19 April, 2024 Member article

Distributed renewable energy investments that spark a ripple effect in financing

In the developing world, where rural communities grapple with the lack of access to clean and reliable energy Distributed renewable energy (DRE) solutions – mini-grids, biogas digesters, and solar systems – promise a brighter future powered by clean sources. However, financing these projects can be challenging due to perceived risk and limited capital in these regions. This is where early-stage investments play a crucial role in de-risking ventures and attracting larger funding. ElectriFI, the EU funded Electrification Financing initiative, managed by ARE Member EDFI Management Company, acts as a catalyst for the growth of promising DRE companies. ElectriFI’s early investments spark a ripple effect of additional financing and here are some of the key cases that show that even a drop in the ocean can create a ripple effect: Nuru, Husk Power Systems, and Sistema.bio.

Nuru: Powering the DRC with solar

  • Nuru, a mini-grid operator in the Democratic Republic of Congo (DRC), faced a daunting challenge in 2018: a volatile security situation and an ongoing Ebola outbreak. Despite these risks, ElectriFI committed EUR 1.28 million, combined with co-investors additional EUR 2.55 million, enabling Nuru to build its first mini-grid project and replace diesel generators with clean solar power. This bold move signalled confidence in Nuru’s vision and the potential of DRE solutions in high-risk environments. ElectriFI’s early investment proved catalytic, attracting EUR 36.55 million in additional investments 4 years later, significantly amplifying Nuru’s reach and impact.

Husk Power Systems: Illuminating rural India

Husk Power Systems, a leading provider of decentralised hybrid mini-grids in India, faced challenges in securing funding due to the nascent nature of the DRE sector in the region. ElectriFI stepped in with a EUR 5.89 million commitment in 2022, followed by an additional USD 4 million in 2024. This investment not only provided crucial capital but also served as a powerful validation for Husk Power Systems’ model.  Their strong track record, bolstered by ElectriFI’s initial investment, attracted further investment (EUR 24.54 million) from Development Finance Institutions and other investors. After ElectriFI’s involvement, Husk Power Systems secured a significant EUR 96.45 million in additional funding. This exemplifies how early-stage investments can unlock a cascade of financing for promising DRE companies.

Sistema.bio: Empowering farmers with biogas

Sistema.bio, a company manufacturing biogas digesters for small-scale farmers in Latin America, East Africa, and South Asia, required capital to scale their operations and expand their reach. ElectriFI’s EUR 2.4 million investment in 2019 and 2020 provided the initial momentum together with additional EUR 5.38 million from co-investors. This not only supported Sistema.bio’s operations but also signalled the viability of their innovative biogas model to other investors.  Following ElectriFI’s involvement, Sistema.bio later secured an EUR 23.27 million in additional investments. This surge in funding allowed Sistema.bio to empower countless rural communities with clean energy solutions. Through Sistema.bio ElectriFI is contributing to 480,000 beneficiaries.

A ripple effect for sustainable development

ElectriFI’s initial investments might seem like a drop in the ocean compared to the total funding needs. However, the true power lies in catalysing significant additional investments. ElectriFI’s model of early-stage, impact-driven investments, plays a vital role in accelerating rural development across the globe. This fosters a ripple effect, ultimately leading to increased access to clean energy, economic development and environmental benefits.

— EDFI Management Company