The commercial and industrial (C&I) solar industry is a growing opportunity that includes diverse market segments. One of our longest relationships in the sector is with Ensol, an engineering, procurement and construction (EPC) company led and operated by a Tanzanian team. We made our first investment in Ensol in 2014 and have scaled with the company as it refined its business model, improved internal systems and expanded. It has become one of the most experienced local solar installers in Tanzania, developing a solid reputation for providing quality services.
We interviewed Prosper Magali, Co-founder and Director of Projects and Business Development, to share insights into the C&I sector through his experience with Ensol.
What inspired you to found Ensol in 2001?
Together with understanding the potential for solar technology at the time when electricity access was merely 10% nationally and 1% in rural areas, our main drive was to become entrepreneurs. To run our own business. To become our own bosses.
How would you describe your entrepreneurial journey as a co-founder?
There have been a lot of triumphs but a lot of setbacks as well, so it is mixed feelings. To appear in the list of the top 100 mid-sized companies in Tanzania twice in 2012 and 2013; our mini-grid project being recognized by the Alliance for Rural Electrification (ARE) as the Best Off-Grid Project in 2018; to have been connected and referred to by a lot of people and partners in the renewable energy value chain – these are some of the best memories for me.
What are the key factors that enabled Ensol to become a sustainable business? How will these evolve with growth?
I think being cautious and minimizing expenses has been key for us to become sustainable. We invest a lot back into the company, not only in monetary aspects, but our time and thinking as well. Ensol is like a baby to us and we do a lot to ensure that the baby excels. Another factor has been the supply of certified, high-quality products. This has been the reason why we have become trusted by public and private institutions.
What role has SunFunder played in supporting the company's growth?
In an environment where it is difficult to access finance locally, SunFunder has been our lifeline and we could not have achieved success and sustainability of our business without you. We enjoy the way you are ready to listen and work with us on every step from appropriately putting together all the numbers and documentation required, to advising on the business itself. For us, we consider SunFunder as a partner in business and, being one of your very first investees, we are glad to see you grow to become an exemplary financing aggregator.
What main challenges has the company faced and how have you overcome them?
I think the main challenge has been access to appropriate finance for our activities. The company is rapidly growing and so many partners want to work with us. As we are required to pre-finance many of the projects, this has made our cash flow so tight. We are currently running into a risk of delaying many of the projects because of tight cash flow. We are now considering reaching out to investors to provide equity investment or other long-term financing which we hope to secure in 2020.
How has the business and policy environment evolved since 2001 and what unique challenges and opportunities does that present?
Tanzania has been one of the pioneers in creating the best environment for renewable energy and off-grid energy access activities in Africa and it is no wonder we have been able to reach over 40% electrification in less than 10 years, with off-grid solutions making a good contribution. We have the best regulatory and policy framework and supportive government that has enabled growth in the sector.
Business climate is a concern that we keep speaking with the government about to ensure we have consistency in taxes, policies, permitting and licensing. We work with the business community, including TAREA, AMDA, TPSF and the like, to address all of the issues surrounding the business environment in Tanzania.
How do you think the C&I sector will evolve over the next few years?
With the government's massive grid extension plans to reach all villages by 2021, we believe C&I is the future of the solar sector, particularly in buildings, businesses and productive use applications. We only need to work to resolve and answer key questions, including financing and business models.
Where do you see Ensol in 5 years?
Together with increasing and intensifying our share in Tanzania, we now want to look at other markets in neighboring countries. Hence, we envision ourselves to be in Malawi, Zambia and maybe Burundi in the next 5 years.
About Ensol
Ensol was established in 2001 to supply, install and maintain solar power systems in Tanzania, focusing on the provision of certified and high-quality products and services. As a registered Class I contractor, Ensol has partnered with local and international organizations, and local and central government to provide EPC services to deploy solar energy solutions. These systems are installed all over Tanzania to support education, health, water, ICT, banking and finance sectors. After successfully commissioning a 48kW solar mini-grid in 2017 that now connects 200 customers in Mpale village, Korogwe, North-East of Tanzania; Ensol has 15-20 mini-grid projects in the pipeline to scale up in different Tanzanian villages. With increasing market share in Tanzania, Ensol now envisions capturing markets in neighboring Malawi, Zambia and Burundi. For more information, please visit www.ensol.co.tz