Zengamina weir helps to power a rural electricity grid in northern Zambia. Source: Gridworks.
Gridworks, the UK government-backed investor into Africa’s electricity networks will invest up to $50 million in renewable power developer Virunga Power as it establishes hydro-powered rural grids across the continent.
The investment will fund new projects across Africa, including in Burundi, Malawi, Zambia and Kenya. It will also support the growth of the Zangamina hydro-backed rural utility in northern Zambia. This will increase generation capacity and the ability to add thousands of new connections.
Virunga Power works with local developers and rural communities to drive sustainable economic growth and electrify for those who are not effectively served by national utilities. The company uses run-of-river hydropower technology and focuses on projects of up to 20MW as well as associated transmission and distribution networks to provide affordable access to energy in rural areas, and to reinforce national grid stability.
Brian Kelly, CEO of Virunga Power, said an investment of this magnitude validates their approach to bringing clean and affordable power at scale to rural areas. “Our pipeline and portfolio of utility projects continues to grow, and we will use the capital and expertise from Gridworks to expand electricity access and drive economic and industrial growth in communities across the region,” said Kelly.
Productive use of energy is gaining traction to improve SDG goals
Rural electrification is a key part of Gridworks’ mandate and an area that is gaining greater attention from governments, funders, and policy makers as the push to achieve connection targets under the UN’s Sustainable Development Goals intensifies. According to the World Bank, Zambia, Malawi and, in particular, Burundi have some of the world’s lowest rural electrification rates (15%, 6% and 2%, respectively).
The impact of this investment will be measured in a number of ways, including new GW hours generated, new connections made and CO2 emissions avoided.
Virunga Power works with its newly connected communities to generate new income by using electricity to stimulate industrial and commercial activity. The company works with local financing and community development partners to help foster ecosystems that can drive productive uses of energy at the household, village and industrial levels. For example, this includes helping customers buy machinery that can improve farming yields and boost income.
Gridworks’ CEO, Simon Hodson explains: “Access to reliable, clean, affordable energy is a catalyst to a better life, but this is currently out of reach for people in the rural areas that Virunga Power wants to serve. We’re committed to making Virunga Power our platform to build hydro-powered rural utilities in at least four countries in Southern and Eastern Africa. Our capital will help them to close the energy access gap and unlock opportunities for people across the region.”
Hydro-powered rural utility
Virunga Power’s current institutional backers include EDFI ElectriFI, the EU-funded Electrification Financing Initiative, and the Camco-managed Renewable Energy Performance Platform (REPP). Together they provided Virunga Power with critical growth capital during its ‘Series A’ investment round which closed in 2019.
Jean-Denis Collin, ElectriFI Manager at EDFI Management Company, said: “Over the past four years, EDFI ElectriFI, sponsored by the European Union, together with Power Africa, and the governments of Sweden and Italy, were instrumental in validating the model and further secure a pipeline of run-of-the-river hydro projects in East Africa. Gridworks’ investment is timely and catalytic; it brings additional expertise and capital to further convert the pipeline and build a strong hydro-powered rural utility platform in Southern and Eastern Africa.”
Ben Hugues, REPP Lead at Camco, said as an early-stage investor, they have long since seen the enormous potential of Virunga Power in delivering transformative impact to communities across the region. “Our confidence in and support for the company has enabled it to grow to the point where it has been able to secure this pivotal investment from Gridworks, which will help the company deliver on its exciting expansion plans.”