro-grid Catalytic Capital Partners.
• PowerGen did not reveal how much cash had been raised but said the round of funding would be sufficient to bring power to one million people in sub-Saharan Africa.
• The move by Shell comes weeks after German small solar system provider Mobisol was acquired by French utility and fossil fuel company Engie.
• An estimated 600 million people in sub-Saharan Africa live with either limited access to electricity or none at all. Some 80% of the affected communities live in rural areas where grid connection is deemed prohibitively expensive by local utilities.

Why The Investors Invested

“I am happy that Shell will be supporting the next chapter in PowerGen’s exciting journey towards meeting the electricity needs of more African customers,” said Brian Davis, VP for energy solutions at Shell New Energies . “We see that PowerGen’s local experience, capabilities [and] growth to date make it well positioned to serve the expanding African decentralized power market. The form is a key part of our growing energy access business as we move towards Shell’s ambition to provide a reliable electricity supply by 2030 to 100 million people in the developing world.”

Read also: Germany Africa Business Forum announces funds for energy startups

What PowerGen Does

Founded in 2011, PowerGen claims to have pioneered the deployment of solar microgrids as a private utility in Africa. Having finished its series A funding round in 2016, the startup established itself in Kenya, Tanzania, Sierra Leone and Nigeria. Its leading investors at the time were Dutch investor DOB Equity and Vancouver-based AHL Venture Partners. Since 2016, the company has reportedly deployed its solutions in 120 communities, benefiting more than 70,000 people in eight countries.

PowerGen says it provides the full value chain of microgrid building, including preliminary consulting; engineering, procurement and construction services; customer management; and operations and maintenance services. The company also offers its expertise for commercial and industrial PV projects.

In January 2019, oil industry charitable institutions Shell Foundation and the Rockefeller Foundation helped establish the Cross-boundary Energy Access fund (CBEA) to finance mini-grid deployment. The aim was to unlock US$11 billion of funding to bring electricity to 100 million people in sub-Saharan Africa. In July, the CBEA announced its first investment, of US$5.5 million, for the development of 60 mini-grids in Tanzania. That fund was given to PowerGen with the developer mandated to sell on the resulting infrastructure to recycle the capital invested in their deployment.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world