Husk Power plans to raise $400m for African expansion

From the newsletter

Solar minigrid provider Husk Power Systems plans to raise $400 million in debt and equity, with the goal of an IPO in 2027, to fuel further expansion in sub-Saharan Africa and Asia. It operates in India and Nigeria and has set its sights on Zambia and Madagascar. The Husk Power CEO disclosed this in an interview with a news outlet.

• Husk achieved profitability in 2023 and has accelerated deployment with its "PRISM" minigrid-in-a-box solution. With this technology, the company can install one mini grid per day.

• The majority of the rural African population lacks access to electricity. Grid extension to such areas is expensive. Minigrids have proven to be cost-effective, with the World Bank projecting that they can connect 380 million people in Africa by 2030.

More details

• Husk Power has experienced rapid growth since its founding in 2008, establishing over 400 mini-grids in Africa and Asia and powering over 1.5 million residential customers and more than 30,000 small businesses. This positions them as the leading private sector mini-grid provider, thanks in part to their innovative approach. While they initially used to deploy around 15 minigrids per month, their new "mini-grid in a box" solution enables them to install one within 24 hours.

• This expansion is reflected in their personnel growth. It now has over 1,000 employees.  The company added roughly 50 new staff members each month last year and aims to more than double its workforce by the end of 2025.

• In a recent interview with the Darden Report, Husk Power CEO Manoj Sinha emphasised the company's dedication to providing energy solutions in the Global South, where a majority of energy-poor communities are located. Their strategy centres on decentralised, renewable energy-based mini-grids, offering a sustainable and efficient option for remote areas where extending the central grid is impractical.

• Husk Power Systems initially focused on providing basic electricity to households but realised the need to expand to commercial customers and promote the productive use of energy. The company now offers energy-efficient appliances, manufacturing machines, and credit financing to support the growth of businesses.

• Minigrids are particularly useful in rural communities due to their catalytic role in economic development. For every dollar invested, the multiplier effect can be five times, boosting economic activities. Serving both residential and small commercial customers, such as restaurants, grocery stores, furniture manufacturers, and agricultural processors, can increase revenue per site. In Nigeria, a single Husk Power mini-grid serves at least 400 customers – about 70% residential and 30% commercial – ensuring consistent electricity consumption and revenue flow.

• The business case for minigrids is thus big. Husk power targeted Africa and Asia expansion confirms this. Their target of Zambia and Madagascar, countries that still have low access to electricity, is a big opportunity. About 58% of the Zambian population and 64% of Madagascar have no electricity. This translates to about 32 million people, with over 80% of them in rural areas. Combined with Nigeria, this translates to a total addressable market of over 100 million people.

• Connecting these millions of people to electricity will require substantial capital investment, which Husk Power currently lacks. Their planned initial public offering (IPO) will help boost their financial muscle, enabling and accelerating their expansion efforts.

Our take

• Demand for minigrids is undoubtedly increasing, as governments have primarily focused on connecting urban populations to the grid. Countries like Nigeria, Kenya, and the DRC are actively deploying minigrids to reach rural communities. This gap in electrification, particularly in populous nations like Ethiopia and the DRC, could present Husk Power with promising new market opportunities to explore.

• The capital-intensive nature of the business and the lack of sufficient capital for expansion pose significant challenges. More funding is needed to support the rapid scaling up of the sector. The World Bank and AfDB programme to electrify 300 million people should target companies like Husk, which have a tested and successful business model, if they are to truly move fast in connecting 300 million by 2030.

• The case for minigrids is clear. Many African grids are unreliable, with frequent blackouts that can take a considerable time to address, especially in remote rural areas. Minigrids offer a solution to this problem. Local communities can be readily trained to manage and operate their own mini-grids, minimising downtime and ensuring a more resilient power supply.