Wednesday, April 18, 2018

Wunder Capital Closes $112 Million Fundraise for Commercial Solar

Commercial solar financier Wunder Capital announced Wednesday the close of its Series B financing, with a $112 million equity and debt raise led by New York investment firm Cyrus Capital Partners.

Cyrus Partner John Rapaport will join Wunder’s board of directors. John Witchel, co-founder of peer-to-peer lender Prosper, will join the company’s advisory board.

Wunder said the raise typifies a “natural progression” in alternative lending that starts with funding from pure-play retail, moves to registered investment advisers, and eventually works its way up to big institutional investors.

“Closing this big facility with Cyrus is us announcing ourselves into this institutional investor space,” said Wunder co-founder and CEO Bryan Birsic. “For us, this is our announcement — and, frankly, commercial solar’s announcement — to the really big banking world that smaller commercial solar is real and Wunder is real. I think this puts us on the map.”

According to GTM Research Senior Solar Analyst Michelle Davis, Wunder’s new source of capital makes sense within the context of the commercial space. 

“The commercial solar segment has been attracting more diverse sources of capital as of late,” said Davis. “This raise from a private equity firm is in line with that trend.”

In the past, commercial solar has faced difficulty getting the financial footing of other market segments. Wunder Capital is among the companies aiming to capitalize on the underdeveloped sector and streamline the complex process. Through a roster of partners Wunder builds a balance sheet for developers, helping them circumvent the arduous process of finding loans. Wunder also manages the project after construction.

Since its founding, the company has grown substantially. Davis said Wunder expanded its portfolio “by an order of magnitude” last year, with expectations to do the same in 2018.

“This recent raise points to their intent to fulfill that vision,” she said.

Early in the year, Wunder told GTM the company is seeing demand from developers for projects worth $1.8 billion in 2018. Now, Birsic said “we are blowing that number away.”

Wunder expects to see demand for over $2 billion in projects this year. The company can only finance about 10 percent of that number. 

Last year, Wunder increased its project originations tenfold, and Birsic expects the growth trend to continue.

According to Birsic, the tariffs will not be a major hindrance. He expects the tariffs to increase project development costs by 4 or 5 percent in the short-term. “The only thing the tariff has done is hit pause for six months,” he said.  

In the meantime, Wunder plans to use the fundraise to grow its staff from 16 to 40, open a Denver office, and expand its lending products and project support.

The company will also continue investigating new partners that offer similar flexibility as the investment from Cyrus. 

“We are very much working to add new partners to expand the number of products we can bring and grow the solar market as much as we can,” said Birsic.

from GTM Solar

SolarWorld Asked the Gov’t to Exclude SunPower From Tariffs. Now SunPower Is Buying SolarWorld

Unconfirmed rumors swirled for weeks: SunPower was eyeing SolarWorld's U.S. manufacturing assets.

It made sense. SolarWorld has been looking for a buyer since last summer; SunPower desperately needed a bigger American manufacturing presence to avoid tariffs.

Turns out, the rumors were true.

On Wednesday morning, SunPower unveiled plans to acquire SolarWorld Americas for an undisclosed amount. If approved by U.S. and German regulators, the acquisition would add 430 megawatts of cell capacity and 550 megawatts of module capacity to SunPower's operations. The company would rival First Solar as the largest U.S. maker of solar modules.

"From a strategy perspective, you can see the logic," said MJ Shiao, head of Americas at GTM Research. "Without the Germany backing, SolarWorld USA needed a way to continue investing in R&D to stay competitive in the market. SunPower immediately injects manufacturing know-how and their P-series module — obviously with a target of keeping U.S. manufacturing competitive."

The proposed deal adds new context to SolarWorld's recent filing with government trade officials.

On Monday, SolarWorld Americas filed comments with U.S. trade representatives on the Trump Administration's 30-percent solar tariffs. It supported exemptions for several solar companies that sell niche solar products and panels for off-grid lighting and signage. SolarWorld also supported SunPower's exclusion request — the only major manufacturer that the company backed.

“SunPower's copper-plated IBC products are structurally and functionally distinct from traditional CSPV front-contact cells and modules, and involve a substantially different production process,” according to the filing submitted by Timothy Brightbill at Wiley Rein, on behalf of SolarWorld Americas.

“This copper-plated IBC technology, combined with SunPower's substantial U.S. investment, provide strong justification for the exclusion of these products from the Section 201 remedies,” the filing stated. “SunPower has explained that excluding these products will allow it to increase its investment in R&D and module manufacturing in the United States-a key goal of the Section 201 remedies.”

Lo and behold, SunPower’s investment plans included SolarWorld.

In an analyst note this week, Roth Capital Partners explicitly called out the mention of SunPower: "We note SolarWorld strongly supports SunPower's 201 exclusion request. USTR will not necessarily follow SolarWorld's recommendation, but it definitely is a positive stance, in our view, for SunPower."

"I think this makes SolarWorld's letter of support in SunPower's pursuit of an 201 exemption super shady. There was obviously a huge conflict of interest when they wrote support for excluding SunPower's technology but not others," said GTM's Shiao.

Whatever happens with exemptions, the proposed deal will offer distinct advantages for SunPower, according to Shiao: "Because 201 tariffs are a percentage of customs value, the impact to SunPower is much higher than it is to standard crystalline modules. That means they're working against a higher tariff than the 8-10 cents per watt for typical solar modules. From that perspective, there's a little bit more space for them to work with when assessing the competitiveness of U.S. manufacturing versus just absorbing the tariff."

In other words, SunPower had a particularly strong incentive to pick up new domestic manufacturing assets. 

In its announcement, SunPower said it plans to spend money on R&D and improving operations: "The company will invest in factory improvements and increased working capital, while retrofitting a portion of the facility to produce P-Series solar panels, in addition to continuing to produce and ship SolarWorld Americas' legacy products."

SolarWorld Americas has been looking for a buyer since last summer, when U.S. manufacturing and sales operations were put up for sale by an insolvency administrator.

from GTM Solar

Bifacial Plus Tracking Boosts Solar Energy Yield by 27 Percent

The conversation surrounding solar modules in 2018 is understandably focused on the ramifications of the Section 201 tariffs. But there is another trend that could also reverberate through the market: the growth of high-efficiency modules.

In particular, monocrystalline and bifacial modules that utilize passivated emitter and rear cell (PERC) technology have demonstrated the potential to increase energy yields, potentially enough to erase the price hike inflicted by the tariffs.

According to GTM Research, PERC cell capacity rose from a few pilot lines just five years ago to more than 35 gigawatts in 2017, or nearly one-third of total global cell capacity.

The large ramp-up in capacity has been driven in part by policy. China’s Top Runner Program was designed to encourage the production and installation of high-efficiency solar equipment. The most recent round of the Top Runner Program required monocrystalline cells and modules to have efficiencies of 21 percent and 18 percent, respectively. GTM Research estimates that the program has driven a total of 6.5 gigawatts of demand.

The use of high-efficiency modules can have a significant impact on a solar power plant’s production and economics. “Because of high-efficiency modules, if you have the same 100-megawatt PV system, you require fewer modules for the same system output,” said Hongbin Fang, director of technical marketing for LONGi Solar, the world’s largest producer of high-efficiency mono wafers and modules.

“Compared to state-of-the-art multi modules, you require 10 to 12 percent fewer high-efficiency modules because they are 10 to 12 percent more efficient," he said. At the same time, balance of system costs for cables, racking, labor and land are also proportionally reduced because fewer modules can produce the same amount of energy.

The emergence of bifacial PERC modules, which produce energy from the rear side of the module as well as the front, is widening the energy production gap when compared to traditional multi modules.

LONGi recently conducted field tests comparing the energy yield of bifacial, mono, and multi modules installed in China. In one test, two roughly 18-kilowatt installations were monitored for three months. Both were installed in a fixed-tilt configuration and one had standard mono modules while the other used bifacial panels. The result was a more than 11 percent higher energy yield for the system using bifacial modules.

The difference was even starker when LONGi compared the energy yield of a 336-kilowatt system using bifacial modules and a tracker with a similar size system using multi modules and no tracker.

“The energy yield gain of the bifacial module and tracker is 27 percent,” said Fang, who will be discussing the outlook for solar modules during an upcoming panel discussion at GTM’s Solar Summit in San Diego in May. Even when equipped with a tracker, the multi modules still had an energy yield 14.3 percent less than the combination of a bifacial modules and a tracker.

These energy yield benefits would be of little consequence if high-efficiency modules were dramatically more expensive than their multi counterparts. But the price difference between mono and multi has narrowed dramatically in recent years.

According to Fang, what was once as much as a $0.40 per piece price difference between multi and mono wafers back in 2012 is now in the $0.10 to $0.15 range, which translates into a $0.02 to $0.03 per watt difference on wafer cost. The $0.02 to $0.03 increase is offset by the high efficiency on the cell and module level, he added.

The ever shrinking cost difference between mono and multi wafer has been enabled in large part by LONGi’s consistent investments in R&D. LONGi invested about $170 million in the development of mono ingot, wafer, cell and module technology last year, and spends 5 percent to 7 percent per year of its revenue on R&D annually.

LONGi expects to hit about $0.16 per unit by 2020 for mono wafer non-Si cost. LONGi improved its cell efficiency by 1.5 percent last year and demonstrated a p-type mono PERC cell with 23.6 percent efficiency in 2018.

“It is promising that 23 percent cell efficiency will be realized in high volume manufacturing in the near future,” said Fang. "We believe mono PERC, including bifacial PERC, is the best solution to realize lower [levelized cost of energy] for solar projects in the next few years.”

from GTM Solar

Homeowner Calls Tesla Solar Roof Installation a ‘Positive Experience’

With Elon Musk’s varied pursuits receiving so much attention — electric cars, batteries, rockets, and tunnels — one might forget that Tesla is also a solar company. Part of Musk’s vision is for Tesla to be a one-stop destination for customers looking to generate, store, and drive on zero-carbon solar electricity.

Since Tesla acquired SolarCity in 2016, the focus of the company’s solar business appears to be shifting to its Solar Roof tiles.

GTM dug into pricing details and product specs for the solar roof last May, when Tesla started taking customer orders. A few months later, the first installations came, which were then limited to Tesla employees, including Musk and CTO JB Straubel.

But, last month, photos posted to Twitter were the tip-off that Tesla’s solar roofing tiles had reached their first customers. So far, the installations appear to be limited to California.

GTM recently reached out to one of the first customers to install Tesla’s solar roof, Twitter user @Toblerhaus, to ask about the experience. (Editor’s note: Feeling a bit overwhelmed by press inquiries since her solar roof was installed, @Toblerhaus asked that GTM not use her name.)

On March 23, @Toblerhaus tweeted, “the Tesla Solar Roof is every bit as beautiful as I hoped. I feel like we’re living in the future!” One week later, she added that “after the federal kickback, total price is mid 50k. We get lots and lots of sun in San Jose, and expect to produce more than we need. The Tesla install team was outstanding.”

GTM reached @Toblerhaus via email; here’s the exchange:

Greentech Media: Why the Tesla solar roof? Was it timing — you simply needed to replace your roof anyway? You wanted to generate your own clean energy? Climate change? It was cool? What was the inspiration for opting for the solar roof?

@Toblerhaus: All of the above! We’ve wanted to go solar for ages but lived in a condominium until about 18 months ago. We reached out to a number of solar companies when we bought this place and were dismayed that no one was willing to work with us because our roof had metal shingles. Since the metal roof was already 20-25 years old, we decided we were willing to consider roof replacement to allow us to add solar.

Tesla announced that they were accepting reservations for the solar roof shortly after we came to this decision, and we put our names on the list since we knew we had the right to cancel if we changed our minds. A representative from Tesla contacted us about moving forward a couple of months later, and we were convinced that we wanted to move forward.

GTM: What is the kW capacity of the system installed? What percentage of the roof does it cover? Did you opt to install a Powerwall(s), too?

@Toblerhaus: We installed a 9.9-kW system. Forty percent of the roof tiles are solar tiles, and they are strategically placed around the roof according to a design that Tesla engineers created based on our home and location. We opted for a single Powerwall because we want to be able to have backup power in case of outage, but didn’t have a goal of storing enough to keep us off the grid for a long duration.

GTM: Tell me about the interaction with Tesla. What was the sales process like? Did you simply get an estimate online and place an order? Or did you talk to a sales rep from Tesla? What about the installation itself — any problems/delays/hiccups? How long did it take?

@Toblerhaus: Interacting with Tesla has been a positive experience. We used the online Tesla calculator to get an idea of the cost and went ahead and paid the refundable $1,000 deposit when they opened the list for reservations in May 2017. I got an email confirmation that they’d be in touch. A couple of months later, an energy consultant from Tesla reached out to let us know that they’re ready to start the process. They asked to see information about our recent power bills and sent someone out to do a site survey of our home.

After that site survey, there was a long waiting period, but our consultant periodically called to let me know that we haven’t been forgotten. I’m not sure why the delay was so long, but we finally got word that they had a plan and price for us in January 2018. We initially planned to do the installation at the end of January, but there were some materials-related delays that pushed it out to a March install.

The installation took about three weeks. We had a lot of rain during this period, so there were some days that they were extremely limited in what they could do. The team was surprised to find a cedar shake roof underneath the metal one, which meant that roof removal took longer than expected. Other than rainy weather and a surprise roof, there were really no problems of note during the install.

GTM: Any final thoughts?

@Toblerhaus: Truly, I’m overwhelmed by the attention our roof is getting, but I am proud to be an early adopter and hope to be a part of helping this technology succeed. 

from GTM Solar

Tuesday, April 17, 2018

Shell’s Sky Scenario: Solar Dwarfs Oil & Gas as World’s Primary Source of Energy

Shell, the world’s sixth biggest oil and gas company, just published a future "sky" scenario that's getting a lot of attention. 

That potential future: By 2050, renewables could overtake oil, gas and coal as the primary energy source; by that date, it could be “impossible” to purchase a new internal combustion car; and by 2070, there could be 10,000 carbon capture plants operating globally.

Shell's energy transition report is receiving mixed reaction. Many energy experts are hailing Shell for putting together such an ambitious document. A lot of environmentalists are cynical, since oil and gas still play a prominent role in the company's future vision.

In this week's episode, we're going to walk through the different scenarios outlined by Shell. We'll also discuss what Shell's business might look like beyond 2050, as the company acquires more electricity retailers, EV charging assets and renewable energy developers.

This podcast is supported by Wunder Capital, the easiest way to invest in large-scale solar energy projects across the U.S. With Wunder, you can help finance renewable energy projects while earning up to 7.5 percent annually. Get started here to diversify your portfolio and support American solar projects.

This podcast is brought to you by Shoals, the gold standard for solar and storage balance-of-systems solutions. Learn more about how Shoals can make your project operate at the highest level.

Recommended reading:

  • Shell: The Energy Transition report
  • Shell: The New Energies business
  • Washington Post: Shell Just Outlined a Radical Scenario for What It Would Take to Halt Climate Change

Subscribe to The Interchange podcast via Apple PodcastsGoogle PlayStitcher or wherever you find your audio content.


from GTM Solar

Energy Production Insurance for Your Solar Project, From Swiss RE and kWh Analytics

A new insurance product from kWh Analytics guarantees up to 95 percent of forecasted energy production for a solar plant, providing security for solar developers in a regulatory environment where it’s been scarce.

The “solar revenue put” offers backing for a project that makes lending debt less risky for banks. Using its solar asset database, kWh Analytics assesses performance for a given project, setting expected output and putting a price on the risk. If a solar farm doesn’t reach that agreed upon output, the insurer pays for the difference.

"This product pays for itself because you're able to unlock so much more debt and get the banks so much more comfortable with these assets," said Richard Matsui, CEO and founder of kWh Analytics. "It allows the banks to feel good and come through." 

With the new partnership, global insurer Swiss RE Corporate Solutions will keep risk from the projects on its own balance sheet. With that backing, projects will be able to get more debt financing at lower costs. KWh Analytics said the product will offset 50 percent of the $0.10 per watt cost of recently announced solar import tariffs. The company recently sold its first policies, for about 40 megawatts at three Virginia solar farms owned by Coronal Energy. 

Cory Honeyman, associate director of solar at GTM Research, said the product should give developers more flexibility and assurance in a project’s viability.

“Being able to raise more debt with a lower debt service coverage ratio means more breathing room for asset owners to hit their required returns during the term of a PPA, rather than being overly reliant on post-contract revenue stream,” said Honeyman, 

Matsui told Bloomberg the tool allows project developers an increase of debt between 10 and 15 percent. 

Honeyman said the mechanism will be “an important financial innovation” to continue lowering the cost of capital for utility-scale solar projects as power purchase agreement prices continue to decline.

The product could be especially helpful for project owners raising debt project-by-project rather than on balance sheet, because Honeyman said that strategy relies more on project cash flows to meet the requirements of lenders.

Driving down solar costs amidst an uncertain, and even negative, policy environment has become increasingly important as the solar industry moves towards maturity. According to S&P Global, coping with tariffs announced by the Trump administration and other potentially harmful policy developments has essentially pushed the market back a year. GTM Research's own forecasts indicate tariffs could curtail U.S. nstallations by 11 percent through 2020.

Innovative solutions and new financing tools can help alleviate some pressure on developers to keep moving forward.

“With corporate tax reform potentially putting pressure on sponsor returns, and the tariffs adding another 5 to 10 cents per watt to all-in costs depending on the year, the ability for asset owners to increase leverage means they can eke out slightly higher returns via less required equity and a lower overall cost of capital,” said Honeyman. 

Guaranteeing generation could also give solar an edge over other clean energy resources.

GTM Research solar analyst Rishab Shrestha, who previously worked at MAKE Consulting, said that it’s more difficult to offer such assurances for generation in the wind market. Looking ahead, the ability to predict generation with high accuracy could guarantee higher revenues for solar in addition to lowering project costs. 

“The value gain I think would be higher if that’s possible,” said Shrestha. “I would imagine that financing costs for solar, which is already more competitive than the wind industry, would become more competitive moving forward.”

from GTM Solar

Water From the Sun: Solar-Powered Water Pumps Offer African Farmers a Way Out of Poverty

Joshua Okundi’s five-acre farm is his classroom. A longtime schoolteacher who left his job to become a farmer in 2013, Okundi is an instructor to the constant stream of visitors who arrive at his home in Kendu, a small rural village in the western reaches of Kenya.

Visitors come seeking advice, seedlings, and a glimpse at technologies that can help them succeed.

Over the past two years, Okundi has exposed locals to the potential of solar-powered water pumps. Okundi was first introduced to the technology in 2015, when a representative from the U.S. Agency for International Development (USAID)-funded Kenya Smallholder Solar Irrigation (KSSI) project brought a pump to show to a group of farmers.

Okundi instantly grasped why it was better than the diesel-powered pumps he had tried to use in the past. “Whenever there is sun, you can pump water,” he said. “Whenever a generator is running [the pump], you have to use fuel. And the pump usually gets broken. And if the cost of the damage is too heavy, that will render most of the crops useless.”

The benefits of a reliable pump that doesn’t require costly fuel are obvious in this part of Africa. Typically hot and dry, agriculture has always been a challenge here. Climate change is making it even more difficult. With increasingly frequent, extended, and severe droughts becoming the norm, the need for reliable irrigation is pressing. 

Okundi now uses four pumps to irrigate his crops of tomatoes and corn and to replenish a small pond where he raises tilapia and catfish to sell in local markets. Besides witnessing the pumps in action, farmers with little money hear this important message: the pump pays for itself quickly. 

Using a pump to grow just half an acre of tomatoes offers a quick payback. “Within three months, he will be in a position to start to repay with the profits,” he said. Winrock International, the NGO that implemented the KSSI project, performed ROI studies on two farmers who purchased solar pumps. The study found that one farmer could expect a gross profit increase of 350 percent after paying off a 22-month loan and the other farmer was projected to enjoy a 235 percent increase after retiring a two-year loan. 

Joshua Okundi surveys his crops. Photo credit: Winrock International/Bobby Neptune

The limits of energy access

The experiences of farmers like Okundi represent a different way to approach energy access in the developing world. Debates have long raged about whether the most direct route out of poverty can be found by extending centralized grids or by employing distributed energy resources, like solar and batteries.

But this either-or debate may be missing a critical component: energy access alone does not guarantee vibrant economic activity. “Grid electricity got to people and 20 years later there has been no economic impact,” said Bikash Pandey, Director of Innovations, Clean Energy, Environment and Water at Winrock International. “Energy is not an end in itself, which is demonstrated by the fact that energy access has not had the kind of poverty impact that many have hoped for and expected.” 

Solar water pumps are an example of a distributed energy approach to energy access that prioritizes productive uses that generate income for farmers.

“The increased income can be used to pay for the appliance within one or two years,” said Jennifer Holthaus, a program officer in Winrock’s Clean Energy, Environment and Water Group. “The farmer then has access to a device which increases her income two or three times for the next 15 to 20 years.” By reducing the reliance on rainfall to irrigate crops, pumps also lessen the risk of drought-caused crop failures. This is critical when farmers are entirely dependent on crop yields to generate income.

The financial puzzle

Along with benefits to individual farmers, solar pumps also help address the continent’s overall lack of irrigation. Indeed, only 5 percent of arable land in Africa is currently irrigated, compared to 40 percent of Asia. Tapping into Africa’s groundwater using solar pumps would provide the reliable access to water necessary to feed the continent’s growing population.

Winrock’s Pandey sees a parallel with India’s successful efforts to expand irrigation. “India tripled food production since independence [in 1947] with only 5 percent more land in production,” he said. “It came overwhelmingly from increased irrigation from individual pumps, where the agency for irrigation was with the individual farmer and not the government. Nobody expects African governments to provide irrigation.”

What’s preventing African farmers from getting pumps is a familiar challenge: their relatively high upfront costs (ranging between $300 and $1200) put them out of reach of most farmers. Banks and other financial institutions in Kenya have also been slow to embrace full-scale lending. “Banks in Kenya are generally reluctant to invest in agriculture, and when they do provide a loan they do so against collateral or a source of reliable income,” said Holthaus. “A school teacher can get a loan for the pump but not a farmer.” 

Testing the financial waters

Far from the rural farms, in Kenya’s commercial and political capital of Nairobi, the microfinance company Juhudi Kilimo would seem a natural source of funding for solar pumps. Launched in 2009, Juhudi Kilimo’s business is financing Kenya’s smallholder farmers. It does so with two approaches, both of which are meant to address the reality that most of its customers lack the collateral and borrowing history mainstream financial institutions require. 

One approach is asset financing, such as providing loans for farmers to purchase dairy cows. The organization also relies on a group lending model in which farmers work together to act as co-guarantors for any individual loan a farmer takes out. If one member of a group can’t repay a loan, the others must step up and contribute enough to cover the debt.

It’s a business model that has worked well. Juhudi Kilimo has 24 branches across Kenya and has distributed over 50,000 loans to farmers. Juhudi Kilimo began investigating whether there was demand for solar pumps in 2014. In 2016 the company worked with Winrock on a small pilot project to raise awareness and provide technical demonstrations of the pump to farmers.

The pilot only resulted in five farmers buying pumps. But there were important lessons learned. Two big ones: the pump made financial sense only for commercial farmers, and those who did take out money to cover the high upfront cost were able to pay the loans back quickly. “For smallholder farmers who are doing an acre of tomatoes or vegetables, they are able to get back the investment in one and a half cropping cycles. That means they only need to use the pump less than a year and they are able to get back their capital,” said Samwel Tobiko, a senior marketing officer at Juhudi Kilimo.

But favorable economics aren’t enough. Research conducted for Juhudi Kilimo showed the profound impact a person’s income level has on their decision-making. “The lower your income levels are, the more short-term oriented you are because you have more pressing problems. You have children to feed, you don’t know where your next meal is coming from, you are worried about school fees,” said Elvin Walela, a senior partnership officer at Juhudi Kilimo.

Walela believes that dynamic may begin to change through increased awareness of the rapid payback of pumps, and if solar pump manufacturers can drive down costs to equal their diesel-powered counterparts.

A solar water pump can pay itself back very quickly. Photo credit: Winrock International/Bobby Neptune

Pump priming

Juhudi Kilimo is embarking on a new effort to drive interest in pumps. The company is optimistic because it is now offering a cheaper version that can pump water longer distances. Juhudi Kilimo is also making the pump available as part of a larger suite of products aimed at helping farmers manage their overall water needs. It’s an approach the company is calling smart water solutions, and it includes the pump, water tanks, irrigation kits, and other technologies. 

Juhudi Kilimo’s first foray into solar pumps was limited to one branch and lasted just over a month. Its new initiative will last more than a year and be available in six counties, each one with a different climate. “Who knows, if the first pilot was in another county, we might have sold 50 pumps. It could be that we didn’t try the right place," said Walela.

Juhudi Kilimo is also investing in marketing and hiring staff dedicated to selling its bundle of water solutions. These new hires will be able to form groups of farmers, and will also have the power to distribute loans. These water solution experts will be given sales targets to meet and financial incentives to motivate them. “If they are able to sell, it just shows with more commitment from people we entrust to sell the product, it is possible,” said Walela. 

The farmer's bank

Co-operative Bank is the second-largest bank in Kenya as measured by number of customers (about 6 million) and third based on assets. It was created to serve the financial needs of smallholder farmers.

Co-operative Bank has also made initial efforts to explore demand for solar pumps. The bank’s foundation worked with Winrock to run a pilot program that both tested the technology and elevated the awareness of its benefits among farmers who already work closely with Co-operative Bank to secure funding for seeds, fertilizer, and other farm necessities.

The pilot project with Winrock validated that the technology itself was durable and operated as expected. But the pilot project wasn’t sufficient for the bank to begin making loans on a large scale. “The pump has worked, we know that for sure now,” said Paul Karugu, who works for the Co-operative Bank Foundation. “Can it be done on a large-scale? Can we see the kind of repayment we expect?”

To test that proposition, the Co-operative Bank Foundation is partnering with the Mastercard Foundation on another pilot program that will attempt to distribute loans to about 2,500 Kenyan farmers over the next three years. The initiative will be rolled out through some of the bank’s 12,000 cooperatives, which distribute loans to members using a group repayment approach. As part of the pilot with MasterCard, the Co-operative Bank Foundation will also seek to educate farmers about financial literacy and how to utilize technology for their own financial needs.

Kuguru is hopeful that demand for pumps will increase and other banks will offer loans. “Kenya, in a way, likes innovations. New things, they take them. If it works well, it spreads like a bush fire,” he said.

Cultivating a future

If the use of pumps does spread like a bush fire, one of the places it will ignite is on a hillside a few kilometers from Joshua Okundi’s farm. Here, Michael Ouma has planted over 300 mango trees, passion fruit plants, oranges, as well as pumpkins and other vegetables. 

Ouma was one of Okundi’s students and has remained under his tutelage since graduating from university with degrees in international relations and crisis management. Ouma never imagined that farming was in his future. But like so many other young Kenyan college graduates, it has been difficult for him to land a job. 

These days, Ouma is pondering a future as a farmer. The one ingredient he would need is water. At the moment, Ouma relies on a number of hand-dug cisterns that hold rainwater. After a recent spate of autumn rains, the cisterns are full. But that’s not always the case. Ouma points at a tract of land with dozens of dead paw paw fruit trees to show what happens when droughts are long and there’s no irrigation.

What Ouma would like to do — if he can get the money together — is hire someone to dig a well that accesses the plentiful groundwater. With that and a solar pump, he sees a bright future for his land and for himself. “You can see I have abundant room to grow. I have a lot,” he said. “When I have that constant supply of water, that is just gold."


Chris Warren is a freelance writer based in Arkansas. The reporting trip to Nigeria was funded by Winrock International.

from GTM Solar