Initial targets for expansion by the end of the year are South Africa and other countries in the region, Carr says in Lagos. He also wants to expand to francophone west Africa and the Democratic Republic of Congo (DRC).
Carr is aiming to more than double both revenue and megawatts installed in 2022. The strategy is to win corporate customers with multiple sites and retain them for the long term. The company concentrates primarily on energy efficiency rather than power production, and typically changes the cooling systems used by clients to reduce demand by between 20% and 40%. It then provides solar and battery systems to cater for the reduced load.
The core of the customer base in Nigeria is made up of banking industry clients, though the company is also branching out to meet commercial and industrial demand. The aim now is to scale the business, Carr says. “The demand across Africa is phenomenal.”
The model is capital intensive, and the company on average holds about $6m or $7m worth of inventory in Nigeria alone. Starsight is backed by two main shareholders, Helios Investment Partners and African Infrastructure Investment Managers. The company also has debt finance supplied by development finance lenders and local Nigerian banks, CFO Paul van Zijl says.
- Starsight has refinanced all of its dollar debt in Nigeria into local currency to avoid exposure to the weakening naira, van Zijl says.
- The company is speaking with banks now to get further debt finance for expansion, van Zijl adds. “Debt is now for growth.”
- New projects are usually financed in the first instance with equity, with debt being added later.
- Carr is optimistic that the two core shareholders will continue to invest and that project finance debt can be raised as needed. “There’s a lot of funding out there for renewables.”
Nigeria diesel tailwind
The company, set up in 2015, operates in all of Nigeria’s 36 states and in Ghana. Last year it bought a 50% stake in the East African operations of Premier Solar Group to enter Kenya, Uganda, Tanzania, and Rwanda.
Starsight is still “not even scratching the surface of the demand,” in Nigeria, Carr says. The company has been profitable for at least four years and so is “one of the few renewables businesses that are not selling a dream” of profitability. “We’ll make money this year.”
The surging cost of diesel fuel in Nigeria should provide a tailwind.
- While petrol prices in Nigeria are subsidised, diesel prices, which have roughly doubled so far this year are unregulated, so the impact of higher crude oil is unavoidable.
- In the past, Nigerian diesel costs have only been about half of those in other countries, Carr says.
- Rising diesel prices in Nigeria have prompted an increase in commercial and industrial interest in solar, he says, arguing that solar power solutions are also cheaper than gas. “We’re very optimistic on Nigeria.”
Starsight sees increased oil and crude prices as a trigger for corporate Africa to make the switch.
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