Ray of Hope

Lumos plans solar power expansion in West Africa in 2021

By David Whitehouse

Posted on September 21, 2020 12:29

Nigeria Solar Power
Vegetable vendors ply their wares by the light of locally-made lanterns in Lagos, Nigeria. Lumos was surprised they spend more on power than solar options. (AP Photo/Sunday Alamba)

Solar home systems provider Lumos plans West African expansion beyond its existing markets of Nigeria and Côte d’Ivoire, CEO Alistair Gordon tells The Africa Report.

“We will expand next year,” he says, without saying which country, or countries, Lumos will enter. Restrictions on movement caused by COVID-19 will play a part in dictating the timing. “Expansion has always been part of the plan,” he adds.

Lumos kits allow storage of enough solar power to run basic appliances, though fridges and air conditioning are too ambitious for now. Customers pay an initial fee and then monthly instalments via MTN payment mechanisms to be able to access the power. They fully own the box after four years.

In Nigeria, Lumos has a grant from the Rural Electrification Agency (REA) with which it aims to provide kits to 1 million users by 2025.

READ MORE Can renewables light up Nigeria’s economic growth? 

The company expanded into Côte d’Ivoire in 2018, where it has financing from the Dutch Development Finance Corporation. A further expansion will need a new debt financing agreement, says Gordon. This would likely be in dollars or euros at first, with a local currency facility being created in the second phase, he adds.

  • The company hopes to be able to extend its partnership in Nigeria with MTN, and otherwise would seek a new telecommunications partner for the expansion, he adds.
  • Uptake of solar power in Nigeria has been slower than in east Africa due to a lack of mobile money, says Gordon. “There was no mobile money in Nigeria” when Lumos started operating.
  • Gordon, who is based in Hong Kong, has a background in telecommunications and consumer payments. “There must be a payment mechanism that everyone has in their pocket” for economic development to progress from the bottom up.

Faulty Grid

According to the World Bank, Nigerian per head energy consumption is only 3.5% of the level in South Africa. Nigerian grid penetration is relatively healthy at around 60% of the population, but that conceals that many who are connected are not able to get any power from the system, says Gordon. “This is viable and more reliable.”

READ MORE African grid operators that don’t open up to solar risk being left behind

The government is targeting five million solar home systems within the next three years. Their realisation is that solar deployment is “incredibly quick”. The company can be anywhere in Nigeria to set up a home solar system “tomorrow”, adds Gordon.

  • The proportion of Nigerians who use solar power remains negligible. Deployment of Lumos kits, Gordon says, can contribute to mass-market education. The market, he says, is “driven by word of mouth.”
  • Even before the pandemic, Nigerian businesses and individuals were spending an estimated $12bn on gasoline generators per year. COVID-19 has created a new sense of urgency for solar power.  People have been spending more time at home, and so need more power there. Yet they have less income to pay the bills.
  • Gordon points to the estimated 37 million micro-businesses which exist in Nigeria. Solar power can keep many of them working and open for business into the evening, he says.

Lumos kits are manufactured in China, where the operation rebounded “exceptionally quickly” from the impact of COVID-19. Still, Gordon would be interested in the possibility of doing more manufacturing in Nigeria, as this would mean lower transportation costs.

Bottom line

Ramshackle national grids mean that solar power at home is the fastest route to electrification for many Africans.

Understand Africa's tomorrow... today

We believe that Africa is poorly represented, and badly under-estimated. Beyond the vast opportunity manifest in African markets, we highlight people who make a difference; leaders turning the tide, youth driving change, and an indefatigable business community. That is what we believe will change the continent, and that is what we report on. With hard-hitting investigations, innovative analysis and deep dives into countries and sectors, The Africa Report delivers the insight you need.