and Drew Corbyn, Head of Performance & Investment l.fortes@gogla.org
This blog was published on 9 August 2024.
The future of energy is sustainable, equitable, and resilient, and off-grid solar is leading this transformation in Africa and Asia. Off-grid solar delivers clean, reliable power to the most remote and underserved communities where traditional grid infrastructure falls short.
This revolutionary technology is redefining how we access and think about energy, much like the leap from landlines to mobile phones. With over a decade of innovation and refinement behind it, the off-grid solar sector is primed for substantial investment, offering a unique opportunity to drive impact and returns.
A Market Ripe for Disruption
The off-grid solar industry is currently reaching 490 million people with clean solar energy and remains the most viable solution for providing basic electricity to 44% of energy-poor homes and businesses globally, according to the latest Energy Progress Report by SDG 7 custodians. The market potential expands dramatically when considering higher tiers of energy access and areas with weak grids, a $300 billion investment opportunity.
The industry has matured, learning valuable lessons in making energy access consumer-centric, affordable, and scalable. With over 200 companies now operating and actively seeking capital, the sector is primed to serve the next wave of consumers in Africa and Asia—regions with young, underserved populations where energy access is critical for climate resilience and adaptation.
Why now?
Recent commitments from donors and multilateral organisations are creating a favourable environment for investment, including blended finance structures and de-risking mechanisms.
The World Bank and African Development Bank (AFDB) have set ambitious goals to achieve electricity access for 300 million people by 2030, supported by initiatives like the USD$5 billion World Bank ASCENT and the AFDB LEAF Program.
The Green Climate Fund (GCF), the largest climate fund globally, is also making significant strides with its flexible financing, such as the USD$250 million GCF-backed Hardest to Reach Fund.
As Chris Emmott, Acumen’s Associate Director notes, “The impact of off-grid solar is clear, evidenced through increasing demand. Profitable companies with sustainable credit performance are delivering affordable, appropriate products and financing structures to diverse market segments. With additional support to de-risk strategic investments, this sector is set to deliver a huge impact.”.
Pioneers Leading the Way
Industry pioneers are setting new benchmarks, showcasing the industry’s potential for significant capital raising and exits.
Sun King raised 330 million in its series D round, led by General Atlantic, including a secondary investment that enabled a full exit for all of Sun King’s prior institutional investors.
d.light secured $176 million recently, building on its earlier Pay-As-You-Go solar securitization, which delivered a full exit for senior lenders months ahead of schedule. Since 2020, d.light has raised $718 million across multi-currency securitizations, showcasing the financial viability and scalability of these models.
SunCulture secured $27 million in funding from high-profile investors like Netflix co-founder Reed Hastings and former Alphabet CEO Eric Schmidt, enhancing agricultural productivity through solar-powered water pumps in several African countries.
The Future is Distributed, Digital, Decarbonized, and Democratic
Digital technologies are driving operational efficiencies and innovative financing models like PAYGo, while decarbonization efforts are reducing reliance on fossil fuels. Off-grid solar is poised to eliminate kerosene lamps, replace millions of dirty generators, and help nations meet their carbon reduction targets. This aligns with broader goals of social equity and justice, empowering communities with energy independence.
The Impact is Unmistakable
Investing in off-grid solar means supporting a transformative force for climate justice and sustainable development. It fosters resilient, self-sufficient communities, reduces urban migration, and promotes numerous social benefits:
- Job Creation: Nigeria’s estimated 50,000 distributed renewable jobs nearly match the oil and gas sector’s 65,000 jobs.
- Boosting productivity: Sun Culture‘s solar water pumps help smallholder farmers increase yields and grow their income, fostering economic stability.
- Health Improvements: Solar generators are displacing 22 million fossil fuel generators in Nigeria, which contribute to over 1,500 deaths annually.
- Gender Equality: Productive uses of energy empower women economically and socially, improving incomes and reducing drudgery (CLASP).
- Poverty Reduction: Two-thirds of users report reduced spending thanks to off-grid solar products, according to 60 Decibels (60 Decibels, 2024).
Conclusion
Off-grid solar is more than just a viable investment; it’s the cornerstone of a just energy transition and a catalyst for climate justice. This sector embodies the future of energy—distributed, digital, decarbonized, and democratic. For bold investors seeking impactful opportunities at the forefront of the energy revolution, off-grid solar offers a chance to build a cleaner, more equitable future.
We invite investors, lenders, donors, and philanthropies to join us at the Global Off-Grid Solar Forum and Expo 2024 (8-10 October, Nairobi). Here, you’ll have the opportunity to meet industry leaders from the off-grid solar, mini-grid, e-mobility, and last-mile markets. Our Matchmaking Platform, pitch book, and exclusive investor-focused services will facilitate connections and funding partnerships. If you’re interested in reserving a room, glance at our pitch book or need more information, please contact Laura Fortes (l.fortes@gogla.org).