Closing the global energy access gap depends not only on innovation, but also on finance that can support companies from their early stages of experimentation, research and development through to commercial scale. A recent study published in Energy Research & Social Science from the TEA Platforms Research Support Service (TEA RSS), delivered by the Universities of Cape Town entitled “Mind the gap: Rethinking transitions along the energy access finance continuum” 1, shows that the usual linear finance narrative of a scaling company does not always match operational reality in energy access. Instead, energy access companies move iteratively and non-linearly across instrument, combining grants, equity and debt in parallel, and often returning to earlier-stage capital even after reaching more mature phases.
Based on multi-year research and 55 stakeholder interviews within the TEA platform, the paper maps where financing transitions break down, what that means for company growth, and how funders and investors can collaborate to improve continuity from innovation to scale.
This research produced a number of key findings:
- Non-linear financing is the norm: The finance continuum is often described as a linear progression from grants and seed funding to equity and then debt. In practice, financing journeys are rarely linear. Energy access companies instead move through the finance continuum in a more iterative and non-linear way which challenge traditional funding models. TEA-supported companies frequently raise multiple forms of capital in parallel and then return to earlier-stage finance as market conditions, technologies, and regulatory environments change and evolve.
- Grants remain essential beyond the start-up phase: Grants continue to play a critical role well beyond the early stages of company development. While early grants support proof of concept and market testing, later-stage grants are used strategically to de-risk scaling decisions, test replication in new markets, and build evidence required by investors. Grants often both improve investment readiness and reduce risk. Many TEA-supported companies rely on grants at Series A and beyond to unlock equity and debt financing.
- A persistent “missing middle” is present: Despite innovation success, companies often struggle to secure capital at two transition points along the finance continuum: between early-stage grants and Series A, and between Series A and Series B/C. At these stages, companies are often too established for grant funding but not yet sufficiently de-risked to attract commercial investors. This “missing middle” leaves many companies stuck in the “valley of death,” and they often have to return to grants rather than proceeding to scale.
The full findings of the study are summarised in a knowledge brief produced by TEA RSS, offering a focused synthesis for funders, programme managers, and implementers. The full study can be found here.
About the Transforming Energy Access Research Support Service:
The Transforming Energy Access Research Support Service (TEA-RSS) is tasked with conducting research across various platform facets, disseminating findings to a diverse array of audiences, and fostering continuous feedback loops to promote learning and enhancement. The University of Cape Town (UCT), a partner within the TEA Platform, has been appointed by the Carbon Trust to drive the activities of the TEA-RSS. UCT is South Africa’s oldest university and one of Africa’s leading teaching and research institutions. It is widely recognised for its academic excellence, and strong commitment to social justice and transformation.