OnePower Lesotho (1PWR) is a renewable energy startup that provides affordable and reliable electricity services to off-grid communities, helping families, schools, health clinics and local businesses to thrive. The company capitalises on technical design and vertical integration to customise, build and operate energy systems that are both economically and environmentally sustainable.
As well as being an independent power producer, 1PWR also manufactures key components of solar equipment for on-grid and off-grid projects. It is currently Africa’s only manufacturer of single-axis solar-panel tracking frames that orient the panels towards the sun. These innovative structures can boost the power output of solar arrays by up to 20%, and 1PWR is pioneering their use in a portfolio of mini-grids in the Lesotho highland.
With funding from PREO, 1PWR aimed to increase local manufacturing capacity of solar PV trackers, smart meters and mini-grid power houses and deliver them to electrification projects in Lesotho. This reduces the country’s reliance on panel imports and helps create local employment.
By localising the production of these critical infrastructure elements, 1PWR also sought to increase the use of the local workforce and generate value for the local community. . This approach demonstrated a viable roadmap for reducing the cost of off-grid electricity supply that is scalable to rural communities across sub-Saharan Africa.
The 21-month project ended in December 2021, having successfully reached the majority of its targets. PREO spoke to 1PWR to find out what lessons can be learned from the project.
Q: What was the background of the project and what were its initial targets?
A: Our goal at 1PWR is to offer the lowest cost-reflective tariff for electricity to rural mini-grid customers. We aim to save costs by optimising systems and through vertical integration – we manufacture key components in-house. To do this we needed to expand our capacity in Lesotho to build solar PV trackers and assemble integrated mini-grid powerhouses (containing power electronics, switchgear, protections, supervisory control and data acquisition hardware and battery storage). While much of the equipment in mini-grids, such as PV panels and batteries, is imported because it is commoditised or high-tech, 1PWR studied the key elements of the value chain and saw the opportunity to build local capacity to:
- Manufacture panel mount structures such as single-axis PV tracker subassemblies that boost output and reduce imports.
- Fabricate and integrate components into containerised mini-grid powerhouses with efficient layouts that are easy to operate and maintain.
- Manufacture GSM enabled smart meters for pay-as-you-go (PAYG) energy transactions with mobile money platforms (e.g. Vodacom M-Pesa).
The PREO grant funding enabled us to invest in manufacturing and testing equipment for local production of the PV trackers, powerhouses and smart meters. It meant we could procure a CNC plasma cutter, TiG welding facility, machine tools and high throughput fabrication and assembly systems and test equipment (AC/DC load bank, bench electronic quality assurance / quality control). These assets, in conjunction with human resources and training, will help us deploy cost-efficient mini-grids to remote areas.
Our initial targets were:
- To manufacture 10 PV trackers
- Assembly and quality control of 10 mini-grid powerhouses
- Assembly and quality control of 1000 smart meters
- To build internship collaboration with the Energy Research Centre (ERC) of the National University of Lesotho (NUL)
Q: What was your strategy to achieve those targets?
A: Let’s break it down by component:
For the manufacture of 10 PV trackers and the assembly and quality control of 1000 smart meters, we upgraded our machinery, equipment and facilities, hired technicians and production engineers, and validated our processes to reach a manufacturing capacity. We also developed manufacturing processes, including standard operating procedures.
We did the same for the assembly and quality control of 10 mini-grid power houses. We also procured prefabricated powerhouses made from shipping containers and pre-installed with equipment and systems. These powerhouses were delivered to the mini-grid site and connected quickly via a “plug and play” installation.
We also built a traditional powerhouse structure at Ha Makebe. Following a cost analysis, we discovered that traditional powerhouses are $988.04 less expensive than using prefabricated structures (not including import duties or shipping costs).
Q: What were the main challenges that you faced when implementing the project?
A. We faced a number of challenges due to COVID-19 as well as some finance related delays:
- A delay in reaching financial close and equity and debt investment from the EU and UK due to legal challenges raised by Lesotho Department of Energy (DOE) to recognize the ring-fenced SPV as the rights holder for the project.
- A delay by the Lesotho Central Bank to approve the loan agreement from EU and UK financiers, thus delaying disbursement of funds.
- Public gatherings were prohibited because of the COVID-19 pandemic. This was challenging from a community engagement and environmental and social diligence perspective.
- The cost of shipping has doubled since the outbreak of COVID-19 pandemic.
Throughout 2021 we had to expend resources, time and effort on planning for and mitigating the impacts of COVID-19. We had to invest in PPE and implement policies and procedures to observe public health guidance. There were slower response times from prospective suppliers and government stakeholders, and we faced travel and work restrictions in response to varying directives of authorities, and delayed supply chains, transport and clearing services.
Q: How did you overcome those challenges?
A: An agreement was reached on 2 September 2021 by the parties including the EU and UK financiers and the Lesotho Department of Energy, which amended obligations in existing contracts to satisfy financier requirements. A cession letter was executed.
- 1PWR had to secure bridge financing to finance other activities while the loan agreement was being reviewed.
- COVID-19 restrictions in Lesotho were lifted in May 2021. That meant we could proceed with stakeholder engagement at the remaining mini-grid portfolio sites.
Q: What was the ultimate achievement of the project, for 1PWR and for the community?
A: 1PWR deployed mini-grids that maximize the output of solar panels through its One Tracker product, at the same time as reducing dependence on imported products. The in-house design was built and led by the 1PWR team. We installed the first One Tracker system at Ha Makebe in 2021, and it currently serves 200 households with solar mini-grid electricity.
Six remote Partners in Health-supported health centres were also electrified, providing more than 44,5000 patients with improved 24/7 healthcare services.
We are currently designing a portfolio of mini-grids that will span 50 villages and serve more than 30,000 people, with debt and equity financing from REPP, EDFI, and UNCDF. EEP Africa grant funding will enable the company to introduce energy efficient appliances in the newly electrified communities and provide business development support for women entrepreneurs.
Q: What strategies did you use to reach these achievements? How did funding from PREO support these?
A: We adopted, developed and refined several multi-stakeholder and cross disciplinary strategies to achieve our objectives. For example, 1PWR invested heavily in a techno-economic analysis and optimisation approach to understand and improve on best practices and develop new ones where gaps existed. This enabled us to identify economic efficiencies in deploying solar trackers to enhance output and reduce reliance on imported solar panels. The logic was that optimised output per solar panel would lead to fewer panels being installed in a site. We identified a gap in the market for these trackers and, coupled with the benefits of localising production, we designed, built and installed them, supported by equipment and resources procured through the PREO programme grant.
Q: What were the key learnings that the company and sector could take from the project?
A: It is possible to capture key aspects of the supply chain and leverage local manufacturing to shift the balance of payments and benefits from overseas (primarily Asia) imports of renewables equipment to local content. The financial benefits of deploying affordable energy infrastructure are complemented by the spill-over effects of upskilling local labour and developing the local economy through job creation.
Q: What is next after the PREO project? What are your ambitions for the future?
A: We intend to replicate the mini-grid project portfolio approach that we validated in Lesotho. We aim to localise the production of key components of the mini-grid supply chain in adjacent markets, by developing pipeline for three similar-sized ($10m) mini-grid portfolio projects in 2022-2023. We plan to do this by expanding and leveraging existing funding partnerships.
The long-term strategy is to build and operate mini-grids (expanding from Lesotho) at scale across sub-Saharan African markets by leveraging the cost efficiencies of vertical integration and consolidated in-house know how.