The Top 5 Investment Trends in the Off-Grid Solar Energy Sector

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The GOGLA deal database is part of our data collection work, ensuring market intelligence is available to inform the sector on trends we should not miss. The database captures the investment trends over the period 2012 – 2018. These are the top 5 trends we are observing for 2018.

1. Total investment increased by 20%, reaching USD 352 million

2018 was generally a positive year for fundraising for the off-grid solar sector, exceeding the previous record year of 2016. After seeing a slight dip in investments in 2017, the sector has attracted a total of USD 352 million, 20% more than in 2017. Not only has the total amount invested in the sector increased but there has also been an increase in the number of transactions. Concentration of transaction decreased slightly: top 10 fund recipients attracted 77% of the total funding in 2018, compared to an average of 83% in 2012-2018.

2. Despite positive trends, funding available is still insufficient

Among GOGLA members, many companies reported a need for additional investments, to help the sector grow further. That’s in line with findings from the 2018 Off-Grid Solar Market Trends Report, showing the sector needs funding of up to USD 5.7 billion until 2022. The growth rate in investment falls short of meeting this target. To further accelerate the market, a substantial increase in grants, equity, and debt is still needed.

3. Investment trends vary by type of capital

The year witnessed a growth in debt investments, mainly driven by DFIs. However, equity investments were stable in comparison to 2017. While the number of investors with at least 1 investment made during 2018 into the sector has grown (32% more players than in 2017, as seen in Figure 1), GOGLA members are still facing a number of challenges in securing investment. Debt is more easily to avail than in earlier years, although younger and smaller companies still report difficulties in meeting their working capital funding requirements. Equity and grant funding are in short supply, especially for 2nd and 3rd tier companies. While grant funding is essential for product and business model innovation as well as for entering new markets, we continue to observe a downward trend for grants.

4. New debt providers bring new opportunities

Aggregated debt funding to the sector in 2018 amounted to USD 225 million, the highest level since our recordings started in 2012. Specialized pioneering intermediary debt finance providers have been joined by crowdfunding platforms and DFIs in unleashing significant amounts of debt funding for inventory finance, working capital and (re-) financing of receivables. There is no sign of growing involvement of local banks in funding the sector, although arguably public disclosures on this type of transactions may be less common. Barriers to their investment in OGS include information gaps and industry challenges such as industry immaturity and perceived risk.

The sector welcomed a new player to the space which has come to stay. Initially addressing smaller companies, crowdfunding platforms are now raising millions of debt funding for single off-grid solar clients. Blending investment from their customer base with public money (guarantees and matching funds), allows crowd funders to offer much needed smaller ticket sizes at more flexible conditions.

The arrival of crowdfunding has its effect on the sector: companies report that the option to choose between various lenders increases flexibility of lending conditions, enhances general efficiency and supports better mission alignment with their debt funders.

We certainly see a more vibrant and dynamic market for debt funding. However, it is yet to be seen how expansion of the debt funder ecosystem will influence the overall investment landscape in the longer run. While some large debt funding initiatives that were announced in prior years have not hit the market yet, there are some concerns that too much debt might be available right now. This could lead to leverage ratios rising too fast. With growing competition, interest rates on debt might further fall. While in itself a very positive development, it potentially also bears the risk of crowding out commercial lenders or delay the entrance of commercial lenders into the market.

5. Investors are increasingly seeing the potential of West Africa as a growing market

Since GOGLA has tracked investment, East Africa has been the focus of investments into the sector. In 2018, however, while East Africa continues to hold its position as a recipient of the largest amount of investments, it has received the lowest absolute amounts of investment since 2012. Companies and investors are now increasingly seeing the growth potential of West Africa. Investments into other regions across the globe (South Asia and Latin America) have been rather stable.

To reach universal electrification by 2030, the sector needs to continue growing stronger and faster. The investment trends of 2018 bring to light the need for more early-stage funding – to help startups and smaller companies access the capital they need, for markets to develop in other regions and to attract more investors. It is also evident that we need to keep the more matured companies well capitalized so they can continue their growth path. Particularly local currency lending needs to increase. The downward trend on grants needs to be urgently reversed.

If you are interested in learning more about GOGLA’s investment deal database, please get in touch with Johanna Galan at or Juliana Martinez at

For more information on the investment climate and capital flows in the off-grid solar sector, visit our Access to Finance hub.

**Note on methodology: The database is populated with data as of 2012. Data for 2012-2015 is mostly information publicly disclosed. For 2016, 2017 and 2018 additional in-depth surveys and interviews have been carried out to enhance the data available. The 2018 update includes the final deals of December 2017 in the database.

No quantitative estimates have been made for disclosed transactions if that information was not available from internet disclosures or was not provided through interviews / surveys. Among others, this concerns a number of equity transactions by strategic investors.

The geography assigned to each specific investment was based on the primary geography where the investment would be channelled. In circumstances where specific project details were unavailable and a company’s operations spanned multiple geographies, a global geography was applied.

In syndicated or co-investments where the contribution of individuals investors cannot be separated out, the entirety of that investment amount is allocated to the lead investor.

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