EU financing for Nuon solar energy company in Burkina Faso.
On a worldwide basis, 1.6 billion people are deprived of electricity. The majority of these people live in rural areas and in developing countries. Via the FRES (Foundation Rural Energy Services) Foundation, the energy company Nuon provides families in developing countries with solar-generated electricity. Nuon called upon Berenschot for assistance in setting up an energy production company in Burkina Faso. One of the key questions: how do we gain access to European grants for this project?
Energy in Africa
The low concentration of households in the African countryside generally makes the installation of electrical networks an expensive proposition. People must rely on alternative energy sources, such as oil lamps and candles for lighting, batteries and old car batteries for radio or TV. Nuon created the FRES Foundation in 2004, with the objective of promoting change in this area.
Business model
FRES established small commercial energy production companies in Mali and South Africa responsible for installing small Solar Home Systems for clients. The client selects a certain service level (number of lights and number of electrical outlets) and pays a fixed amount per month (fee for service). The advantage of this business model is that people who are unable to afford an upfront investment are still able to gain access to energy, and that good maintenance is guaranteed. Following its success in Mali and South Africa, FRES wanted to accomplish the same thing in Burkina Faso.
Energy Facility
Fons de Zeeuw, Berenschot Consultant: “We usely start off by conducting an analysis of available grant options. We then make an assessment to determine if existing grant programmes provide an entry point for the project concept. If we do not find a suitable programme, we investigate other financing constructs, for example, the creation of partnerships between companies, social organisations and government services. In the case of FRES, we found a relevant grant opportunity in the form of the EU Energy Facility Programme.” Berenschot subsequently provided advice during the selection of local business partners in Burkina Faso. A consultant – originating from Burkina Faso – visited the potential partners.
Amply rewarded
To qualify for the European grant in the context of the Energy Facility Programme, a project file had to be submitted to the European Union. A complete business plan was prepared for this purpose, as well as a ready-to-use project plan with detailed estimates for the creation of the energy production company. De Zeeuw: “In case of such EU programmes, there always is a limited budget and fierce competition. Only the best project proposals are selected.” And this was the case for the FRES proposal as well. Berenschot subsequently provided support for the contract negotiations with the European delegation. De Zeeuw: “Our efforts were amply rewarded: the application resulted in the award of a €2.5 million EU grant to FRES.” Armed with this capital and a detailed business plan, access to electricity is one step closer for many households in Burkina Faso.
