Husk Power Systems, which pioneered the first renewable energy minigrid in 2008 and now operates the largest fleet of community minigrids across Africa and Asia, announced that it has achieved profitability on both continents.
Husk is the world’s first minigrid company to achieve this major industry milestone. The company became EBITDA positive in Q4 2022 in its two primary markets, Nigeria and India. EBITDA (earnings before interest, taxes, depreciation, and amortization) is a widely used measure of corporate profitability.
By achieving profitability, Husk has sent a clear signal to the market that rural minigrids are a fully bankable asset class, as well as an important contributor to net-zero growth for the more than three billion people – and countless small businesses and farmers – that are still without access to reliable electricity in rural Sub-Saharan Africa and Asia.
“When I took over the reins of Husk in 2014, we underestimated the amount of time and effort it would take to discover the right business model, right team and right technology platform to build a commercially viable minigrid company on two continents,” said Manoj Sinha, Co-Founder and CEO.
“It took grit and innovation to arrive here – at a profitable and scalable minigrid company.” In 2022, Husk launched its Nigeria Sunshot Initiative, with a target of building 500 minigrids by 2026 that benefit more than 2 million people, while also displacing 25,000 diesel and gasoline generators used by rural businesses and farmers.
The company currently operates 12 off-grid minigrids in Nigeria, benefiting 50,000 people, and expects to expand 5X nationally by the end of 2023. An active participant in the Nigeria Electrification Project, NEP, Husk is making a significant contribution to Nigeria’s energy transition goals and to reducing carbon emissions.
The minigrids also power schools and health clinics, contributing to the broader Sustainable Development Goal, SDG, agenda. The profitability milestone was achieved because of two factors, namely: Husk’s unique platform approach, which addresses the entire rural energy ecosystem (besides electricity and appliance sales, it also installs rooftop solar for businesses, and offers energy-as-a-service for drinking water, agro-processing, and its relentless focus on technology and business innovation, which has allowed Husk to boast the lowest cost of delivered energy and highest average revenue per user in the industry. Husk pioneered the rural minigrid 15 years ago using waste biomass gasification, and in 2017 followed up with the industry’s first solar hybrid minigrid.
Since then, the World Bank and International Energy Agency have both recognized the central role of solar minigrids in ending energy poverty by 2030. It is estimated that between 100,000 and 200,000 minigrids need to be built before the end of the decade. “Husk has proven that the rural minigrid business model works, in Asia and in Africa, and in off-grid, under-the-grid, and grid-interconnected communities. It works and it is robust,” said Board Chairman, Brad Mattson.
“We have already scaled 10X, and are poised to scale another 10X. We urge the industry to embrace the roadmap Husk followed. If funders and governments embrace the minigrid sector and this roadmap for success, together we can not only end energy poverty, but also lay the foundation for a rural industrial revolution.”
In 2022, Husk signaled its ambitions to do its part in fueling that revolution by signing a UN Energy Compact. It committed to build at least 5,000 minigrids by 2030 that would impact more than 10 million people and avoid 7 megatons of carbon emissions from diesel generators. Corporate profitability in India and Nigeria was achieved against a backdrop of severe market disruption caused by Covid-19, global inflation and rising costs of capital, demonstrating the resilience of Husk’s business model.