In Alexandre Dumas’ novel, first three, later four musketeers fight for justice in the world. They are not revolutionaries, they are rather part of the system, but as individualists they are willing to stand up against traditional views.
Similarly, today the large energy companies of France ride through the energy worlds of Africa and Asia as four energy musketeers:
- The second largest power generator in the world:
Électricité de France (EDF): 69.6 billion Euro turnover / 3.4 billion Euro profit before taxes
- The world’s largest liquefied natural gas (LNG) company:
Engie: 65.0 billion / 1.1 billion
- One of the world’s leading electrical engineering groups:
Schneider Electric: 24.7 billion / 2.8 billion
- The fourth largest petroleum company in the world:
Total: 132.2 billion / 8.3 billion
The four energy giants are an important part of the old, central and fossil energy supply but they also recognise that decentralised, regenerative energy technologies are a technology of the future and not only in developing and emerging countries. And unlike many energy companies in the USA, Great Britain or Germany, they got involved in the off-grid sector of developing countries at an early stage and not only through their charitable foundations, as they also see there a business area for the future.
Although the strategies of the four are very different, they all have a decisive influence on the off-grid sector today. Reason enough to present a portrait of the four off-grid giants.
The following information does not claim to be exhaustive, but it does claim to trace the most important activities of the four companies.
1. Électricité de France (EDF)
The first of the musketeers in the off-grid market was clearly EDF: back in 1999, with the support of ADEME (French Agency for Environment and Energy Management), EDF developed the concept of decentralised service companies (SSD): a SSD is a company under local law, run by local managers, which sells a wide range of energy services. The strength of the SSDs lies clearly in their integration into the local socio-economic fabric: they install, operate, maintain and renew the power generation infrastructure.
Mali – 1999
The first SSD service company was founded in Mali in 1999: Korayé Kurumba. In 2001, a second SSD followed in Mali, which generates its electricity almost exclusively from solar energy and operates in the cotton-growing region of Koutiala, in southern Mali. Access to electricity was already provided by photovoltaic kits, but also by low and medium voltage micro grids operated by small power plants. In line with the strategy of transferring the SSD to local partners, EDF sold its 50% stake at the end of 2008.
South Africa – 2002
Together with Total, EDF founded Kukhanya Energy Services (KES) in South Africa in 2002. EDF also holds 50% of this SSD company (Total S.A. = 35%). It electrifies households in rural regions with solar home systems (SHS). From today’s perspective, the business model is as innovative as it is ambitious: KES sees itself as a fully-fledged supply company with a maintenance contract for SHS for 20 (!) years.
Morocco – 2002
EDF and Total join forces again in 2002: Total Energy (Maroc) becomes the joint venture Temasol. The new company offers photovoltaic systems (albeit with maintenance contracts for only 10 years). EDF withdrew from Temasol between 2008 and 2011.
This is followed by an eight-year break, the reason for which is unknown to the public.
Botswana – 2010
In 2010, and following a call for tender, EDF will be selected by the Botswana Power Corporation to implement a decentralised rural electrification programme for a joint venture: among other things, individual solar solutions will be distributed via a franchise network.
Senegal – 2011
EDF has a 70% stake in Energie Rurale Africaine (ERA) – a majority stake that had previously been rather untypical for EDF. The company was founded in 2011 together with the Senegalese partner Matforce and continues the concept of a SSD designed back in 1999. The special thing about it: ERA is the concessionaire for 25 years for the rural electrification in two Senegalese regions, which together comprise 25% of Senegal.
In the following years, the off-grid market developed rapidly: new manufacturers, new financing models, new technologies. Apparently also a time of (re-)orientation for EDF. This is accompanied by a change in the office of the "Directeur Afrique et accès à l’énergie" (March 2016). From 2016, EDF will be active again with an obviously changed strategy – very active:
Ivory Coast – 2016
In 2016, EDF formed an alliance with one of at the time the most promising companies in the young off-grid industry: Off-Grid Electric, active in Africa under the brand Zola. Zola EDF Côte d’Ivoire (ZECI) was founded with equal shares. ZECI’s product strategy followed what was already the standard in the off-grid market in 2016: standardized solar kits distributed via a pay-as-you-go financing model.
With the help of EDF, ZECI also received financial support in 2018, the first of its kind: a loan (USD 28 million) from Société Générale de Banque Côte d’Ivoire (SGBCI) and Crédit Agricole Corporate and Investment Bank (Crédit Agricole CIB) enables ZECI to grant loans in local currency. This was made possible because the African Development Bank (AfDB) provides a partial loan guarantee. An important step forward, also in competition with other off-grid companies!
For EDF, this first joint venture should actually have been the start of a large-scale and rapidly growing partnership with Off-Grid Electric in Africa. In fact, however, this did not happen for the time being. One can only speculate about the reasons for the sluggish expansion of the cooperation between Off-Grid Electric and EDF: but these are probably related to the economic difficulties into which Off-Grid-Electic repeatedly finds itself and which jeopardize the growth and stability of the EDF partner. Perhaps this is one of the reasons why EDF is deviating decisively from its previous strategy for the first time and joining the partner itself as a shareholder:
Off-Grid Electric – 2018
In January 2018, EDF became a shareholder in Off-Grid Electric. Another musketeer, Total S.A., was also involved in this capital increase of USD 55 million. But more about that later.
Ghana – 2018
Immediately after EDF’s entry into Off-Grid Electric, both companies finally founded their second joint venture with the Ghanaian CH Group (20%): Zola EDF Ghana (ZEGHA). ZEGHA’s business model is the same as ZECI’s: distribution of solar kits and energy-efficient equipment such as radios, televisions and fans via Pay-as-you-go financing over 2.5 to 3 years. The monthly rates of 20-27 Euro (!) are supposed to correspond to the current electricity consumption of Ghanaian households for similar purposes.
Togo – 2018
In order not to be tied to just one partner in its own expansion, EDF now also turned to new partners. This was initially the British manufacturer Bboxx, in whose one-year-old company in Togo EDF holds a 50% stake. The joint venture continues to bear the name Bboxx Togo, without any external reference to EDF.
At the same time, the new partners confirmed in a press release exactly what EDF had previously planned with Off-Grid Electric: "Binding Bboxx to EDF is the first step towards a broader partnership, with plans to expand the joint venture to other countries in Africa".
From a product portfolio perspective, Bboxx should not pose any difficulties for EDF: essentially, Bboxx trades in very similar products to Off-Grid Electric and also sells them via its own pay-as-you-go platform. However, the monthly price for customers in Togo is significantly lower than in Ghana: households only have to pay 8-12 USD per month.
One difference between Off-Grid Electric and Bboxx is worth mentioning: Bboxx sees itself not only as a distribution company, but also as a new-style energy supplier: "next generation utility platform".
The explicit mention of a technical cooperation that goes beyond the cooperation in Togo is also interesting: EDF’s research and development department is to help improve the performance of the partner’s battery storage solution.
NEoT Offgrid Africa – 2017
But new partnerships for new joint ventures in Africa are no longer enough for EDF. In 2017, EDF, NEoT Capital and Meridiam founded the NEoT Offgrid Africa investment platform to broaden its presence in the increasingly diversified off-grid market. In 2018, the Mitsubishi Corporation joins the group. It is planned to invest hundreds of millions of euros in African energy projects.
In 2018 NEOT invests as majority shareholder in Sabon Gari Energy Ltd.: a project of Lagos-based Rensource Energy. Sabon Gari offers clean electricity to consumers, small businesses and industrial customers through its subscription-based Power-as-a-Service (PaaS) model with solar hybrid systems installed on the user’s land – for EDF a very attractive addition to the pay-as-you-go sales concept pursued with Bboxx and Off-Grid Electric.
SunCulture – 2018
EDF is also making another investment in 2018, underscoring its strategy in the off-grid sector, which is clearly broad-based compared to its beginnings: for the first time, the company is participating in a manufacturer without its own distribution network in Africa: SunCulture (20-30%). Founded in 2013, the manufacturer of a solar water pump for small farmers has so far been primarily active in East Africa. EDF wants to support SunCulture in its expansion throughout Africa – and in the longer term even take over the majority of the company. The way there has already been paved by the issue of convertible bonds.
EDF’s new strategic orientation since 2016 and its significantly increased involvement in the off-grid sector is remarkable, as it is a clear commitment to the possibilities of decentralised solar power supply. Looking back at recent years, it is also clear that EDF wants to expand its position amongst the other energy musketeers. It will be exciting to see what new investments, takeovers and joint ventures EDF will announce in 2019.
Next: The activities of an energy giant that has set itself the goal of becoming Africa’s largest energy service provider – Engie (formerly GDF Suez).