The Elon Musk’s Gift To Zimbabwe

The Elon Musk’s Gift To Zimbabwe

There is one key industrial sector in Africa which has a very challenging future: electricity distribution companies (Discos). They have a double-whammy: the micro-renewal energy momentum,  and the loss of premium customers through disintermediation. Yes, as most customers find alternatives to national grids, the Discos will be forced to serve sub-optimal customers who can hardly pay for the electricity consumed.

So, the news that Econet Wireless has gone Tesla Powewall is typical – the national grid in Zimbabwe loses one of its best customers. As that happens, it becomes a vicious circle where not having those good customers will make it harder to have the resources to invest, and not having the capacity to invest will annoy the remaining customers who will then find their own alternatives.

Zimbabwe’s Econet Wireless is has ordered for over 520 Powerwall batteries from Tesla, the US-based energy and automobile company. The order was made following persistent power failures in the southern Africa country. Power blackouts last up to 18 hours per day and risked having an impacting on Econet’s telecom services and mobile money operations. The newly ordered Tesla batteries will serve as backups in the telco’s base stations particularly at night when solar panels are not generating electricity. (TC Daily newsletter)

Just like that the distributions companies keep struggling because the best customers are going or gone: only two electricity utilities in Africa are profitable! 

The SMEs need power to run the economy. But discos would need the help of some of the big manufacturers who typically are the cheapest to serve and usually most profitable to link into the network. But for this to happen, those major players would expect the discos to demonstrate reliability before they commit to national grid. If we do not manage this interface, what would happen is to expect discos to become profitable by serving the masses (typically expensive due to higher marginal cost). Most times, that does not happen. The business of power utilities is hard: only two utilities are profitable in Africa.

Do not expect that to change, especially now that everyone knows that Elon Musk can send a good gift to Africa: Powerwall.

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