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© Gaia Energy
Steven L. Kukoda, Executive Director, ICA
The International Copper Association (ICA) was pleased to join for the first time at the ARE Energy Access Investment Forum in Abidjan on 21-23 March 2023. I participated in two panel discussions to promote ICA’s work on sustainable energy in Africa: Cornerstone of Rural Electrification (CORE), Grid Efficiency and Resilience (GEAR) and the long-standing United For Efficiency (U4E).
ICA viewed EAIF as an appropriate venue to find new partners to support CORE and GEAR, and in particular to meet with financial institutions. EAIF proved to be ideal on both counts and we are in follow-up discussions with several organisations. More broadly, this fits in with ICA’s ever-increasing advocacy on increased investment in SDG7, and in particular on energy efficiency. Through Mission Efficiency, ICA co-founded the Mission Efficiency Marketplace, which brings together the global financial and energy efficiency communities. Investments in energy efficiency are greatly lagging ambition, even though the greatest share of action needed—more than 40%--to achieve the Paris Climate Agreement goals is energy efficiency. U4E and GEAR provide solutions to unlock a myriad of socio-economic benefits in Africa.
One of the greatest barriers to increased investment in energy efficiency is a lack of funding for capacity building and technical assistance. This upfront work includes data aggregation, energy-savings modeling, policy development, practitioner training, etc. and is needed to develop investment-grade energy efficiency projects. This work in and of itself is not profitable, so it is difficult to unlock the funding of it. At EAIF, ICA socialised a new and innovative model of blended financing— one that brings together three separate types of funding institutions to work in parallel to develop energy efficiency projects:
This model is being refined by the Mission Efficiency Marketplace and may be pioneered through a GEAR project in Zambia. For more information please contact Steve Kukoda.
A new coalition to foster access to energy in sub-Saharan Africa has been announced on 21 March 2023: the Gaia Energy Impact Fund II. This alliance gathers different actors supporting entrepreneurship:
The Gaia Energy Impact Fund II will invest mainly in African SMEs in the off-grid renewable energy sphere. In addition, the investees will receive technical assistance from Schneider Electric experts. The entrepreneurial spirit of the fund and of the Limited Partners (LPs) will help to tailor the right financing tool for the targeted start-ups, aiming at long term development and solid growth. The fund will not take majority stakes as it aims to support the entrepreneurs and not to take over the activities. The LPs are ready to share the entrepreneurial risks as well as their experience through board positions and mentorships. If relevant, commercial or technical partnerships can be envisioned.
Impact will be at the heart of the fund’s activities. It is the main investment driver and the investing team will be incentivised by the results. The aim is to develop access to electricity, productive energy to boost farming production thanks to solar irrigation, cold storage or mills. Productive energy will also enable the development of small businesses and services thanks to mini-grids and C&I. Impact will be a main discussion point with the entrepreneurs to ensure its compatibility with the start-ups’ development, and ensure the measurement will not impede the operations. Impact assessment is managed by a dedicated employee and will be supervised by a specific committee relying on the long experience of I&P, the expertise of academics and the involvement of the sponsors of the Fund.
We are confident that such a partnership of entrepreneurs will bring a new spirit in the access to energy financing eco-system.
A company planning to build 13.7 MWp of isolated solar-hybrid grids in the Democratic Republic of the Congo (DRC) by mid-2024 is close to finalising on USD 30 million in fresh equity as part of its Series B fundraise, in what is a prime example of blended finance in action.
The UK government-funded Renewable Energy Performance Platform (REPP), which is managed by Camco, last month committed USD 500,000 to developer Nuru SASU (Nuru) alongside equal amounts from co-investors Proparco and E3 Capital.
The USD 1.5m convertible notes have served to bridge a financing gap and reduce some of the risks associated with the deal for the consortium of commercial investors lined up to participate in the Series B round. The residual funds – including a further USD 5.5m from REPP – are now expected to be invested within the next few weeks.
The Series B raise will help to accelerate the implementation of three nationally strategic late-stage development projects in Goma, Kindu and Bunia, with an aggregate installed capacity of 13.7 MWp. Nuru has a further 35MWp in its current active pipeline, which it expects to be fully commissioned within three years. Once both phases have been completed, the company will be providing first-time clean energy access to over 230,000 people as well as approximately 5,300 businesses and social and public institutions, most of whom currently rely on diesel gensets for their power.
At Camco, we believe that blended finance-structured deals like this, which use concessional public finance to de-risk and attract commercial investors, are crucial to supporting Africa's energy transition and we are currently raising several blended finance funds to scale up our activities in Africa and the Pacific.
REPP’s investment in Nuru follows research by the International Energy Agency which found that achieving Africa’s energy and climate goals would require more than doubling energy investment this decade, taking it over USD 190 billion each year from 2026 to 2030, with two-thirds going to clean energy. Climate finance from public sources alone is simply not enough to address this problem, but private investors are often too risk-averse to invest in novel energy access business models in Africa.
This certainly seems to be the case in DRC, with analysis by ACERD analysis by ACERD indicating that despite the success of some companies, most businesses in the country are still facing challenges accessing finance due partly to the high perception of market risk by international funders and the limited availability of local financing sources for renewable energy. By using public finance to de-risk investments like in the Nuru deal, more private capital can be attracted to DRC and other African countries, and in doing so help to achieve the scale of investment needed to affect real change.
Decentralised renewable energy is hindered by numerous technical, regulatory and financial hurdles that have so far stopped it from reaching its full potential. With Africa’s population predicted to double by 2050, at ENGIE Energy Access we are exploring innovative new methods of financing and mitigating risks.
How can the global community solve the financial challenges to energy access?
ENGIE Energy Access is testing alternative financial approaches that are new to the market and can contribute to creating more robust and shock-resistant internal financial markets in Africa. We believe that these approaches should incentivise private sector investment to meet some of the main challenges.
ENGIE Energy Access therefore partnered with CarbonClear, a Danish start-up that developed an innovative service for SHS companies to issue and certify carbon offsets.
With CarbonClear, ENGIE Energy Access will further raise funds for energy provision by issuing and selling carbon credits.
Under the terms of the partnership agreement, CarbonClear will be using its innovative and fully digital model to certify the carbon offset generated from the solar kits distributed by ENGIE Energy Access to rural and off-grid communities living in sub-Saharan Africa.
ENGIE Global Energy Management & Sales (GEMS) – the energy management and sales division of the ENGIE Group will assist ENGIE Energy Access in selling these credits to climate-conscious organisations wanting to offset their greenhouse gas emissions with projects that have a high social and environmental impact. The partnership targets to issue 500.000 tCO2e of offsets.
Through an IT integration between CarbonClear and MySolGo, the last-mile distribution software used by ENGIE Energy Access to monitor its PAYG operations, Micro Carbon Avoidances (MCAs) are created, which are made available to corporate buyers wishing to compensate for their CO2 footprint. The carbon calculations applied are based on the established UN Clean Development Mechanism (CDM) methodology and are third-party verified by DNV.
This partnership happens at a time when a number of global initiatives such as the Africa Carbon Market Initiative are exploring ways of strengthening the integrity of the voluntary carbon market, as well as its liquidity. By scaling the CarbonClear data-driven model, measurable carbon finance to impactful solar off-grid deployments throughout the countries in Africa where ENGIE Energy Access operates are being provided.
Access to safe water is recognised by the UN as a human right fundamental to everyone’s health, dignity and prosperity. However, still today one in four people in the world do not access to clean drinking water. Climate change and insufficient public investments in adequate water infrastructure are among the causes of this problem that impacts dramatically the life of millions of people worldwide, especially in developing countries.
Climate finance is a tool that can help to address water poverty by directing private investments in carbon offsetting projects complementary to governments interventions. The voluntary carbon market is a financial system whereby companies can offset their carbon emissions by purchasing carbon credits generated by projects that have verified positive impact on both environment and people. One carbon credit is equivalent to 1 tonne of CO2 which has been saved thanks to a project.
OffgridSun, an Italian solar energy company whose mission is to improve the life conditions of disadvantaged communities in developing countries through clean and efficient energy solutions, implemented thanks to carbon finance mechanism a project in Kenya aiming at providing safe drinking water to 50,000 people living on Lake Victoria where 98% of the population drinks unsafe water because of lack of functioning water infrastructures.
Limited access to safe water affects dramatically the life of these communities and the surrounding environment. About 80% of people drink unsafe water or boils it as purification method before drinking, consuming significant amount of firewood thus contributing to deforestation and CO2 emission; while 70% suffer from waterborne diseases every year. Women are more affected by this problem because they are often in charge of water collection, spending up to two hours daily in this activity.
The project “Maji safi maisha bora” (in Swahili language “safe water, better life”) implemented by OffgridSun in collaboration with Genius Watter and local partners, will build a water system entirely powered by solar energy whereby the water will be pumped from the lake, purified and supplied to targeted communities through smart water kiosks installed along a 30 km long pipeline. The system is expected to start functioning in August 2023 and distribute more than 60 million of litres of safe water per year. The project is certified by Gold Standard to generate about 16,000 carbon credits per year through the expected emissions reduction.
To know more about this and other OffgridSun projects, visit our website or write to info@offgridsun.com
It’s been 15 years since donation and reward-based crowdfunding platforms like Kickstarter were launched, and in the last decade the proliferation of crowd-based alternative finance platforms has been extraordinary. From funding for small community projects or “patronage” for artists and creators, all the way to established companies raising millions in equity and debt, the variety of platform is dizzying.
So how can energy access companies take advantage of all these choices?
For many DRE companies, and especially those operating in emerging and frontier markets, access to capital is a constant challenge. But alongside the expansion of the DRE sector, crowd-finance platforms have grown to meet financing needs across the capital continuum. Crowdfunding for energy access has grown from USD 7.9m in 2016 to over USD 60m in 2021, and an impressive 16% of all investment for energy access companies in the period 2018-21 came from crowdfunding platforms.
Donation and reward platforms like Kickstarter are a useful way to raise non-repayable funds for product prototyping, and not-for-profit companies can raise on platforms like Global Giving, a donation-based platform where people can support a variety of climate and development focussed projects. Funds raised on these platforms are typically in the range of USD 5,000 - USD 150,000 and according to Energy4Impact, donation crowdfunding campaigns raised over USD 1.5m for energy access-related projects in 2021 alone.
Equity crowdfunding is a more complex option, with many countries now introducing specific regulation which requires a company to be registered in the same jurisdiction as the platform which they are using to raise finance. Nonetheless, energy access companies have raised six- and seven-figure sums in Seed and Series A funding on platforms such as Crowdcube and Seedrs (EU, UK), Birchal (Australia), and BacktoWork (Italy).
Donation, reward and equity crowdfunding platforms typically require the company raising funds to have an anchor investor (who will make the first investments, giving momentum and credibility to the campaign), and the most successful companies have a strong network in the jurisdiction where they are crowdfunding, doing a lot of their own work set up and market campaigns.
Perhaps the biggest game-changer for DRE companies has been with debt-based crowd-finance platforms. Although many of these platforms are regulated, they are generally open to companies registered in other jurisdictions, making them accessible to a larger number of energy access companies. A number of platforms are also specialised to focus on renewable energy and energy access projects and have built up investor communities of several thousand users, all of whom are keen to support high impact projects, raising over USD 30m in 2021. Charm Impact, a UK based platform, specialises in offering loans to early stage clean energy companies, with ticket sizes of £10,000 - £250,000 for tenors of up to 24 months; while more established platforms such as Energise Africa, Lendahand and Trine offer larger loans of £750,000 or more to growth-stage companies, and can lend for four to five years. With their own marketing teams, and dedicated user-base, these specialised platforms promote campaigns on behalf of the issuing company, reducing the work required to raise funds.
The speed and flexibility of crowd-lending also makes it well suited for energy access companies and last-mile distributors – for example, Energise Africa provide qualifying companies with access to a credit facility which can be drawn-down in tranches as small as £75,000. This means companies can match loans to their underlying business needs, and only pay interest on what they actually borrow.
Recently launched donor initiatives, such as RVO’s Clean Cooking SME Finance Facilitator and CEI Africa, focus on supporting crowd-lending platforms to grow and diversify their clean energy portfolios, so the next few years promise another exciting period for energy access crowd funding.
Energy4Impact’s annual Crowd Power: State of the Market report is a great resource, or to find out more about some of the platforms and initiatives mentioned in this article, feel free to reach out to isona@energiseafrica.com
Don’t invest unless you’re prepared to lose all the money you invest. This is a high-risk investment and you are unlikely to be protected if something goes wrong. Take 2 mins to learn more: www.energiseafrica.com/risk-summary
The German Federal Ministry for Economic Cooperation and Development (BMZ) hosted the ‘Decentralised Renewable Energy in Africa’ in Berlin on 27 March 2023 to share experiences, successes and expertise.
The event allowed personal exchange between high-ranking government representatives, global business leaders, scientists, leaders of international organisations and NGOs. More than 10 Members participated in the dialogue.
The Innovators’ Village is a key event during the African Microfinance Week known as SAM that plays host to exhibitions of innovative and environmentally friendly solutions (systems, methodologies, products and services) that deal with the challenges facing the inclusive finance sector and vulnerable populations in Africa.
The next event will take place over two days on Thursday 19 and Friday 20 October in Lomé, Togo, in a dedicated space at SAM, which runs from 16 to 20 October.
The Innovators’ Village is a place for all players in the sector to meet up and create opportunities and synergies:
The Innovators’ Village brings together a diverse group of exhibitors, mainly organisations that facilitate financial inclusion by offering financial and non-financial services via solutions that enable access to the market and enhancement of the internal management of organisations (MFIs, MSMEs, cooperatives, incubators).
Do you have an innovative solution you would like to present as a start-up, NGO, incubator or company which supports access to basic services (energy, healthcare, water, education), access to financing for young entrepreneurs or enhancement of value chains in agriculture and forestry?
Contact us for information on how to participate in the Village as an exhibitor: sam-innovators@ada-microfinance.lu
ARE CEO David Lecoque addressed the progress in rural electrification in a fireside chat at the Middle East Energy in Dubai on 7-9 March 2023 on electrification and mobility and practical applications to bridge the electrification gaps across rural areas.
ARE was also invited to the MEA CEO Roundtable. The roundtable focused on high-level pressing issues and evolving opportunities to exchange open conversations, strengthen relationships and propel the industry to new heights.
ARE participated in DIHAD in Dubai on 13-15 March 2023 to expand the use of distributed renewables in humanitarian settings.
It was a pleasure to connect with ARE Members: Solar23, BAE, Off-Grid Europe, Differ Community Power, Asantys and ARE Partner UNIDO ITPO Germany.
ARE was invited to a panel discussion at the second webinar of Deloitte Asia Pacific’s Leading in Volatile Times series on 14 March 2023.
ARE addressed the challenge of energy security and access to power in Asia Pacific and what the business community should focus on in order to ensure affordability and equity in the medium to long term.
The Mozambique Investment Academy organised by ARE and supported by GET.invest, which kickstarted on 9 December 2022 has successfully come to an end on 12 April 2023 with the final pitching ceremony by the participating companies.
12 local early stage and SMEs from Mozambique took part in the academy received trainings on different business development concepts and on how to access to finance along with exposure to international investors.
ARE organised its flagship event, the Energy Access Investment Forum (EAIF), in Abidjan, Côte d'Ivoire on 21-23 March 2023. The event was co-hosted by African Development Bank (AfDB) and Sustainable Energy Fund for Africa (SEFA) and made possible by GET.invest and Prospect. GET.invest and Prospect are supported by the European Union, Germany, Sweden, the Netherlands and Austria.
This year’s edition of EAIF echoed its previous success and attracted more than 1,500 registrations, of which about 400 joined on-site and more than 500 connected for virtual sessions. EAIF 2023 enabled delegates to enjoy insightful sessions, an exhibition and GET.invest matchmaking opportunities. The delegates included more than 70 private and public financiers, and many energy and climate investors, development finance institutions, international funding partners, government officials and private sector companies.
The Forum saw key industry announcements and pledges to reach universal clean energy access by 2030. It saw Schneider Electric, Capelan, Capital Croissance and Investisseurs & Partenaires (I&P) and Gaia Impact announced their partnership to launch Gaia Energy Impact Fund II, which aims at a final closing by the first half of 2024 for a total target amount of €80M. In addition, ENGIE Energy Access announced their new partnership with CarbonClear to finance the access to energy challenge in Africa through the Voluntary Carbon Market. The second phase of GET.invest was equally announced in the context of the event.
Overall, the event featured thematic & country sessions and interactive panels to advance on concrete topics and keep up with the latest trends in the decentralised renewable energy sector. In addition to the packed agenda, on-site delegates also had the chance to experience the state-of-the-art exhibition and GET.invest matchmaking sessions. Furthermore, the networking receptions held during the initial two days of the event were the icing on the cake, allowing the participants to unwind and connect with their peers after a long and productive conference day.
Every participant has valuable knowledge that deserves to be uncovered, shared and tapped into. Thanks to GET.invest matchmaking, powered by Braindate, on-site delegates could openly post their knowledge through one-on-one or small group discussion topics, thereby fostering meaningful dialogues and business partnerships. At the end of the event, the matchmaking sessions facilitated 617 new connections among delegates, discussing about 130 topics.
Finally, EAIF 2023 was supported by an exceptional array of sponsors and strategic partners from the DRE sector including Schneider Electric as the Diamond Sponsor, ENGIE Energy Access and International Copper Association as Gold Sponsors, ADA Microfinance, EDP and Zayed Sustainability Prize as Silver Sponsors. Bronze Sponsors included Greeno, I-REC Standard, NRECA International, REPP, and Turbulent Hydro. The event's key strategic partner was GIZ-Green People's Energy for Africa. Other strategic partners included ADEME, CLUB-ER, CORE Initiative, Energy Catalyst, International Finance Corporation, Konrad Adenauer Stiftung and UNIDO.
150 participants tuned in to the webinar on 6 April to learn more on ARE's member value proposition and gain first-hand knowledge on member-exclusive services such as market intelligence support, global matchmaking platform, business delegations and capacity building initiatives.
Many thanks to Aptech Africa, ENGIE Energy Access, EDP, Okra Solar and Schneider Electric for your kind testimonials.
Present your projects and technology solutions to public and private sector players! Partnering with the German Federal Ministry of Economic Development and Cooperation (BMZ), this year’s Off-Grid Power Workshop on is an outstanding opportunity for companies and project developers to attract and to raise interests from high-ranking delegations, policy makers, investors and international press members by taking part in the Off-Grid Power Workshop event on 15 June 2023 at Intersolar Europe in Munich. The Off-Grid Power Workshop event is the focal point to learn about practical insights on the latest trends on future markets, technological solutions and smart applications.
ARE, BSW and Intersolar Europe are offering a unique marketing opportunity for companies active in the field of off-grid solutions. Present your projects and technologies at Off-Grid Power Workshop and position your company as the off-grid specialist.
Special speaking slot prices for ARE and BSW members.
Deadline: 12 May
This second annual report continues an investigation into European and other financial flows to Africa, which began with the first AEEP European Financial Flows report published in August 2021. That first edition analysed data from 2014-2019. This second edition analyses financial flows for the whole 2014-2020 period and evaluates the trends towards meeting the globally-agreed SDG7 goal to ensure ‘access to affordable, reliable, sustainable and modern energy for all’.
By scrutinising data over several years, this report aims to assess the quantity, quality and equitability of European contributions to SDG7, whilst also highlighting opportunities to accelerate progress through partnership. To achieve this, it triangulates multiple, credible data sources – from African national governments, institutions and development banks; the development finance institutions (DFIs) of European Union (EU) Member States, other European and non-European states; EU financial institutions; the multilateral development banks (MDBs) and international organisations, including the Organisation for Economic Co-operation and Development (OECD), the International Energy Agency (IEA) and Sustainable Energy for All (SEforALL). It further leverages the AEEP network to identify emerging trends, initiatives and opportunities to accelerate progress.
Energy 4 Impact’s research programme Crowd Power examines the role of alternative finance in supporting the growth of the energy access sector with a particular focus on crowdfunding. Accounting for an average of 16% of total investment volumes from 2018 to 2021, crowdfunding, particularly through debt-based models, has become an important source of financing in the energy access sector.
The research highlighted in this report shows that energy access projects raised USD 61.5 million on crowdfunding platforms in 2021, making it a record year for energy access crowdfunding.
Global investment in energy transition technologies, including energy efficiency, reached a record high of USD 1.3 trillion in 2022. However, annual investments need to at least quadruple to remain on track to achieve the 1.5°C Scenario in IRENA’s World Energy Transitions Outlook 2023. Investment in renewable energy was also unprecedented – at USD 0.5 trillion – but represented less than one third of the average investment needed each year. Investments are also not flowing at the pace or scale needed to accelerate progress towards universal energy access; investments in off-grid renewable energy solutions in 2021 – at USD 0.5 billion – fell far short of the USD 2.3 billion needed annually in off-grid solar products alone (not including mini-grids).
This third edition of the biannual joint report by IRENA and Climate Policy Initiative (CPI) analyses investment trends by technology, sector, region, source of finance and financial instrument in the period 2013-2020 and provides preliminary data for 2021-2022. It identifies financing gaps to support informed policy making for the deployment of renewables at the scale needed to accelerate the energy transition.
The report finds that investments have become further concentrated in specific technologies and uses, and in a small number of countries/regions. It underscores the need to direct public funds to regions and countries that have considerable untapped potential but find it difficult to attract investment. Funding must be focused on supporting energy transition infrastructure development, as well as enabling policy frameworks to drive investment and address persistent socio-economic gaps.
Please note that views expressed in the Co-Editorial, the In Focus section and the Special Feature of the newsletter, are those of the contributors and do not necessarily reflect ARE’s opinion.
