Keeling Curve

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Project Summary / Description:

Energise Africa is a UK crowdfunding platform enabling everyday people to invest from just £50 to support renewable energy projects in Sub-Saharan Africa. The platform enables solar power businesses to issue bonds, providing them with vital working capital finance needed to bring clean and affordable energy to millions of low-income households and small businesses. Energise Africa predominately supports companies installing off-grid “Pay-As-You-Go” solar home systems. Bonds issued via the platform enable these companies to offer affordable financing plans to rural households and small businesses across Africa - bringing clean energy alternatives to people otherwise dependent on kerosene or diesel.

How Project Affects Greenhouse Gas (GHG) Emissions:

Electricity generation is responsible for over one-third of the world’s current CO2 emissions, yet 1.5billion people have only unreliable access to electricity, and a further 800million lack access of any kind . If we are to reduce greenhouse gas emissions in an equitable and inclusive way, we must find ways to expand energy access without contributing to climate change.

Many technologies already exist to expand decentralised renewable energy (DRE) access, yet today’s investments in clean energy for the bottom of the pyramid fall woefully short. A study conducted by Catalyst Advisors and sponsored by the Shell Foundation estimated that an additional US$31billion in mini-grid and solar-home-system (SHS) investments would be required to achieve universal energy access in Sub-Saharan Africa by 2030. Even with this level of investment, consumer affordability will remain a challenge, with as many as 37% of households in the region struggling to find the $6/month needed to finance a SHS.

At the same time that DRE companies struggle to access finance, new research led by Oxford University has found that fossils fuels will account for 60% of new electricity generation in Africa in the next decade - traditional financial institutions continue to channel vast amounts of money into the fossil fuel industry!

But people around the world are calling for divestment and looking for better places to put their money. A 2019 report conducted for the UK government found that over 70% of people say they want their investments to “avoid harm and achieve good for people and the planet”. Energise Africa provides a simple platform that allows these people to invest in clean energy companies. They can start from as little as a one-off £50 investment, and there are no charges to investors for using the platform.

By connecting the people who want to fight climate change with the companies who have the technology to do so, the platform has so far enabled £18.5million of people-powered investments to go to DRE companies in Sub-Saharan Africa. These investments have allowed companies to provide over 100,000 SHSs for households across the region, on affordable monthly pricing plans. By replacing dangerous kerosene lamps, these SHSs reduce CO2 emissions by 114,000 tonnes each year.

And Energise Africa is only just getting started. Since launching in 2017, we have had an overwhelmingly positive response from UK investors – our last campaign reached its £315,000 target in under four hours! But the platform has primarily focussed on companies in the SHS sector, where systems are replacing tiny kerosene lamps. Today, our investments team are looking at companies in the productive use, commercial and industrial (C&I), and mini-grid sectors. Investments in these sectors can improve reliability of energy-supply, making positive impacts in productivity, business profitability and job-creation for micro, small and medium-sized enterprises (MSMEs). But more importantly, providing solar power solutions on affordable financing-schemes can allow these companies to get rid of costly diesel generators or unreliable grid electricity from coal-fired power stations.

A recent £1million campaign for C&I projects in South Africa will enable our investee to install 1,890KWp capacity of solar panels, reducing CO2 emissions by 2,700 tonnes annually. Another investee, operating in Ghana and Kenya, estimates that with the help of investments made via the Energise Africa platform, they will have installed enough solar power solutions to local businesses to mitigate 100,000 tonnes of annual CO2 emissions by the end of 2021. Both companies are able to install their systems on a lease-to-own basis, thanks to the affordability of finance offered on our platform. This means that MSMEs no longer face the prohibitive upfront cost of purchasing a solar power system.

Energise Africa is also looking to the mini-grid sector as a critical means of achieving affordable universal energy access. The 2020 benchmarking report from the African Mini-grid Developers Association (AMDA), found that rural mini-grid connections are thousands of dollars cheaper than connecting to state-run utility grids. According to the World Bank, Africa will need 140,000 mini-grids to achieve SDG7. But a recent report by Power for All found that of the $1.6billion promised between 2012 and 2019 by donors for midi-grid development in Sub-Saharan Africa, only 13% has been deployed. Our platform aims to launch its first investment offers in the mini-grid sector in 2021, giving people even more options for investing in climate action. These investments will provide clean energy to rural households and MSMEs, leapfrogging any connection to polluting coal-powered grids.

By crowding-in affordable finance for DRE companies in a broad range of sectors, our platform reduces greenhouse gas emissions from households and industry alike. Such is the scaling potential of Energise Africa, that we were identified by Mission Innovation (a global initiative of 24 countries working to accelerate clean energy innovation) as one of 100 technology innovations capable of delivering 3 Gigatons of carbon emission reductions by 2030.

Impact on Underrepresented Groups:

Energise Africa enables low-income families in climate vulnerable regions to climb the energy ladder without contributing to CO2 emissions. Investments made via the platform contribute to the reduction of fossil fuel consumption by providing affordable solar power and efficient cook stoves to households who previously lit their homes with kerosene lamps and cooked their food on wood fires.

Our platform also allows people to make direct investments in companies offering productive-use solar power systems. Examples include solar water pumps to support farmers in regions that are at increasing risk of desertification; and solar powered fridges for health clinics and micro-enterprises in rural communities.

Investments made via our platform have provided over 100million extra hours of quality light. This is particularly impactful for women and youth, who are most commonly harmed by the toxic fumes from kerosene lamps. Access to clean, affordable energy also allows youth to study into the evening - in countries where the sun sets between 6 and 7 pm all year round, these extra hours of light can make a life-changing difference to a young person’s educational attainment.

From a gender perspective Energise Africa creates a virtuous circle; household solar power benefits more women than men , as it reduces the time spent on domestic tasks. Furthermore, from an investor perspective, typically only 21% of investors are women, yet 36% of Energise Africa’s investors are female and we aim to increase this to over 40%.

But most significantly, Energise Africa is uniquely placed to provide affordable and unsecured lending to indigenous energy access companies who struggle to access working capital finance from local financial institutions. According a 2020 report by the Green for Access partnership, only 14% of locally owned companies in Sub-Saharan Africa were able to raise finance from a local bank. 68% of locally-owned off-grid companies identify high collateral requirements (ranging from 100 to 250%) as a key barrier hindering financing and growth. 63% of companies reported that local financial institutions lack understanding of the off-grid sector and are therefore unwilling to provide finance. In addition, companies identified the high cost of debt (often over 20% ) as a major funding challenge.

Energise Africa offers unsecured lending at rates of 8 – 12%, bypassing the high collateral requirements, and reducing the cost of borrowing by nearly half. Additionally, our investment team now have several years’ experience in lending to companies in the African off-grid sector; are members of GOGLA (the global off-grid lighting alliance); and benefit from the strategic oversight of Energy for Impact.

While established investment funds and financial institutions do offer equity and debt funding to the off-grid sector, their risk appetite doesn’t necessarily extend to Africa. According to the IEA, the region only received 15% of renewable energy investment in 2019 and even these do not favour local companies. Energise Africa can address this dearth of accessible finance for smaller, indigenous off-grid companies in SSA and accelerate the achievement of SDG7.

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