Sep 13, 2016
Tags: Energy, Tech Entrepreneurship,
Redavia Achieves Financial Milestone
Efforts to bring low-cost energy to some of Africa’s poorest countries just got a major financial boost. Factor[e] Ventures portfolio firm, Redavia, recently secured a commitment of up to $5million US from InfraCo Africa to expand operations.
Redavia is able to deliver solar energy to off-grid locations through its innovative use of converted shipping containers. Equipped with photovoltaic panels, backup batteries and low-voltage connection capabilities, they serve as portable solar farms that can be deployed and brought online in a matter of days.
Redavia has been operating in Tanzania, where only 15 percent of the population has access to electricity, for more than two years now. Offered on a short-term rental basis, the containers can function in a standalone capacity or have the ability to connect to existing diesel generators in a supplemental role. This not only saves money by replacing expensive fuel sources with less costly solar power, but also avoids high up-front costs typically associated with photovoltaic installation. Once the contract is complete, the containerized units can be easily redeployed to the next project. Current applications include agricultural operations, mining facilities, and village electrification.
InfraCo Africa is working to improve the infrastructure in the continent’s sub-Saharan region as a first step toward alleviating poverty. And small-scale, off-grid solar power has been recognized as a viable alternate energy to help stimulate emerging economies. The $5 million commitment now allows Redavia to expand its operations not only in Tanzania, but into other areas of East Africa, including Kenya and Rwanda.
Much of what we like about Redavia is its sophisticated and innovative business model. Rental models like Redavia’s are expected to pave the way for wider acceptance of solar technology. However, two challenges are common to most rental-based business models. One is product theft or nonpayment. Redavia’s modular and easily deployable product design allows them some asset security, thanks to the ease of product repossession. The other challenge is financial in nature and is baked into the model itself. Incurring full production costs for capital-intensive assets, then receiving revenues connected to those assets in tiny slivers over time is a recipe for cash flow challenges.
That is exactly why InfraCo’s investment commitment is so important. This funding will allow Redavia to finance more units to customers, and, for Factor[e], that means impacting more lives and livelihoods through access to energy.