Ariya Finergy‘s project to install solar and battery systems has the important goal of addressing the challenges of high electricity costs and unreliable energy supply, which significantly limit the growth of small and medium-sized enterprises (SMEs) in East Africa.

Sustainable economic growth is one of the most important factors in improving the quality of life on the African continent. In this regard, Kenya is one of the fastest developing countries and a trading center in East Africa. In 2023, the Kenyan economy grew by 5.4%, up from 4.8% in 2022. Growth momentum is expected to continue with an average forecast of 5.2% in 2024-2026. 

According to a 2019 report by the International Trade Center, SMEs in Kenya are crucial to the economy, accounting for about 98% of all businesses and creating 80% of new jobs annually. However, the high cost and instability of the electricity supply lead to production losses, forcing companies to resort to diesel generators, which are readily available but harmful to the environment and costly. 

 Ariya Finergy aims to provide a sustainable solution by developing, financing and implementing tailor-made green energy systems. These include photovoltaic solar systems, smart battery storage systems, and power stabilization technologies.  

 The focus is on established commercial and industrial customers in Kenya, Uganda and Tanzania to help them transition from diesel generators to clean and reliable renewable energy sources. 

 As part of the project, Ariya Finergy plans to finance the installation of 4,750 MW of photovoltaic systems and 2 MWh of battery systems in various companies in East Africa. Each plant is expected to have an average capacity of 300 kWp, resulting in the installation of about 16 systems. These measures allow companies to benefit from clean solar energy, reduce energy costs, and increase operational efficiency. In addition, the funds will support Ariya Finergy’s growth and expansion in Uganda and Tanzania. 

 Overall, this project not only aims to improve the reliability and affordability of energy supply for businesses, but it also makes a valuable contribution to sustainable economic growth in the growing countries of East Africa. 

Ariya Finergy‘s business model actively contributes to four of the United Nations’ Sustainable Development Goals: 

 By installing solar panels, Ariya’s customers will receive clean, renewable electricity that is a cost-effective alternative to Kenya’s grid or diesel generators (Goal 7.2). 

 Many of Ariya’s clients are involved in agriculture, which accounts for about 57% of jobs in Kenya. They are particularly well represented in the tea, horticulture and floriculture sectors, which together account for about 33% of Kenya’s exports. A single tea factory employs an average of 3000 people, with each individual generating the income for a family with an average of four members. Expensive electricity costs, frequent power outages and poor power quality are recurring problems here.  

An intelligently planned solar system can thus indirectly promote economic and sustainable growth (Goal 8.1). 

 Ariya’ s holistic approach combines various innovative technologies such as solar thermal collectors and cost-effective energy storage systems to meet the energy needs of its customers in the industrial sector. The smart systems also address the deficiencies in the electricity infrastructure, which mainly lead to high electricity costs, frequent power outages and poor power quality (Goal 9.4).  

 By providing financing to its customers, Ariya also contributes to Goal 9.3. 

 Ariya’ s business model counteracts climate change (Goal 13) as the solar arrays and other energy-efficient solutions replace diesel generators and grid power, 80% of which is generated in thermal power plants, ensuring a significant reduction in CO2 emissions. In addition, Ariya directly contributes to this goal by replacing the unsustainable firewood heating systems with solar thermal energy. 

The electricity grid in East Africa is predominantly powered by clean energy, but the inconsistent quality and reliability of electricity forces many companies to resort to diesel-powered generators. This leads to significant diesel consumption and increased CO2 emissions.  

 Ariya Finergy offers a sustainable solution by helping companies switch to solar energy. This allows them to significantly reduce their carbon footprint while increasing their operational efficiency. 

 The financing of the project is expected to install 4.75 MW of solar plants, which will generate 6,022 MWh of clean energy annually and reduce CO2 emissions by 3,005.1 tons per year.  

 These savings are based on the CO2 emission values of the power grids in Kenya, Uganda and Tanzania, which currently emit 499 g, 295 g and 200 g of CO2 per kWh, respectively. 

Over the course of the project period, a total of 14,720 tonnes of CO2 will be saved. Over a period of 25 years, the life of the solar system, we aim to prevent a total of 73,600 tons of CO2 emissions. 

The investment risks associated with the subordinated loan are described in detail in the VIB under point 5 and in the risk information. The measures taken to mitigate risk are explained in this section: 

 a) Dual corporate structure:

 Two special purpose vehicles, so-called “Special Purpose Vehicles” (SPVs), are used for the crowdfunding campaign:  

1. The first, called Afrika Emissions 6 UG (haftungsbeschränkt), acts as borrower and issuer and is domiciled in Germany. It forwards the raised capital as a secured project loan to the local asset company Ariya Finergy Limited (AFL). In return, collateral is pledged (see further down in this text section). In addition, Afrika Emissions 6 UG (haftungsbeschränkt) will not engage in any other business activities during the entire term of the loan in order not to mix the risk with other projects. The shareholders and managing directors of Afrika Emissions 6 UG (haftungsbeschränkt) are independent of the Ariya Group. In addition, Afrika Emissions 6 UG (haftungsbeschränkt) has a liquidity buffer of 25,000 euros of the funds raised in crowdfunding. The liquidity buffer serves as a financial cushion for any necessary measures by the Issuer in the event that the Project Owner does not meet its payment obligations.

2. The second special purpose vehicle, Ariya Finergy Limited (AFL) based in Kenya, is the local asset company used by Ariya for the purpose of financing as a pure asset company. It acts as a borrower vis-à-vis Ariya Emissions 6 UG (haftungsbeschränkt) and remains the owner of the project assets financed and generated with the project loan and pledged to the German UG during the entire term of the loan. AFL may not take out any further loans during the term of this loan without the consent of Afrika Emissions 6 UG (haftungsbeschränkt). AFL may not engage in any business activity other than the one in which it is already engaged during the term of the loan.

 b) Project assets:

The assets financed by the Kenyan project company AFL as part of this campaign are available to the German issuer Afrika Emissions 6 UG (haftungsbeschränkt) as collateral for the forwarding loan. The assets are in particular the solar plants financed with crowdfunding and leased to customers or the customer receivables of AFL from power purchase agreements (= PPAs) with the customers. 

 c) Payments in USD or Euros:

All contracts, with a few exceptions, require customers to pay in USD or euros. Since the majority of Ariya‘s customers operate internationally and generate sales in hard currency, this significantly reduces currency risks in the local currency KES. 

 d) Equity financing:

AFL and its parent company Ariya Finergy Holding Limited Mauritius (AFHL Mauritius) contribute at least 20% of the project costs in the form of retained earnings and equity. From the point of view of the issuer in Germany, the own funds represent a buffer against losses, for example from currency risks between customer payments in USD and payment obligations from the project loan to the issuer in EUR. 

This financing plan contains the total projected cash flows for Ariya Finergy covering the receipt, initial utilisation and repayment of the loans.

Investment 

The loan of 3,701,800 euros will be used to finance the installation of solar PV systems and batteries for Ariya’s customers. The loan will thus cover the costs of developing the projects, installing the systems, materials and transport. 

The term of the loan is 6 years and has an annual interest rate of up to 7% p.a. for the crowd investors. Investors who invest in the project within the first four weeks will also receive an early bird bonus of 1% (i.e. up to 8% p.a. in total).).  

Repayment is made once a year and includes repayment and interest (annuity repayment), with the first year being repayment-free. The funding threshold in this project is €50,000, if only this amount is reached, the project owner will still use the investor funds to finance his business activities and invest to a lesser extent in the above-mentioned projects. 

 Repayment 

The loan will be repaid from the funds generated by Ariya Finergy in the course of its operations as income from the sale of the solar PV and battery systems and as consideration from installment payments, power purchase agreements (PPAs) and power lease agreements (PLAs).