Off-track: Challenging conditions slow progress on off-grid solar investment in 2023

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This blog was published on April 25, 2024

Headline Insights

After two years of positive growth, the off-grid solar industry saw investment drop by 43% in 2023, leading to concerns that macroeconomic conditions are pushing the sector off-track for enabling basic electricity access for all by 20301.

In 2023, 85 companies received a total investment of $425 million, comprising $281 million in debt, $128 million in equity, and $15.5 million in grants.

Despite the downturn, positive insights emerged. These included (i) a surge of investments into solar irrigation and cooling technologies used to support agriculture and enterprise, (ii) larger off-grid solar companies unlocking greater amounts of off-balance sheet financing and (iii) the third highest investment amounts to date, illustrating ongoing recognition of the sector’s impact and potential. At the same time, new initiatives such as the USD$5 billion World Bank ASCENT programme and USD$250 million Green Climate Fund (GCF) backed Hardest to Reach Fund recognise that a convergence of public, private and climate finance can significantly move the dial on electricity access.  

However, companies focusing on household solar saw a decrease in investment when compared to 2021 and 2022. To achieve the industry’s contribution to SDG7, an annual investment of $3 billion is needed, requiring a far greater step-change in ambition. The drop in investment in 2023 to one seventh of this total is a worrying sign that the sector is not receiving the capital it needs to reach hundreds of millions of people living in energy poverty.


Overview of Annual Investment since 2014

Figure 1. Historic Investment Trends

In the context of a global slowdown in venture capital activity, coupled with tough macroeconomic conditions, the $128 million equity investment in off-grid solar companies in 2023 actually exceeded some expectations. 

50 lead investors engaged2 in at least one deal with 85 companies, marking a record amount of recipients in the database3. Among these, 45 companies received grant funding, 25 companies received equity, and 37 companies received debt. Out of the 85 recipients, 47 received funding for the first time. Among these first-time recipients, 29 obtained a grant, helping them to step onto the capital continuum.

However, the industry did not maintain its positive growth trajectory seen since 2020. 

Scale-up Investment Trends

GOGLA’s Investment Database uses historic investment volumes to classify off-grid solar companies: seed ($0 – $3m), start-up ($3 – $100m), and scale-up (above $100m).

Figure 2. Scale-up Investment Trends 

(Companies with over $100 million in historical investment)

Six industry scale-ups secured a total investment of $249 million4, constituting 58% of the year’s total investment. The total investment in scale-ups marks a significant decrease compared to the previous year. This decline can be partly explained by cyclic fluctuations expected in equity raises, after last year’s large equity raise by Sun King.

This year’s funding is dominated by the $130 million securitization deal from Sun King led by Citi; this deal represents 52% of the total funding going to scale-ups. The top three companies receiving investments are responsible for the vast majority of funding in this segment. 

The decline in scale-up debt funding from 259m to 208m could be a cause of concern, since historically companies in the off-grid solar sector have either used it to fund consumer receivables5 or growth, which could lead to a slowdown in sales.

On a more positive note, off-balance sheet financing, utilized by scale-ups to fund receivables6, has proven to be a viable financing mechanism for industry scale-ups and is here to stay. It accounts for a substantial $157 million of the $208 million in debt commitments to scale-ups, 75% of the total. This structuring approach is a significant development as it provides larger off-grid solar companies with liquidity to continue operations. Moreover, it creates the potential to attract new sources of financing, such as investments from national financial institutions and institutional investors, attracted by a new asset class that isolates the risk exposure associated with investing in companies’ balance sheets directly. In early 2024, d.light’s groundbreaking securitization vehicle, BLK1, achieved a full exit for its senior lenders months ahead of schedule. 

Although off-balance sheet financing is currently only accessible for large players, it shows strong potential for wider adoption which could catalyze more growth and innovation.

Start-up and Seed Investment Trends

Figure 3. Start-up Investment Trends

(Companies with between $3 million – USD$100 million in historical investment)


Figure 4. Seed Investment Trends

(Companies with under USD$3 million in historical investment)

Start-up and seed stage companies have shown a more positive trend and followed similar trajectories, reaching respectively $148 million and $24 million in investment in 2023. This rise in funding has been predominantly driven towards productive uses of renewable energy (PURE), mostly to solar irrigation and cold chain technologies. 

Funding allocated to PURE start-ups, which now constitute 34% of the start-up total, was raised by just two leading companies. Although the market is still young and untapped, some PURE start-ups are starting to consolidate their market position and could follow a robust growth trajectory. 

The surge in funding experienced by seed and start-up companies is primarily fueled by equity deals directed towards PURE, which have attracted a total of $42 million. This substantial support from equity investors reflects a growing confidence in the potential of solar irrigation and cold storage technologies, paving the way for innovation, growth, and market expansion. 

While equity investments in household solar companies within these categories have recovered from the unusually low levels of 2022, they have yet to reach the heights witnessed in 2021 ($46 million), 2020 ($62 million), and 2019 ($51.7 million). 

Start-up companies represent the scale-ups of the future, and seed companies are the start-ups of tomorrow. The downward trend of equity investment in household solar signals a concerning failure to nurture new companies focused on electricity access that will be crucial for achieving electrification goals.

Macro-economic challenges and exogenous factors 

Double digit inflation and rapid currency depreciation in key African markets posed a double-threat for off-grid solar companies in 2023, resulting in reduced consumer purchasing power and a hit to company revenues. The growing intensity and frequency of climate threats such as droughts, cyclones and flooding have also contributed to economic challenges in key market economies. These issues have been intensified by a scarcity of new equity investments and high interest rates on debt.

A majority of off-grid solar companies have been able to weather these impacts, however, the challenges have  pushed some organisations out of business in 2023 and forced others to pivot and diversify their business models away from energy access. 


The off-grid solar sector is crucial to advancing global electricity access. It is recognized by the IEA, World Bank and other custodians of SDG7 for its pivotal role8 in addressing energy poverty and is helping national governments in Kenya, Rwanda, Nigeria, and beyond to meet their electrification targets. The industry boasts viable business models, resilient companies and pioneering technologies, backed by donors and investors. It is also trying to reach the world’s poorest communities while it is hindered by high inflation, high interest rates and climatic and economic uncertainty.

The 2023 investment data shows that without more de-risking instruments and concessional financing, commercial investment in off-grid solar will not reach the size or scale needed to meet national and global development goals. Many examples of successful blended finance structures that are catalytic already exist9, but we need more of them to achieve targets.

To address this urgent challenge, GOGLA and its Partners are developing a Financial Vision for the industry, designed to Power 1 Billion Lives by 2030. We urge development actors, philanthropies and climate aligned investors to work with us in the months ahead to make this vision a reality. To learn how you or your organisation could play a role, please connect with us directly, find out more via our Member Working Groups, or join us in Nairobi, Kenya, at the Global Off-Grid Solar Forum and Expo 2024. We look forward to hearing from you. 


GOGLA Investment Database captures the investment trends over the period 2012 – 2023 and was realized with support from GET.invest, a European programme supported by the European Union, Germany, Norway, the Netherlands, Sweden, and Austria.

Click here to watch the recording of the Off grid Solar Investment Trends 2023 Webinar (25 April 2024)  


1. The off-grid industry is expected to reach over 50% of the 675 million people living without electricity today.(Source: Off-Grid Solar Market Trends Report 2022)

2. GOGLA Investment Database tracks the number of lead investors only, a chunk of the investments are syndicates, and hence these investors are not counted as lead investors.

3. In 2023, GOGLA Investments Database tracked 58 companies receiving investments in the seed stage, 20 companies in the start-up phase and six companies in the scale-up phase.

4. Investments made by scale-ups that are not earmarked for energy access products are not counted in GOGLA Investment Database

5. PAYGo Business Models finance consumers by leveraging mobile money, allowing customers to pay for systems in small installments, and generating accounts receivable in a company’s balance sheets.

6. PAYGo Business Models finance consumers leveraging mobile money, allowing customers to pay for systems in small installments, and generating accounts receivable in a company’s balance sheets.

7. Household companies’ have a predominant focus on residential electricity consumers, however, many are also providing light and power to businesses, and additionally expanding their product ranges to solar irrigation and cold storage. Some ‘PURE companies’ also sell solar lighting and power systems. The distinction between companies that are predominantly focussed on household vs PURE in this data has been created to highlight the increasing investor interest in companies that primarily sell products specifically designed to increase productivity.

8. Access to electricity improves slightly in 2023, but still far from the pace needed to meet SDG7 – Analysis – IEA

9. For example, with $237 million invested in several industry funds and initiatives, the Green Climate Fund has leveraged $1.5 billion in total funding.

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