Differ enables sustainable energy access in the Kenyan healthcare sector

Differ AS, a Norwegian renewable energy firm, is leading a sustainable shift in Kenya’s healthcare sector with its innovative pay-as-you-go solar model. Supported by Nopef, this initiative promises enhanced energy security and a significant reduction in CO2 emissions, providing both social and environmental benefits.

Kenya’s developmental readiness: an ideal launchpad for the project

Differ’s initiative in Kenya is driven by a wider mission to implement distributed energy solutions in healthcare and educational facilities across Africa and Asia. As part of this work, Differ founded Differ Community Power (DCP), a company specialising in electrification of social infrastructure. Tom Erichsen, CEO of Differ, highlights the company’s commitment: “Electrifying healthcare facilities and schools has been a core objective for us for a number of years. With the establishment of DCP three years ago, around the time we started our project in Kenya, we aimed to strongly advance these efforts and generally improve the sustainability of the sector.”

Acknowledging the limitations of traditional payment and service delivery models, Differ introduced a pay-as-you-go (PAYG) scheme to provide a more sustainable alternative, reducing upfront costs for healthcare clinics. “Our aim was to pioneer ‘energy as a service’ for private sector clinics, enabling installations with just a 10% down payment, with the remainder payable in monthly instalments. This approach not only reduces initial investment cost but also ensures system longevity through our operations and maintenance service, leading to better returns for our customers,” Erichsen notes.

Choosing Kenya as a launchpad for this innovative project was a strategic choice driven by the country’s stable currency, familiarity with PAYG models and existing local partnerships. “Kenya presented the perfect combination of developmental readiness and partner availability, essential for our project’s success,” Erichsen adds.

Aligning environmental goals with a unique business approach

The project’s clear environmental benefits made it a suitable candidate for Nopef funding. “The environmental benefit was a key component of the project, so it was natural to apply for Nopef funding to kickstart the feasibility study,” Erichsen explains. The emphasis on replacing diesel generators with solar PV and energy storage solutions represents a critical environmental initiative, which aims to substantially reduce carbon emissions and foster cleaner energy usage. Nopef’s financial backing was instrumental in tackling the initial hurdles of entering a new market and establishing the financial and operational frameworks of the new business model.

From Nopef’s standpoint, the project is closely aligned with its objectives, marrying environmental benefit with an innovative business model. “For Nopef, the project ticked many boxes. It combined significant environmental benefits with an innovative business model as well as positive social impact,” explains Joakim Svahn, Nefco Investment Officer and project manager of the Nopef project.

Launched in 2019, the 2.5-year feasibility study on Differ’s PAYG solar model in Kenya explored financial viability, customer commitment to payments and regulatory suitability for different ‘energy-as-a-service’ operations. This investigation revealed the model’s significant environmental and economic promise, especially in replacing diesel generators with solar power. It also highlighted the strong interest from healthcare facilities in adopting cleaner energy solutions to reduce costs and improve energy security, as well as the project’s potential to achieve substantial CO2 emissions reductions. These insights have steered Differ’s strategies for market entry and operational planning.

Navigating adversity and charting a path forwards

The onset of COVID-19, followed by an economic downturn and uncertainty surrounding the Kenyan elections, presented significant challenges for the project and affected investments and decision-making among private healthcare facilities. Despite these obstacles, the team’s commitment to adapt and explore solutions highlights their belief in the project’s long-term potential and positive impact.

There was significant interest from healthcare facilities, but financial constraints, particularly the ability to meet the 10% down payment, emerged as a primary barrier amidst the pandemic-induced economic strain. However, Differ’s achievements, including its operational establishment in Kenya, agreements with three pilot facilities and preparations for solar installations, signal a promising advancement towards sustainable healthcare infrastructure.

Differ’s ability to keep a Nairobi-based facility, Top Care Nursing Home, operational during the city’s longest blackout in August 2023 without using diesel backup also showcases the effectiveness and reliability of its solar solutions. Despite the obstacles facing the company with regard to scalability, including financing challenges and economic uncertainties related to local currency, Differ’s optimism and dedication to leveraging renewable energy for the healthcare sector remains undeterred.

“We are still actively pursuing ways to move forwards with our pay-as-you-go (PAYG) or ‘energy-as-a-service’ models, which we see as a key for broadening access to renewable energy across healthcare facilities, schools and small to medium-sized enterprises. We believe this approach has the potential to open up new markets and deliver a more significant impact and return on investment for solar projects compared to conventional engineering, procurement and construction methods,” Erichsen concludes.

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