21 June 2018 | Reading 10 mins.

Unlocking capital for energy access

Nico Tyabji
Director of Strategic Partnerships, SunFunder

Nico Tyabji, Director of Strategic Partnerships, SunFunder

One of the major challenges today is how to expand access to energy to every corner of the globe, so that no one is denied the opportunities that come with being connected to a reliable source of electricity. One way to address this challenge involves using off-grid solar companies, which hold significant potential for delivering energy access to the over 1 billion people currently living without any electricity – and to the many more that have unreliable access to the grid. However, channelling capital to these companies from interested investors has been one of the key bottlenecks for achieving scale.

SunFunder is a specialist finance company that has unlocked $62 million for solar enterprises from 2012-17. In doing so, it has experimented with a range of structures to increase investment – and discovered ways to help the sector scale-up to a long-term sustainable future, sourcing larger amounts of capital from commercial investors.

The Energy Access Financing Bottleneck

Today, more than 1 billion people, predominantly in rural areas, still live without electricity, and over half of which are in sub-Saharan Africa. A new ecosystem of commercial enterprises that deliver off-grid solar energy access solutions in developing countries have made significant inroads to address this access gap. For example, in 2017, these enterprises were providing improved electricity access to an estimated 73 million households comprising over 360 million people. There is an even larger opportunity for growth, with an estimated potential market of 434 million households.

The off-grid solar sector is emerging as an investment success story, with over $550 million deployed in the last two years alone. However, working capital debt for scaling-up has been, and remains, an obstacle for off-grid solar companies year after year. Specialist intermediaries – foremost among them SunFunder, responsAbility’s Energy Access Fund and SIMA, as well as broader investors Global Partnerships, Oikocredit and Developing World Markets – are actively lending capital to impactful enterprises across the sector, and beginning to tackle the capital gap which prevents scale.

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