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Ignite Power to acquire ENGIE Energy Access
From the newsletter
The Abu Dhabi-based distributed renewable energy (DRE) company, Ignite Power, has signed a share purchase agreement to acquire 100% of ENGIE Energy Access. This acquisition will create a new entity, Ignite Energy Access, with an expanded reach across 14 African countries, delivering solar power to 15 million people.
This transaction would be the fourth for Ignite Power in the past 24 months. The company in December 2024 raised $15 million from Afrigreen to support its growing Commercial & Industrial (C&I) solar projects. The agreement is expected to be completed in the next few months.
ENGIE specialises in providing solar solutions for homes, businesses, and mini-grids across nine countries, mainly in West (Nigeria, Ghana, and Ivory Coast) and East Africa (Kenya, Rwanda, Uganda, Mozambique, Tanzania, and Zambia). Ignite brings expertise in solar, financing, and digital solutions to form Africa’s largest provider of the full range of distributed renewable energy solutions.
Our take: Ignite Energy Access, now with more money and market presence, stands to benefit big from this acquisition… Read more (2 min)
More details
The countries of operation for Ignite Energy Access will now represent a total addressable market of more than 250 million people. This is advantageous as it is supported by economies of scale. Ignite wants to utilise its digital solutions and proven business model to reach 100 million people by 2030.
Ignite Energy Access will operate in countries with low electricity access rates but high market potential, such as Nigeria. Nearly half of Nigeria's population (100 million people) lacks access to electricity, but the country is making progress towards electrification.
Some, like Kenya, Rwanda, and Ghana, are more mature with higher electrification rates. But the policy space in these countries, which exempts solar importation from VAT, makes it attractive. Again, the unelectrified population is mainly those in rural areas who are best served with customised solar home solutions and mini-grids.
The grid price in these countries is also very high. For instance, it costs $0.185/kWh in Kenya, $0.10/kWh in Ghana, and $0.069/kWh in Rwanda, compared with the country with the cheapest commercial tariff, Libya, at $0.009/kWh. These countries also have unreliable grids with frequent blackouts, which affect business operations.
The market for self-power generation is thus growing as C&I customers switch to off-grid solutions. Policies and regulations surrounding this are also being implemented in these countries. Kenya, Nigeria, and Ghana have set up clear policies allowing self-generation of power.
Ignite Power's interest in this market is a good move. There is potential in this customer segment market to grow. There are, of course, other companies providing similar solutions, like Crossboundary, Powergen, and Ecoligo, but Ignite Energy Acces can utilise its combined expertise to compete effectively.
Our take
Providing energy is a capital-intensive investment. It requires significant capital, and few companies are willing to risk it all. Yes, there is a large addressable market in Africa—600 million people who lack access to electricity. But the serviceable market is small, as many people lack the capital to finance the upfront purchase of energy equipment. The majority require some form of financing, which energy companies must offer if they are to make sales.
Ignite Energy Access, now with more money and market presence, stands to benefit big from this acquisition. With increased resources and a broader reach, they are better positioned to offer attractive financing options and capture a larger share of the market. This acquisition also allows them to leverage economies of scale, potentially reducing costs and further improving their competitiveness.
Mergers and acquisitions are common in the renewable energy space as the market has matured. Some recent examples include the merger of Starsight Energy and SolarAfrica Energy and the acquisition of Lekela Power by Infinity Power. This consolidation often leads to stronger players with the capacity to invest in innovation, expand into new markets, and ultimately drive down the cost of clean energy, benefiting consumers.