The Energy Access Relief Fund, a first of its kind fund, has been launched to target energy access companies working in sub-Saharan Africa and Asia.
The Energy Access Relief Fund, which will be managed by Social Investment Managers and Advisors (SIMA), will provide relief capital in the form of short-term, low-interest loans to an estimated 90 energy access companies in sub-Saharan Africa and Asia who are still struggling with the disruptions wrought by the COVID-19 pandemic.
The companies being targeted are ones which operate in the solar home system, solar lanterns, solar-powered productive appliances, minigrid and clean cooking space.
Jacquiline Novogratz, Acumen CEO/founder: “Access to clean, reliable and affordable energy is essential in lifting communities out poverty. We could see that the pandemic was adversely impacting those who were most vulnerable and that we needed to take action. We couldn’t do it alone – it would take all of us. The launch of the EARF illustrates the power of partnerships and moral imagination in a time of crises.”
The Fund has a first close of $68million and a target of more than $80million. The EAFT is the culmination of a partnerships convened by Acumen and it includes CDC Group, US International Development Finance Corporation (DFC), FMO, Green Climate Fund (GCF), Shell Foundation, IKEA Foundation, The Rockefeller Foundation, World Bank, International Finance Corporation (IFC), Swedish International Development Cooperation Agency (SIDA), Swiss Agency for Development and Cooperation (SDC), the UK Foreign, Commonwealth and Development Office (FCDO), USAID and Power Africa.
Changing financing imperatives to deal with health and economic consequences of COVID-19
Broken supply chains, increased costs of solar components, and continued COVID lockdowns have crippled the energy access industry, which provides renewable energy solutions such as solar lanterns, household solar, minigrids, and modern energy cooking equipment to customers in low-income and last-mile communities.
A coalition of committed global investors and donors created the Fund to protect the industry’s progress toward United Nations Sustainable Development Goal 7: universal energy access.
Geoff Manley, CDC Group head of energy access and efficiency: “Together, CDC, DFC and FMO are mobilising our capital to ensure the survival of small and medium social enterprises extending energy access to the 800 million people living without power. The EARF’s flexible and innovative financial structure blends different types of capital to offer low-interest loans and liquidity while the health and economic consequences of the pandemic continue.”
SIMA’s analysis of energy access companies eligible for relief funding across 50 countries shows that 77% of potential borrowers require emergency financial assistance to stay afloat. Without it, many companies may be forced to take drastic measures such as pausing operations, laying off staff, or permanently closing their doors, which would disrupt energy access for customers at a particularly difficult time.
Using financing to affect gender action plans and ESG process in the energy access field
Asad Mahmood, SIMA CEO and EARF fund manager: “We have innovated to create a robust underwriting approach that allows us to rapidly provide relief loans to companies that most need our support during the crisis. We have also implemented into our investment approach a comprehensive ESG process, including developing a gender action plan and supporting the companies to deal with COVID-19 challenges.”
Sam Parker, Shell Foundation director: “Small-scale renewable energy enterprises and innovators are scrambling to serve some of the world’s poorest communities. We hope similar collaborations follow this sector landmark — much more capital will be needed in the coming months to continue progress toward universal energy access.”
The relief fund aims to safeguard gains made in the once-booming energy access sector. In the last decade, the industry has grown six-fold, providing 470 million people with energy access, employing more than 370,000 in green jobs and avoiding 74 million tonnes of greenhouse gas emissions.
Yannick Glemarec, Green Climate Fund executive director: “The EARF is a critical tool to help us build back better and tackle climate change. It will ensure that social enterprises can continue to provide renewable energy solutions and advance climate mitigation and resilience across sub-Saharan Africa and Asia,” said. “
The EARF is also part of the 2021 Roadmap of the World Economic Forum’s COVID Alliance for Social Entrepreneurship that mobilises support for social entrepreneurs who are making a difference on the frontline of the COVID-19 crisis.