Deep-dive view on different market segments and success stories for solar across Kenya and Nigeria

Intersolar Middle East, 26th September 2017, Dubai

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Overview Market segments

▪ Utility scale

▪ Industrial/commercial (rooftop or ground mounted)

▪ Residential (with or w/o storage)

▪ Pay-as-you-go (offgrid, mainly lower segment)

▪ Hybrid (diesel-PV, increasingly storage/PV)

▪ Minigrids-microgrids

▪ Special applications, e.g. Telco Towers

Our Focus Markets

Most Countries Heading for Renewables

Morocco is aiming a4GW solar and windplan until 2020

Dubai has massive plans (Al Maktoum solar park) and successfully executing its target of 7% of RE by 2020

Egypt plans around 8.5GW power generation from solar and wind

Turkey is ramping up windand solar energy to 13GW by 2019

Saudi Arabia is ramping up with ‘initial target’ of 9.5 GW of renewables, eventually including power export

Algeria plan to install 3 GW capacity from renewable sources by 2020

Bahrain has announced a target of 5% renewables of its total capacity

Jordan, Iran, Pakistan offer increased opportunities

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Abu Dhabi 1.2 GW Sweihan PV produced historically low bid pushing the cost of renewables to much lower levels

©Dii Desert Energy

Identified Renewables Projects2017(Dii ProjectDatabase)

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©Dii Desert Energy

Kathu, South Africa, 81 MW PV Plant , single axis tracker, COD August 2014

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KENYA

Challenges

$150 GRID CONNECTION COST IN RURAL AREAS

70%NO

ACCESS TO

POWER

Grid connection cost remains too high for the majority of off-grid households.

Governments and NGOs are inefficient and slow in solving the issue.

Fossil-based fuel lamps are therefore used for lighting purpose, but remain:

;

;

;$

Expensive Unhealthy & Dangerous

Poor Luminosity

No Electricity (mobile, TV, etc.)

Sources: IFC, World Bank, Lighting Global

125MHOUSEHOLDS WITH NO ELECTRICITY ACCESS IN AFRICA

Powerful & Measurable Social Impact, Our 3 Year plan:

ENERGY ACCESSLead to significant social improvements as well as potentially high returns.

KEROSENE DISPLACEMENTincreasing use of solar power over kerosene will lead to cost savings, but more importantly huge longer term health benefits.

FINANCIAL INCLUSIONUse of mobile money transactions enhances financial accountability and reduces fraud risk, improves local business environment

EDUCATIONCommunity impact of electrification enhances the ability to educate and communicate with citizens.

EMPLOYMENTJob and wealth creation within local communities will lead to increased prosperity

OTHER PRODUCTS/SERVICESPositioned to expand our product and further developmental service offerings, e.g. internet, TV, refrigeration, to hard-to-reach communities.

Sources: goodenergy.co.uk

12,000t

CO2

avoided

200,000People

Access to Energy

250MPossible Studying

hours

500Directjobs

>6MMobile

transactions

>$1BMarket Value

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Market Focus: Kenya

46M POPULATION

4$AVG. HOUSEHOLD DAILY INCOME

272$AVG SPENT ON LIGHTING PER YEAR

Good mobile penetration (88%)

;

High mobile phone usage for payments (68%)$$$

Sources: IFC, Lighting Africa

MARKET

MARKET RATIONAL

10$ Monthly charging fee per Mobile

8$ Monthly Kerosene purchase per Lamp

1x

;1x

=18$MONTHLY PER HOUSEHOLD

MINIMUM SPENDING

25%MONTHLY HOUSEHOLD BUDGET FOR LIGHTING ONLY

Large off-grid population (~ 9M Households)

7 MAJOR COMPANIES

800 000+ CUSTOMERS (with overall <5% market share)

>$300m+ USD RAISED IN EQUITY AND DEBT

>$100m+ VALUATION OF SEVERAL PLAYERSPAYGO solar model successfully rolled out over last five years. Well established with clients and becoming almost mainstream with investors.

However, sustainability of business model remains challenge, due to gaps in product quality and customer experience.

a “second wave PAYGO Solar” company,

is focusing on bridging these gaps

PAYGO solar in East Africa

KEROSENE DISPLACEMENT AND SAVING METHOD

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PROBLEM

- Kerosene is expensive, dangerous and poisonous

- It is one of the main reasons of house fires and burns in rural Africa- Carbon Monoxide can cause lungs and eyes diseases, threatening the

health and the lives of kerosene users

SOLUTION - Pawame SHS

- Improves the quality of light

- Allows people to save money of energy

- Has huge long term health benefits

- Reduces of 12.000 tons of CO2

Reliability and Quality

PAWAME kits tested and charged at our premises

EDUCATION

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Pawame SHS allows children to study longer hours in the night.

Our impact on communities has a potential of boosting opportunities for education.

Nigeria

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Enerwhere: Award-winning company with innovative solar technology

Thank you!

▪ World’s first distributed solar utility – we sell electricity as a service/no upfront cost

▪ Globally unique transportable solar capability – allows deployment in days

▪ Proven business model - providing power to commercial/industrial customers without (stable) grid connection

▪ Founded in 2012 in Dubai, ~45 employees

▪ 2016 revenue of US$3.5m (over 2x 2015), expecting US$8+m in 2017

▪ Ranked by Forbes Middle East as one the UAE’s 20 Most Promising Startups

▪ Raising growth financing to fund CAPEX & market expansion

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The Problem: Diesel is expensive & dirty while solar payback times are perceived to be too long

Diesel generators are a convenient but expensive & extremely dirty source of off-grid power

Solar is cleaner and cheaper but only works during the day and payback is longer than typical customer project duration or budget timelines

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Our Solution: Combining cleaner and cheaper technology solutions with a unique payment model

TECHONOLOGY: SOLAR-DIESEL HYBRID

Load

6am 12pm 6pm 12am12am

SolarDiesel

Solar system produces power during the day

Diesel generator continuously provides grid stability and backup

Share of power supplied from solar: 30-50%

Enerwhere, with its fully modular and transportable technology, is the only company in the world in a position to provide solar-hybrid technology solutions on a short-term rental / lease basis. The benefits of this are:• The customer requires no upfront capital investment; and• The customer saves money from day 1

Fully Modular and Transportable hybrid system

BUSINESS MODEL: LEASE RENTAL BASIS

Unique Lease Rental Business Model

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Nigeria’s frequent power outages and large electricity demand accelerate Enerwhere’s market access

Nigeria

2nd largest off-grid

population

3rd largest electricity

demand in Sub-Saharan Africa

80% firms have a diesel

generator

3-4 year off-grid

payback

Daily 8hr power

outages

Source: World Bank Enterprise surveys, Global Petrol Prices, Global Solar Atlas, World Bank, Enerwhere payback model assuming USD 1000 Capex, 0.3 l/kWh DG efficiency

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Payback periods are faster in Northern Nigeria but Lagos cannot be ignored as a key commercial district

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Low import duties on solar systems allow them to reach target sectors

Source: African Economic Outlook 2017, internal report

Type of tax Amount Imposed on

Import duty 1.5% Solar cells

Import duty 5% Mounting structure

Import duty 20% Batteries

VAT 5% Inputs and outputs

Corporate tax 30% Income

Educational tax 2% Income

Taxes for operating solar energy business• Textile,

footwear

• Plastics

• Food and beverages

Kano

• Textiles

• Petroleum

• MiningKaduna

• Oil

• Transport

• Manufacturing

• Construction

Lagos

• 1100 kW by 2017

• 2850 kW by 2018

• 600 kW by 2017

• 850 kW by 2018

• 300 kW by 2017

• 400 kW by 2018

Total installed capacity is expected to be 1100 kW in 2017 and will reach 4100 kW by 2018

Expected pipelineMain industries

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Key risk is the exchange rate, which is why we cannot consider long lease contracts at this point

Source: abokiFX and Central Bank of Nigeria

0

100

200

300

400

500

600

8/1/16 9/1/16 10/1/16 11/1/16 12/1/16 1/1/17 2/1/17 3/1/17 4/1/17 5/1/17 6/1/17 7/1/17

Exch

ange

rat

e, n

aira

/USD

Naira/USD exchange rate in official and parallel markets

Official exchange rate Parallel market exchange rate

214175

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Enerwhere has completed 3 projects under the SolarNigeriaprogram partially funded by DFID

Rumbu Sacks Factory

• The project provides 75 kWp to a factory located on the Hadejia-Kano road

• The roofs of the factory are standard steel structures, able to hold significant weight

• Solar replaces a large portion of the grid electricity and diesel fuel currently consumed by Rumbu

• Solar-diesel hybrid plants combine the low cost of solar PV with the reliability of conventional diesel generators

• The empty lot adjacent to the factory potentially offers additional solar opportunities

260 m

140 m

210 m

Plot boundary

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The other 2 projects provide a total of 1 MW to Bayero University Kano

Ground areas available for solar plant

Generator house

Area availablefor installation

Power house

Substation

• For both Bayero University Kano (BUK) campuses, the old and the new one, solar solutions in the range of 500kW each are proposed

• Given the dramatic power shortages in Nigeria and Enerwhere’s existing pipeline, we expect to grow to 100+ MWp over the next 3-5 years (subject to funding of in-country business development teams)

Bayero University Kano (BUK)

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Immediate Project Pipeline

City TechnologyProposed solar capacity

(kWp)Contract signature

Kaduna Solar-diesel 600 Sep-17

Kano Solar-diesel 375 Sep-17

Lagos Solar-diesel 300 Sep-17

Abuja Solar-diesel 75 Sep-17

Kano Solar-only 146 Sep-17

Kano Solar-only 1,025 Dec-17

Kaduna Solar-diesel 75 Dec-17

Kaduna Solar-diesel 300 Dec-17

Kano Solar-only 75 Dec-17

Kano Solar-only 150 Dec-17

Kano Solar-only 300 Dec-17

http://dii-desertenergy.org/dii-summit/

GROSVENOR HOUSE, DUBAI Marina, UNITED ARAB EMIRATES

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