Tech giant Microsoft, via its Climate Innovation Fund, has partnered with climate-centric blended finance fund manager Climate Fund Managers (CFM) to invest USD 18 million in the first renewable energy trading platform in Nigeria developed by UK company Konexa.
Konexa is one of the few companies to have been awarded a private energy trading license in Nigeria. The license, which was awarded by the NERC (Nigerian Energy Regulatory Commission) in June 2022 allows Konexa to source renewable power from IPPs, transport it across the national grid and sell it to private clients at a competitive price.
“We are honored to have been awarded one of the first trading licenses for renewable energy in Nigeria and to be launching our trading platform with the invaluable support of CFM and Microsoft’s Climate Innovation Fund,” said Pradeep Pursnani, CEO of Konexa.
“The platform will enable us to integrate sustainable energy sources into the grid while helping decarbonize the hard-to-abate commercial and industrial sector,” Pradeep Pursnani, CEO of Konexa added.
Boosting private energy trading in Nigeria
The renewable energy trading platform by Konexa recently connected its first client, Nigeria Breweries PLC, and will supply renewable energy to two of its breweries. The trading platform will facilitate the transmission of renewable energy from the 30MW Gurara Hydro Power Plant in Kaduna State, Northern Nigeria, to two of Nigerian Breweries’ Kaduna facilities. Currently off-grid and powered by fossil fuels, both breweries will transition to receiving 100% of their electricity needs from the hydro energy source, operated by North South Power Company Limited.
The investment by CFM and Microsoft’s Climate Innovation Fund will support the construction of facilities and the deployment of a Battery Energy Storage Solution to connect Nigerian Breweries PLC into the grid supplied by renewable energy from the Gurara Plant. With an annual supply of 20.5GWh, the Project will avoid 8,104 tons of CO2 equivalent emissions per year, the equivalent of taking 1,800 cars off the road.
“At Microsoft, our long-term vision is to reach a state where, on all the world’s grids, 100% of our electricity, 100% of the time, is generated from zero-carbon sources and that clean power can reliably reach all customers,” said Brandon Middaugh, Senior Director, Climate Innovation Fund, Microsoft.
“With this investment, Konexa’s technology will deliver firm, clean power to customers in sub-Saharan Africa, demonstrating the impact of innovation and grid modernization,” Middaugh added.
CFM invested in the Project via its Climate Investor One (CIO) fund; an EU-supported blended finance facility focused on renewable energy infrastructure in emerging markets. The funding, which was facilitated via CIO’s Construction Equity Fund, was provided by the European Commission. CIO’s Development Fund, in which the European Commission is an investor, provided development funding for the Project. CFM supported the technical, financial and ESG aspects of the project development; helping the Project achieve financial close within just 14 months.
“Historically, Nigeria has suffered from under-investment in its grid infrastructure, particularly when it comes to the distribution grid. Konexa’s trading platform will play a pivotal role in bridging this gap by efficiently connecting third party, and, in future, its own renewable energy generation to C&I customers, helping them achieve reliable, cost-effective and sustainable energy independence while strengthening and enhancing the sustainability of the national grid,” commented Darron Johnson, Regional Head of Investments Africa at CFM.
