Utilities Middle East – August 2019

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http://www.utilities-me.com August 2019 / Utilities Middle East 3

August 2019
Contents Volume 13 | Issue 08

How Yellow Door Energy

is driving solar uptake

in the region with its

leasing model

Why has fi nancing for distributed power generation been such
a disappointment? One explanation is that investors simply do
not understand how scalable or economically viable distrib-
uted power generation is. Industry actors have long argued
that fi nancial systems are skewed, with the amount of fi nance
directed towards distributed energy resources (DER), like
mini-grids and stand-alone systems, remaining tiny in com-
parison to investments in national grids.
This is despite distributed energy technologies being the
most economical solution to meet the needs of the majority of
unconnected people by 2030, according to research.
Early this year, Yellow Door Energy, a leading player in the
Middle East’s distributed energy market, received a $65mn
Series A round of funding from a group of international inves-
tors. The funds will support the Dubai headquartered compa-
ny’s planned expansion into new markets following its success
in the past four years since its inception.
It takes a lot of convincing for such a start-up to raise this
kind of funding. But for Jeremy Crane, CEO of Yellow Door
Energy, the fi rm’s consistency in successfully executing big
projects was enough to convince fi nanciers. Crane attributes
the lack of fi nancing for distributed power generation to the
fact that few companies in this sector deliver large returns or
have scaled beyond a certain extent.
In other words, when investors do their due diligence
and negotiate contracts, small projects present a challenge
because their transaction costs per project are very high. Most
distributed power generation do not invest billions of dollars
at the time, but instead implement small projects in diffi cult
conditions. For a fi nancier, small projects mean lots of work
for at most limited returns and a much higher perceived per
capita credit risk.
Crane advises start-ups and other smaller players to aggre-
gate multiple projects together in bundles of 20MW or 50MW,
which would make a stronger case for long-term fi nancing. In
this issue, UME speaks to Jeremy Crane on a broad-range of
issues concerning the Middle East’s distributed energy sector
and Yellow Door Energy’s success.

Closing gaps in

DER fi nancing

Baset Asaba, Editor
Email: baset.asaba@itp.com

View point



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