A Nigerian startup Arnergy reportedly secures $3 Million to expand solar power in Nigeria. The company specializes in distributed renewable energy products and solutions. All On, an off-grid energy impact investment company supported by Shell, supplied the bridge financing.
Arnergy Secures $3 Million to Expand Solar Power in Nigeria
Five years have passed since Arnergy, which provides solar power solutions for homes and businesses, secured a $9 million Series A round in 2019. In this round, All On participated together with other investors like Norfund, ElectriFI, and Breakthrough Energy Ventures, led by Bill Gates.
When Arnergy was founded in 2013 by Femi Adeyemo and Kunle Odebunmi, it set out to offer sustainable energy solutions to supply dependable, clean energy to families and businesses alike.
To empower clients in a variety of industries, such as hospitality, education, finance, agriculture, and healthcare, the company specifically designs its energy systems to address the issues of intermittent power supply and grid unreliability. These systems enable clients to adopt and implement dependable and reasonably priced distributed energy systems.
Arnergy Succeeds to Install Over 2MW of Electricity Capacity for More than 2,000 Clients
Arnergy successfully installed more than 2MW of electricity capacity for more than 2,000 clients before obtaining its Series A funding. Furthermore, the company has been able to broaden its reach by installing over 20MW of lithium battery energy storage solutions (BESS) and over 7MW of solar photovoltaic (PV) systems thanks to the $4 million in debt financing it was able to secure from a variety of domestic and international lenders, including the Bank of Industry in Nigeria.
Nigeria’s energy industry still has a long way to go despite great development. With only a small percentage of the nation’s 12 GW system capacity being used by customers, many Nigerians lack consistent access to energy.
Because so many people rely on self-supplied power from gasoline or diesel generators which mostly burn fossil fuels there are environmental and health risks associated with this. The recent removal of fuel subsidies, the skyrocketing cost of diesel, and the challenging financial environment draw attention to how urgently energy cost reductions for both corporate and retail consumers are needed.
Even if solar energy systems are a common choice, there is still a gap in supply and demand, which Arnergy is eager to close given the state of the regional energy market right now.
Solar Energy Proves to Be More Affordable Option for Nigerians than Regular Grid Power
In an interview with TechCrunch, Arnergy’s CEO, Adeyemo, indicated, “Capital efficiency has been crucial for Arnergy. We weren’t interested in raising money only for it. He stated, “We were looking for certain indicators, such as the end of fuel subsidies, reaching grid parity in terms of grid prices, and the rise in diesel costs, to re-enter the market. These factors combined essentially provided us with the cues we needed, based on the benchmarks we established during our last fundraising.”
According to Adeyemo, solar energy is now starting to prove to be a more affordable option for Nigerians than regular grid power. In 2019, many Nigerians did not think solar power solutions were financially feasible.
Nonetheless, the cost of grid energy, gasoline, and diesel has increased, which has increased the demand for solar power systems. Globally, the cost of lithium batteries and solar panels has decreased, despite the challenges posed by exchange rate variations.
Adeyemo stated that Nigerian lithium costs could have been substantially lower if it weren’t for changes in currency rates. Additionally, he mentioned that the price of lithium batteries has decreased from $400 in early 2023 to $250 as of right now.
Arnergy Direct Sales Have Accounted for 75% of the Company’s Total Revenue
In the past, direct sales have accounted for 75% of the company’s total revenue rather than leases. Due to this change in the market, Arnergy had to update its sales approach and obtain new finance for growth. According to Adeyemo, clients used to think that renting a long-term vehicle which spreads out the expense over time was more expensive than utilizing a gasoline or diesel generator. But with diesel costs tripling, even tripling, long-term leasing is becoming more economically advantageous.
“Given the now appealing cost-effectiveness, we are enthusiastic about focusing on leases. We’ve experimented with this approach and observed a reduced risk of default due to the monthly costs associated with petrol or diesel. Now, these expenses can essentially be replaced with solar energy. This was not the case four years ago when even a five-year lease-to-own plan for solar was more expensive.”
Arnergy Aims to Ride this Current Wave of Momentum for As Long As Possible
Arnergy aims to ride this current wave of momentum for as long as possible. Its primary market, Nigeria, has little chance of obtaining a consistent electrical supply shortly. Even when certain discounts are phased out, this difficulty is contrasted with the growing trend for solar energy in areas with excellent grid stability, such as Europe, the U.S., and Australia.
Currently, in its 10th year of operation, Arnergy is a clean tech company whose revenues have increased tenfold over the last five years. Through collaborations with mini-grid developers, the company hopes to expand its offerings throughout the 36 states of Nigeria. Additionally, this quarter’s Series B investment round is about to close for the business.
With the help of this significant financial achievement, Arnergy hopes to accelerate the adoption of its renewable energy solutions in Nigeria and around the world, as well as to broaden its market presence.
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