19 April, 2024 Member article

Catalytic mini-grid asset financing for RBF grantees in Africa

Since 2021, ARE Member SustainSolar has successfully piloted vendor-based asset financing deals for 10 rural electrification projects utilising SustainSolar turnkey power systems electrifying mini-grids, health clinics, and PURE applications – in Lesotho, Sierra Leone, and Uganda. This scalable asset finance model was developed by SustainSolar (with support from GET.invest) to bridge construction finance needs of off-grid and mini-grid developers with results-based grants – thereby eliminating developers’ fundraising needs for the power system portion of such projects. Thanks to this successful pilot phase, the model is now scaling into a USD 9.5 million blended finance facility which will become available for grant-qualified developers starting in 2024. This facility will enable swift access to SustainSolar’s rapid-deployment turnkey power systems for approximately 100 new PV mini-grids across Africa, achieving progress toward SDG7 and beyond.

Based in South Africa, SustainSolar is a leading systems integrator providing high-quality, turnkey containerised solar and battery energy storage systems (BESS). Our innovative product range includes modular, plug-and-play solutions designed for various applications, such as off-grid power supply, mini-grids for rural electrification, and hybrid diesel fuel saver systems for commercial use. With a robust track record, we’ve successfully installed over 50 systems across 14 African countries.

Through this experience, we identified in-house asset finance as a catalytic opportunity for improving clients’ access to SustainSolar systems for rural electrification projects – specifically designing our facility with low deposit and deferred payment terms aligning to grant milestone schedules. With the rising prevalence of results-based grants – often called Results Based Finance (RBF), Performance Based Grants (PBG), or Milestone Grants – bridge finance mechanisms like SustainSolar’s have become critical for developers, funders, and community beneficiaries alike.

With our model, developers can access asset finance swiftly, at concessional rates, for purchase of SustainSolar’s rapid-deployment turnkey power systems – built to spec for unique project needs, delivered on time from South Africa, with engineering and logistics support from experienced local professionals. For developers this means hassle-free installation of pre-tested power systems – with minimal finance fees or “idle” capital. For investors, this model derisks the project by ensuring reliable power systems with performance and delivery guarantees from SustainSolar.

Project timelines of our pilot deals have ranged up to 9 months, with SustainSolar manufacturing, delivering, and commissioning our power systems within 4 months, and clients’ grant payments received in month 9 or before. In the scaled model, payment terms can extend up to 18 months – allowing clients further time to acquire grant payments.

For mini-grid grants like BGFA, UEF, CEI Africa, DARES, GET Access, and other programmes, SustainSolar offers developers a great partnership – with turnkey power systems, tailored asset finance, and strong industry track record.