Umlilo Energy Taps the Diaspora Remittance Market to Drive Residential Solar Energy Adoption in Africa

The rooftop solar market is growing rapidly in several markets and continues to break records in terms of installed megawatts per year. The Australian market is a great example of what can be achieved in the home solar market. The Australian Department of Industry, Energy and Emissions Reduction in March this year announced that 2021 was the fifth consecutive record year for rooftop solar power in Australia. In 2021, Australians installed around 380,000 new systems with a combined capacity of 3.2 gigawatts (GW). Over 3 million rooftops in Australia are now equipped with solar panels, bringing the total installed capacity to 17 GW! “Last year, $7.4 billion or $284 per person was invested in renewable energy in Australia. This puts us ahead of countries like Canada, Germany, Japan, France, China and United States per person,” Minister Taylor said earlier this year.

Another market that is breaking records is the United Kingdom. In the UK, 164 megawatts (MW) were installed on the roofs of houses from January to June this year. This total, installed in 6 months, was greater than the total MW installed over the whole of 2021! Despite all the sunshine across the African continent, we have not seen this level of growth in most parts of Africa, especially in southern African countries like Zimbabwe, where citizens are facing blackouts daily for hours as the utility company struggles to keep up with demand. The electricity company must therefore set up a load shedding program. Load shedding is a controlled process that responds to unforeseen events (such as demand exceeding available capacity) to protect the electrical power system from total failure.

Funding platforms for urban rooftop solar may be the missing link in the quest to accelerate adoption of rooftop solar. Although the prices of solar panels and battery storage have come down significantly over the past decade, the total upfront cost of the systems required by most middle-class urban homes in places like Zimbabwe are still expensive enough to many families. An example of a popular configuration in this segment would be a 3 kVA hybrid inverter coupled with 5 kWp of solar panels and a 4.8 kWh LFP (LiFePO4) stationary storage battery. These systems are used to supply essential loads during load shedding. Essential loads include Wi-Fi routers, refrigerators, televisions, laptops, lights, and booster pumps to pump water into homes from water storage tanks located in their backyards . Many homes in large urban centers also experience water rationing and therefore typically have 5,000-10,000 liter water storage tanks in their backyards.

The majority of people in developing markets tend to have lower incomes than people in developed countries, which means installing rooftop solar panels is out of reach for many families. There is also a very limited choice of financing options. Checking the credit of potential customers in the local market is also quite difficult. Umlilo Energy is tapping into the growing remittance market to drive adoption of residential solar power in Africa, starting with Zimbabwe. People based in developed markets who have higher incomes are more likely to be in a much better position to purchase these solar solutions for their parents and other family members back home.

Diaspora remittances are increasing in the continent, but most of them are channeled to support family and friends back home with day-to-day expenses such as transport, groceries, school fees and medical expenses. While some remittances are channeled to household development projects, a significant percentage of remittances are still destined for household consumption. There is an opportunity to increase the dividend from remittances by shifting the pendulum from consumption to investment in development projects that generate income. Investments have the potential to create resilient and lasting income that is not forever dependent on the sender’s ability to continue earning income and sending money home. This is an important step in breaking the dependency syndrome among beneficiaries.

Umlilo positions itself to stimulate and promote the sustainable and productive use of remittances to the renewable energy sector and other investments. This could help play an important role in unlocking the full potential of the residential rooftop solar market on the African continent. Its primary market is the UK-Zimbabwe corridor. There are a large number of Zimbabweans in the UK who send money home. Diaspora remittances are now the primary source of foreign exchange in Zimbabwe. Zimbabweans working in the UK as well as other Zimbabweans based in the Southern Africa region, the United States of America and elsewhere sent $1.4 billion to Zimbabwe last year. Umlilo will soon add more lanes in the near future.

Umlilo was established in 2019. Most of its customers so far are middle-aged Zimbabweans working in the UK who pay for the installation of solar and battery storage systems for their retired parents back home. . These systems are installed both in cities and in rural areas. The availability of quick credit score checks on platforms such as ClearScore in the UK makes it easier for Umlilo to vet potential customers when offering payment plans over a certain period.

Umlilo has grown through referrals and word of mouth over the years and is now looking to scale its operations. Umlilo also wants to be more active on other channels such as social media groups. Members of the diaspora community usually have many chat groups on Facebook and WhatsApp where they discuss issues regarding their home country as well as any opportunities.

Umlilo is also finalizing plans to add modular and portable solutions to meet the needs of people living in rented apartments. Umlilo is also working on financing what it calls “business in a box” solutions. An example of this is a solar water pump kit which presents itself as an almost plug-and-play solution for farmers in the horticulture sector. These plug-and-play kits will help rural farmers who have access to land be able to use their half-hectare plots to grow popular income-generating crops such as paprika. The horticulture sector has a good support system through outgrower programs supported by major local and international organizations. This support system and ready buyer’s market for crops enables small farmers to be able to invest profitably in this area of ​​the agricultural economy. It will also allow more farmers to obtain a regular income to support the payments of these “business in a box” funded solutions.

All images courtesy of Umlilo

 

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