EU financing for Nuon solar energy company in Burkina Faso
Worldwide,1.6 billion people have no electricity. The majority of these people live in rural areas and in developing countries. Through FRES (Foundation Rural Energy Services), the power company Nuon provides families in developing countries with solar-powered electricity. Nuon asked Berenschot to help set up a power production company in Burkina Faso. The core question: how do we access European grants for this project?
Electrical power in Africa
The low concentration of households in the African countryside generally makes the installation of electrical networks an expensive proposition. People rely on alternative energy sources, such as oil lamps and candles for lighting, batteries and old car batteries for radio or TV. Nuon set up FRES in 2004 to help promote change in this area.
FRES established small commercial power production companies in Mali and South Africa to install small Solar Home Systems for customers. The customer selects a certain service level (number of lights and electrical outlets) and pays a fixed amount every month (fee for service). The advantage of this business model is that people who are unable to afford an upfront investment can still have access to electricity and are guaranteed good maintenance. Following its success in Mali and South Africa, FRES wanted to repeat the project in Burkina Faso.
Fons de Zeeuw, Berenschot consultant: "We start by analysing the available grant options. We then assess whether existing grant programmes provide a match for the project concept. If we don't find a suitable programme, we look at 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 advised on the selection of local business partners in Burkina Faso. A consultant - originating from Burkina Faso - visited the potential partners.
To qualify for the European grant in the context of the Energy Facility Programme, a project file had to be submitted to the European Commission. 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 power production company. De Zeeuw: "Where such EU programmes are concerned, there is always a limited budget and fierce competition. Only the best project proposals are selected." And this was the case for the FRES proposal too. 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 EU grant to FRES worth around € 2.5 million." Armed with this capital and a detailed business plan, access to electricity is one step closer for many households in Burkina Faso.