Two corporate giants with huge stakes in the existing fossil fuel energy infrastructure sent a clear signal to the market this past week that decentralized renewable micro-grids and rooftop solar in Africa are mainstream and ready to scale.
Caterpillar Ventures, a wholly owned subsidiary of Caterpillar Inc., the world's largest diesel generator manufacturer, said it had joined a $20 million syndicate to invest in micro-grid developer Powerhive. Caterpillar will also work with Powerhive to leverage the multinational's emerging market experience, technical know-how and scale.
At the same time, Total SA, the world's fourth largest oil and gas company, announced that it had taken equity stakes in both Off Grid Electric and Powerhive (the latter as part of the same syndicate as Caterpillar Ventures). Total is not a stranger to decentralized renewables, having acquired rooftop solar leader SunPower in 2011. Its Awango program has also been selling picosolar products in emerging markets since 2012.
It's important that big traditional energy players are investing in decentralized renewables. First, companies like Total, Enel and Caterpillar don't like risk, so if they invest it means that a technology is being viewed as an emerging mainstream investment opportunity. At the same time, it means that micro-grids are now capable of reliably and affordably generating enough power to be attractive to big players. Lastly, finance, which is a key barrier to more rapid deployment of decentralized renewables, usually follows more established players.
This signal is most definitely one to watch.