Powering The Future: Access Power Founder Reda El Chaar
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Since the trend towards greener, more sustainable energy solutions started quite some time ago, the prevalent question has been whether it is just a fleeting fad, or it offers viable business opportunities for the long-term. The public is now more convinced of the latter, but only due to entrepreneurial minded individuals willing to take tremendous risks related to disrupting the utilities sector. To Reda El Chaar, founder and Executive Chairman of Access Power, a developer, owner, and operator of wind and solar power plants in Africa and Asia, prospects for entrepreneurial achievements in this sector lay within his own area of expertise.
Having moved to the UAE in 2003 from Lebanon, El Chaar started his career in the energy sector first at Unilever, followed by a five-year stint at ACWA Power, where he helped it to become one of the largest private power producers in the MENA region. In 2012, being 27 years old at the time, he started Access Power "with two desks" (for his wife and himself), and AED 100,000 of his own capital. It has since grown into an employer of more than 50 people. "We started off by providing consultancy services within the independent power projects (IPP) sector, and, very quickly, in the first year, we became a very successful consultancy, advising on all IPPs from Morocco to Oman," he says. "The vision has always been to become the developer, owner, and operator of power plants, but the consultancy business was a building block to accrue the capital to get there. When people heard that I was going to start a utility company with AED100,000, they thought I was mad. But I told them that I had a plan and that was to build my cash through consultancy services, and then to pivot and move the company towards becoming a developer, owner, and operator of power plants."
A very ambitious target of building Access Power meant taking part in a seismic shift to radically change the energy sector, filled with conservative, well-entrenched incumbents. Five years later, however, Access Power has a development pipeline of 1,000 MW in 15 African countries, and of 500 MW in eight countries in Central Asia- all collectively worth over US$1 billion. The key to this, El Chaar explains, was in tapping into an uncrowded market niche. "When you go into highly fragmented emerging markets, it means that there is no single market that can deliver a high turnover," he says. "Instead, you need to go to multiple countries and do smaller size projects, and in an aggregate, they become big. What happens if you are a large utility, which are generally extremely big companies, is that you have heavy overheads, and it becomes less economical for you to do small projects in small fragmented markets. You look for big markets where you can deploy strategies of scale. On the other hand, we found our niche because we limited our overheads, and by doing that, we were able to go into smaller countries, do smaller size projects, and eventually become a very attractive platform. We managed to aggregate very large MWs, and became an interesting target for large utilities. Our biggest USP, however, is what I call, PowerPoint to power plant. Many large companies simply dismiss PowerPoints, meaning that they don't want to get into a project at a PowerPoint stage, but when there is some more material behind it. Our case is very different. We start a project as a PowerPoint, and stay with it until it becomes a power plant."
One of the first wins the company had was its official entry into the Egyptian market by developing two solar PV plants with a total capacity of 126 MWp located in the Benban solar park in the Aswan province of Egypt, with its strategic partner EREN Renewable Energy. Another was in Uganda, last year, when Access Power inaugurated the country's first grid-connected solar power plant- a 10 MW utility- in Soroti. The $19 million Soroti Solar Plant is expected to generate clean, low-carbon, sustainable electricity to 40,000 homes, schools, and businesses in the area. Yet, this is not the only value El Chaar, being an environmentally and socially conscious entrepreneur, aims to add to those less developed markets. "Doing business in Africa takes a lot of patience, perseverance, and you should mix these with a lot of passion," he says. "If you lose one of them, you won't be able to do business there. But, beyond this, it requires fundamental and profound understanding of the people and communities that you are dealing with. Many of our projects are in faraway communities, so far that you have to drive for eight hours to get to a major city. It is very important that that particular community benefits from your project, in terms of job creation, electricity, and so on. They need to give you, what we call, a full buy-in, meaning to believe in it and become a part of it. For example, in Uganda, the people who operate our plant there are all Ugandans. So, there is a full Ugandan team operating the first solar project in East Africa. This gives us the feeling that we are giving back directly to the community."
Identifying an opportunity that is worth investing the time and effort that is usually needed when dealing with the complexities of these markets seems to be an art to master. El Chaar explains that the solution is in being agile in all aspects of the business. In Zambia, for example, experts lined up to propose solar power solutions, whereas Access Power suggested developing the country's first privately financed wind farm. It is now working on a 130 MW wind farm concept with grant funding from the US Trade and Development Agency (USTDA). "When we went to Zambia and decided to do a project there, we went to one of their ministries and proposed a wind power plant. Their immediate question was: 'Is there wind in Zambia?' Or: 'Can we generate power from wind in Zambia?'" he remembers. "Then, we did our PowerPoints, our studies, and so on, and today, everyone wants to do something with wind in Zambia. So, everything starts with a desktop analysis, then you create your contacts there, but it does take a lot of time. From the day when we decide that we want to approach a country, to the day when we get the first project, there can sometimes take two or three years. In general, I would say that it can take anywhere between eight months to two years. It can be a very time consuming business, but that is exactly why we had the niche that we have."
Time consuming processes aside, Access Power is enabling a wider social change, and that is in addition to providing affordable electricity to a reported 600 million Africans, who still do not have any kind of access to electricity, El Chaar says. For that reason, he is not fond of humanitarian aid, doubting its effects on a society apart from goodie bags donated at official ceremonies of bureaucrats, journalists, and the like. "I don't believe in the aid approach, because aid never builds countries, it's trade that does that," he says. "There have been many aid-driven electrification initiatives, and I call them a bandage approach to aid. For example, somebody has cancer, and you give them a bandage. We cannot have a bandage approach to aid, but a trade approach to aid. So, aid through trade. We try to find profitable opportunities, to bring power to people profitably, so that everyone can benefit from it while creating a sustainable ecosystem. The aid ecosystem is not sustainable, because you give free money, you build a power plant to some extent, you run out of money, you can't continue, people don't get electricity, and it's all gone."
Another illustration that he is walking the talk is the Access Co-Development Facility (ACF), a competition offering technical and financial support to chosen utility projects. Since its inception in 2014, ACF has received a significant number of proposals- 55 in 2015, 96 in 2016, and 82 in 2017. The winning projects are mainly grassroots entrepreneurship initiatives, such as this year's proposed energy solutions for Tanzania, Ghana and Rwanda. Some of these projects have already come to fruition- one of the two first year's winners were a team proposing a 50 MW Abiba Solar project in Nigeria's Kaduna State. With the support of Access Power, the team has secured a $1.25 million loan from InfraCo Africa, a multi-government funded, privately managed company providing early-stage development capital and expertise to develop infrastructure projects in Sub-Saharan Africa. Once completed, it will be Kaduna State's first privately developed renewable power facility, and its first solar project. "We provide them [chosen applicants] with funding and know-how," El Chaar says.
"The entire team will work with us and we will help them make their projects happen. In Nigeria, for example, three Nigerian guys who had worked for big international companies abroad, decided to go back and give back to their country. They put together a specific project for a specific need and then got stuck because they didn't have enough money to continue. They are exactly the type of people we want to support since they brought in some knowledge, some of their own money, and just needed somebody to help them at the last hurdle. That's exactly what we did." Similarly, Access Power also launched Solar Shark Tank, a competition offering a US$100,000 grant to the projects in Asia, Africa and Latin America, in partnership with Dutch development bank FMO.
El Chaar's approach to his business can be summed up as descending on a new country in anticipation of a rush of lucrative infrastructure contracts and fewer competitors, yet making sure that the host country receives not only the needed infrastructure and jobs, but, more importantly, technology and skills. The strategy is, therefore, reversing the "no risk, only gains" business tactic often taken by international companies in emerging markets. When it comes to financing, El Chaar's formula is similar- from its inception, Access Power has been taking on the full development risk for its projects.
"Development business is one of the riskiest businesses, and that is why we have managed to bring an entrepreneurial spirit into a very non-entrepreneurial industry," El Chaar explains. "It is risky, but if you have the right know-how, the right people, process and procedures put in place, you can manage that risk. You cannot erase it, but you can manage it. For the first project, the risk was massive. I had to put $2 million of my own money before having something that could even be called a project. Then, in Egypt we put close to $12 million of upfront money. It is very tricky at an early-stage, because then you have concentration risk. At that stage, you have one or two projects, and if something goes wrong with them, you are dead. At the stage we are at today, with projects in so many different countries, we have this diversification as a backup. Initially, it is a bet. If Uganda had failed, we would have closed up shop. You think about this risk every day. Waking up in the morning and going to bed at night, your head is all about the risk that you're taking. But, it is not the thinking why not to do it. On the contrary, we think of that risk so that we are aware of it and that we are able to manage it."
By having his skin in the game, El Chaar has earned the trust of Eren Development, a French renewable energy developer. The two companies launched a privately funded investment vehicle --Access Infra Africa-- to build a portfolio of power assets in Africa worth in excess of $500 million. The deal includes Eren Development taking a 20% stake in Access Power and a seat on the board, as well as committing to put up 70% of the costs to achieve the joint venture's African portfolio target. Starting a utilities business is hard enough, but managing it for long-term success is often an even bigger hurdle to overcome.For that reason, I enquire how he sets deadlines for different phases of the projects. This has particular resonance as the key to Access Power's success is bringing ideas to market more quickly and more affordably than ever thought possible. El Chaar's answer is hardly surprising. "It's very simple- aim for the stars to get to the moon," he says, laughing. "Deadlines always get pushed, especially in emerging markets. However, you should always remember that just because timelines get pushed you should not decide not to have them. To the contrary, I believe that an unrealistic timeline is better than no timeline. People always say, 'Reda wants everything to be done yesterday.' It is important to stretch yourself. It's about both overpromising and over-delivering. We have managed to complete the fastest built power plant on the African continent ever. It was in Uganda in 2015. From the signing of the contracts, to delivering the first power on the grid, it took 12 months. Historically in Africa, it used to take up to five years from contract signing to delivering power. We did it in one year."
Lighting up homes in underserved parts of Africa and Asia is one possible explanation of the rush, and a good one for that matter. However, El Chaar's ultimate goal stretches far beyond what Access Power has achieved so far- creating and seizing opportunities to redevelop other sectors and our cities/ countries along the way. "For now, our goal is to put as many megawatts as possible on the grind to light up as many schools, homes, and so on, and later on, it is to create the largest pan-emerging market utility within the renewables sector," El Chaar says.
"My even bigger dream is to take this outside of our sector and to be able to build pan-infrastructures not just for power, but for roads, schools, healthcare. Basically, to do pan-infrastructure investments. So, to take this spirit of entrepreneurship and innovation into those infrastructure sectors. If you look at all of them, they all lack entrepreneurial spirit. As we have been successful in the energy sector, I would like to see this formula replicated in other sectors. I would like to see Access Power, as a group, growing into other sectors, other than the energy sector, to which we can bring our experience of how to originate and develop processes and procedures to create new opportunities and then turn them into investable projects. For example, we could become a major player in the education sector by building schools on a PPP basis. I can build a school and lease it to a government, for example. They can buy seats in it on a yearly basis, for example. In the healthcare sector, it's the same thing. I can build hospitals, and sell them bed spaces."
It's clear that El Chaar has big dreams for the future of his business, and given how he has led Access Power to its current market standing, these goals aren't as far-fetched as they may seem. After all, it's by fostering relationships with entrepreneurial minds, both upstarts and veterans, that he has managed to break into and thrive in a traditionally conservative sector. El Chaar tells me that he meets with his previous bosses, all highly respected experts in the energy sector, over dinner once a month to ensure that he remains exposed to sound advice. His management style is not much different- empower to be empowered.
"I lead by example. I lead from the front line. I like to empower people. I want my team to feel that they are both empowered and accountable for what they are doing," he says. "With empowerment comes responsibility, and with that, my role becomes very simple, I become an advisor. When they have an issue, they come to me, and I then become a problem solver. So, my leadership style is one, giving responsibility and ownership of their work to our staff, two, being a trusted advisor and a solution provider, and three, being the driver of all the passion in this organization." And for all his dreams for a better, cleaner, brighter future, El Chaar is essentially making it happen.