Securing sufficient finance for energy access projects in Africa has been a real challenge, but TEA partners are demonstrating how grant funding, coupled with commercialisation and incubation support can be a catalyst to stimulate wider investment.
There is an urgent need to develop new finance mechanisms and funding sources for clean energy projects in Africa.
Sustainable Energy for All (SEforAll) found, for example, that of the $45 billion per year needed to achieve universal residential electrification, only $16 billion was invested in 18 key sub-Saharan African and Asian countries (Energizing Finance 2020) where the need was greatest.
As well as there being a shortfall, the funding that is available often supports projects using fossil fuels to generate electricity. The limited volume of investment going towards clean, renewable energy projects means that issues of gender equality, economic opportunity, climate change, and protection of land and forests remain unaddressed, according to SEforAll.
The TEA programme is focused on tackling this issue through the development of models to demonstrate how public sector funding in clean energy projects can catalyse socially and environmentally responsible private sector investment.
Working with delivery partners, TEA is mobilising different types of funding from a variety of sources. As of March 2024, it has managed to raise over £1.5bn. Examples of successful partnerships in the financial space include:
- Between 2017 and 2021, Acumen’s Pioneer Energy Investment Initiative (PEII), supported with co-funding from TEA, backed 12 energy access companies that have attracted an additional $128 million in further investment and reached 1.25 million people. In 2022, TEA awarded follow-on funding for Pioneer Energy Investment Initiative: Powering Livelihoods Using Solar (PEII+). PEII+ is a 5-year initiative that will invest early-stage capital in companies that provide renewable energy-powered appliances to microentrepreneurs and smallholder farmers in India and East and West Africa.
- UK aid via TEA, in partnership with Virgin Unite, provided founding support to Energise Africa, a crowdfunding platform set up in 2017 to enable the UK public to invest in solar energy in Africa. Energise Africa has collectively raised more than £32.8 million from the UK crowd to lend to companies who have improved energy access for over 850,000 people.
- Crowd Power, the TEA platform’s vehicle for innovation in crowdfunding for energy access, has been supporting fundraising campaigns on a variety of platforms including Crowdcube, KIVA and Wajenzi – a crowdfunding platform designed to enable the diaspora in Europe to invest in businesses in Africa. Crowd Power’s campaigns have raised £2.6 million from individual investors. (Energy 4 Impact, which delivers Crowd Power, produces the Crowd Funding Energy Access – State of the Market Report which provides valuable investment information to the sector).
- Since its formation in 2019, Powering Renewable Energy Opportunities (PREO), managed in partnership with the Carbon Trust and Mercy Corps-Energy 4 Impact, has received funding from the IKEA Foundation, alongside UK aid via Transforming Energy Access. As of 2024, the programme has awarded £8.9m to 54 SMEs in sub-Saharan Africa and the Pacific Island Countries, enabling over £24 million in public and private capital to be secured so far. The grant funding helps support the development of productive use of renewable energy (PURE) enterprises, enabling communities to test and prove income-generating activities and drive sustainable and inclusive economic development.
The TEA platform has also demonstrated the benefits that come from collaboration between delivery partners. For example, Crowd Power has been supporting members of the Global Distributors Collective (GDC), a network of last mile distributors, to overcome challenges through targeted crowdfunding. The GDC is supported by the TEA platform to make last mile distribution the first priority so that life-changing products can be made affordable and available to all. Crowd Power helped members raise essential investment by funding due diligence activities, or providing match funding for campaigns. For example, GDC member Bidhaa Sasa, which sells clean cookstoves and water tanks to women in rural Kenya, raised $200,000 on KIVA with Crowd Power’s support.
Another example is Simusolar, a leading productivity-enhancing agricultural equipment provider to East Africa’s rural economy, which secured funding from Acumen. Over 60% of its customers live on less than $3.10/day and its water pumping technology has been shown to transform incomes: 93% of pump customers reported an increase in productivity yields and 100% reported an increase in income. Other TEA platform partners have also been supporting Simusolar: it has raised just under £900,000 from eight companies on Energise Africa and received a PREO grant for an innovative solar pumping project with NUCAFE – an aggregator for smallholder coffee farmers in Uganda.
The TEA platform has demonstrated how UK aid money can catalyse investment. For every £1 of UK government funding spent up to March 2020, an additional £6.73 has been secured from co-financiers. This has been done mainly through spring-boarding of individual companies to commercialisation and sales as a result of initial UK aid support. Close engagement and partnership with foundations and philanthropic institutions has also helped to identify and support energy access themes which align with TEA’s own delivery.
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