Dragon’s Den with a twist: unlocking finance for energy access


April 30th, 2018

‘Dragon’s Den’ has been a very popular TV format where entrepreneurs get to pitch their ideas to potential investors, with versions of the show produced in nearly 30 countries.

New investments are also needed in energy access. There remains a very large financing gap between the amounts estimated to be needed per year to reach the 2030 SDG goal of universal access to electricity and clean cooking, and finance currently flowing. Various reports documented this over the last year including the suite of ‘Energizing Finance’ reports from SEforAll, Practical Action’s Poor People’s Energy Outlook, and the IEA’s Energy Access Outlook.

What’s missing in the usual Dragon’s Den format is the voice of the consumer, who could ask questions about whether the product on offer will meet their needs.

Practical Action at the SEforAll Forum

SEforAll Forum 2018 logoAt this year’s SEforAll Forum, Practical Action together with CPI and Hivos are hosting a Partner Working Session on Energizing Finance: Thursday 3rd May, 14:30-16:00, Rossio room.

As part of this we’ll be inviting two organisations with great financing products to pitch their ideas. The twist is, they will be quizzed not only by potential investors, but also by representatives of their customer base: the off-grid businesses who are so starved of money currently. The finance products we’ll be featuring are:

  • The Renewable Energy Scale-Up Facility (RESF), which works by delivering early-stage finance to businesses in increments as they achieve key development milestones, in exchange for the option to buy equity at financial close, at better-than-market rate terms.
  • Green Aggregation Tech Enterprise (GATE), which helps mini-grid developers by acting as an aggregator and providing other business development services to mini-grids. They commit to providing mini-grids with a standardized payment system, and offer a standardized documentation, payment and energy accounting system.

These are just two of a range of 26 financing solutions brought together under the Climate Finance Lab which, since its launch in 2014, has mobilised more than $1 billion in sustainable investment.

This opportunity for potential beneficiaries of RESF or GATE to quiz them is part of the bottom-up revolution in energy access that is so sorely needed if we are to stand any chance of meeting our SDG goals.

What do we already know about finance for energy access?

Practical Action worked with SEforAll last year on the Taking the Pulse’ report as part of the Energizing Finance series. Focusing on five high-impact countries, we interviewed a wide range of small and medium energy access enterprises and other stakeholders to understand the challenges they face in accessing finance and growing their businesses to better serve poor and remote communities. We heard time and again about the barriers of lenders’ conditions to qualify for a loan in terms of collateral, track record or data. We heard about the problems of borrowing in foreign currency rather than local currencies which make it all-but-impossible to offer stable pricing to customers, or where restrictions on foreign exchange can make it hard to guarantee year-round supplies. We heard about the urgent need for working capital and for the easing of restrictive government regulations particularly for mini-grids.

The Taking the Pulse report highlighted the depth of the challenge in the clean cooking sector where current investments were so low they amounted to less than $1 per capita per year. In this cash-starved environment, companies are looking for ways to help customers borrow for clean cooking solutions, as well as better co-ordination and policy support for market-based solutions. The sector needs to recognise the opportunities in the fuels markets which may be significantly greater than in the stove itself.

Poor People's Energy Outlook 2017 cover imageOur 2017 edition of the Poor People’s Energy Outlook similarly pointed to the gap between current levels of financing, and the amounts needed to meet the energy service needs of off-grid communities. We emphasised the need for energy access financing across the spectrum: meeting needs for electricity and clean cooking, and for household, productive uses and community services (water pumping, street lighting, schools, health care, government services etc). We highlighted the extent to which an affordability gap still remains, requiring the right sorts of public finance targeted to close this gap.

We had a particular focus on the extent to which women are disadvantaged in terms of access to finance both as entrepreneurs and consumers. Levels of trust in their businesses are often lower, and they may be more affected by the requirements for collateral and track-record. And as consumers they may find it harder to access finance for purchasing products in their own right.

Graphic showing barriers and solutions to women's participation in energy access markets

Hivos and Practical Action alike will be bringing a clear focus to the Partner Working Session on our core questions of:

  • How will new finance solutions help bring energy access to those places currently not well served – remote and poor communities, where levels of affordability are low?
  • How will new finance solutions recognise and seek to address gender inequalities which disadvantage women and hold back progress on energy access?

The closing panel for the session includes strong civil society representation from Surabhi Rajagopal, co-ordinator of the ACCESS Coalition, who will bring these messages and challenges to the discussion.

We are looking forward to a fascinating and challenging event, and hope to see many of you there. The forum will also be very well covered on social media, so if you can’t make it in person, stay tuned all week for updates. #SEforALLForum

One response to “Dragon’s Den with a twist: unlocking finance for energy access”

  1. Neil Jackson Says:

    Can one pitch to the investors about a project in Africa using run of river technology for 1 million people

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