Yellow Door Energy: Supporting Companies Transition to Clean Energy with Bespoke Lease-to-Own Solar Power Plants Financing in this space globally climbed 17% and reached a peak in 2023, when global investment in cleantech and energy transition reached US $1.8 trillion.

Yellow Door Energy is a leading sustainable energy partner in the MENA region that envisions powering emerging economies reliably, efficiently and sustainably with green energy that will help the world achieve its net-zero targets. They first established themselves in Dubai, United Arab Emirates in 2015, and quickly set up operations in Jordan. This is unsurprising when you look at the adoption of renewable energy across these markets.

Jordan currently leads in the Middle East, with 23% of its national energy requirements being met by renewable energy, as of 2022; 16% of which comes from solar energy alone. The UAE met over 12% of its energy needs by renewable energy sources in 2022, and that number is expected to triple by 2030.

The country has several top-down government strategies that have laid out a clear roadmap to triple the contribution of renewable energy in the national energy mix and install 19.8 GW of clean energy capacity by 2030.

The UAE has also committed to invest AED 150-200 billion (equivalent to US $40-$55 billion) into renewable energy infrastructure by 2030, and hopes to achieve AED 100 billion (equivalent to US $27 billion) in financial savings with the renewable energy transition they have mapped out to 2030. The country has also mapped out clear milestones in order to achieve net-zero targets by 2050.

At COP28 which was hosted in the UAE in November - December 2023, over 110 countries unanimously agreed to transition away from fossil fuels, achieve net-zero by 2050, and triple the renewable energy capacity globally. The problem that Yellow Door Energy seeks to solve-for is in supporting the world triple its global renewable energy capacity. This can be challenging, as transitioning to renewable energy solutions can not only be CAPEX intensive, but may also require a complex mix of solutions, from battery storage solutions and hybrid energy solutions, in case of emergency power outages which can happen when we rely solely on renewables sources of power such as solar or wind.

The company seeks to smooth out the many challenges companies face when trying to transition to clean energy, by providing a number of on-grid and off-grid energy solutions that also include hybrid solutions that are necessary during this transition period.

So how do they do this? The company builds bespoke solar power plants for corporate clients on their premises. Yellow Door Energy serves commercial to industrial players, from factories, offices, shopping malls, and large warehouses. To date, the company has been awarded over 240 MW of solar projects in the Middle East and Africa region. This includes over 100 solar projects in the United Arab Emirates, supporting over 50 different organizations. They have also recently entered Saudi Arabia, where they have secured 4 projects across retail and manufacturing players in the Kingdom. They are also actively providing solar energy in Oman, Bahrain and South Africa.

Yellow Door Energy finances, designs, operates and maintains these solar electricity facilities. Customers pay a monthly bill but will own the plant on their premises outright at the end of the contract, which usually spans 10 to 15 years, in what is known as a build-own-operate-transfer agreement. Their solar lease program allows customers to significantly reduce their electricity costs – roughly 10 to 40 per cent, depending on local market regulations and dynamics – and switch to clean energy, reducing their carbon footprints, without any upfront CAPEX investment.

Yellow Door Energy tries to increase solar energy penetration across commercial and industrial sites of its clients, by providing an on-site solar plant and energy storage solution that is fully managed, operated and maintained by Yellow Door Energy. This allows customers to move away from any heavy reliance on the grid, allowing companies to use more clean energy throughout the day, significantly reduce electricity cost without any upfront investment, maximize clean energy production, increase power reliability and lower carbon footprints.

In many parts of the GCC and the Middle East, there exists remote resorts, mining or industrial operations that often run on off-grid energy solutions, such as diesel generators that have heavy fuel consumption and thus large carbon footprints. Yellow Door Energy goes to these off-site players and develops an off-grid energy facility, which is a hybrid mixture of solar energy, energy storage and diesel or gas powered generators as a fail-safe option.

Transitioning from fossil fuel-powered generators to a hybrid renewable energy solution, such as that which Yellow Door Energy offers, helps clients shield themselves against price fluctuations of diesel and gasoline.

Companies that suffer from high tariffs due to peak charges can also look to reduce these costs, by transitioning to stored energy on premises during those peak hours, where electricity costs are prohibitive; this is a strategic solution known as 'peak shaving'. In addition, having on-site energy storage can help other companies that wish to reduce the impact of power outages on their business and on their operations.

There are many markets in the world that suffer from regular power outages, including market such as Lebanon, South Africa, and India, where such solutions could bring significant peace of mind, and control run-away costs.

South Africa, Saudi Arabia and Turkey

Rory McCarthy, Yellow Door Energy's Chief Operating Officer, said that South Africa is its biggest growth market, followed by Saudi Arabia, but that it was also considering expanding supply of solar electricity to Turkey, eventually. He remarked that the opportunity is large in Saudi Arabia, where a large number of companies are operating outside the grid, and many of whom require additional power – which they are currently obtaining through on-site generators.

"We want to help those customers come off generators and onto cleaner sources of power," McCarthy said. But there are challenges in Saudi Arabia, including slower legislation to reduce subsidies currently at play, which make it difficult for independent power suppliers to convince customers to transition away from domestic fuel consumption.

Saudi Arabia has also set a later net-zero target, which it says it will achieve by 2060, while the rest of the world is aiming for 2050. South Africa is a major focus market for the company, as lengthy power outages are a near-daily occurrence due to problems with Eskom, the state utility player. McCarthy remarked, "Large industry in South Africa is crying out for energy solutions and for capacity. They have back-up power, but generators aren't that efficient and it's much smoother to transition away to distributed energy through solar and battery solutions."

Cleantech Financing

Yellow Door Energy raised US $65 million in a Series A funding in 2019, and it received an additional $400 million from investors in October 2022, which made the private equity firm Actis its largest shareholder. The Series A funding round also allowed some of Yellow Door Energy's earliest investors to exit, though many maintained or grew their equity position in the company. Mitsui & Co, International Finance Corporation, and the Arab Energy Fund (formerly Apicorp) are some of the investors backing the clean energy company.

The company says that their five-year business plan, which will take them through 2027, is fully funded and the management team is focused on executing sustainable energy solutions, with a portfolio value expected to exceed US $1 billion, which will be funded through a combination of equity and debt securities.

Jeremy Crane, Founder and CEO of Yellow Door Energy, said of their landmark US $400 million fundraising round in late 2022: "This substantial investment will enable Yellow Door Energy to rapidly expand into new countries and deploy over US $1 billion in projects across the region."

The company also counts many large multinationals and regional heavy-weights among its customers, including Unilever, Nestle, Agthia Group, Majid Al Futtaim, and Aldar Properties. At the end of 2023, Yellow Door Energy had an installed and under-construction capacity representing roughly US $200 million; the company says it's aiming to increase this five-fold to reach US $1 billion by 2027.

Financing in this space globally climbed 17% and reached a peak in 2023, when global investment in cleantech and energy transition reached US $1.8 trillion. The largest investments were made in electrified transport, which overtook renewable energy as the main target of financing for the first time. China was the biggest market with more than a third of the total investment, followed by Europe and the US. New clean technologies such as investments in hydrogen power and power grid innovations seemed to also be prevalent.

Investment in energy transition has outpaced fossil fuel investments for the last five years – US $5.4 trillion versus US $3.7 trillion. In 2023, clean energy financing was US $1.8 trillion compared to US $1.1 trillion for fossil fuels. This trend is undoubtedly expected to continue as governments get serious about achieving their 2030 milestones on their way to achieving 2050 net-zero targets.

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This article was originally published on Lucidity Insights, a partner of BIZ Experiences Middle East in developing special reports on the Middle East and Africa's tech and BIZ Experiencesial ecosystems.