UK charity Shell Foundation and US based International Development Finance Corporation are collaborating to bring affordable renewable energy to more than 5 million people in low-income areas of Africa and Asia by 2025.
The two organisations signed a memorandum of understanding (MOU) to enhance their ability to support the growth of social enterprises that deliver essential renewable energy services to people living on $2 to $10 a day in off-grid areas. All with the aim of enhancing income, education, health and women’s economic empowerment.
In a DFC press release, the company says more than 800 million people worldwide currently lack electricity, and 2,8 billion more people have unreliable access. This constrains recovery from the COVID-19 pandemic and long-term economic growth. This collaboration seeks to address the lack of investment into innovative small and medium-sized enterprises, particularly those owned by, led, or supporting women, that can address this challenge.
As part of the MOU, Shell Foundation intends to deploy more than $45 million grant funding by 2025 to build a pipeline of fast-growing, high-impact businesses that deliver distributed renewable energy (DRE) to households, farmers and businesses in off-grid areas. DFC hopes to approve up to $100 million early-stage debt and equity to support the growth of these businesses and leverage capital for further scale subject to these projects meeting DFC’s eligibility criteria.
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Sam Parker, Shell Foundation CEO: “Innovative DRE enterprises are already providing more affordable, more reliable energy to tens of millions of people who cannot access the grid, mostly in ways that are far more cost-effective and quicker to deploy, yet they are unable to access significant growth investment. DFC is particularly forward-thinking in acting to address this. By blending our capital, and by working with shared partners such as FCDO and Rockefeller Foundation, we can bridge the gap between social and commercial investors, unlock substantial funding and enable hundreds of millions of people to escape energy poverty by 2030.”
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This collaboration has the potential to widen the pool of investment opportunities that DFC can make by providing deeper connections with a portfolio of energy investments that Shell Foundation has built in tandem with the UK’s Foreign, Commonwealth and Development Office (FCDO), Power Africa and the U.S. Agency for International Development over the last five years. It will also provide insight, co-funding and guarantees that reduce the risk of supporting new types of businesses in nascent sectors.
This collaboration with Shell Foundation builds on DFC’s recently announced cooperation with the Rockefeller Foundation to de-risk investments in the DRE sector.