More than 2 billion people in the developing world live without access to reliable energy, or rely on expensive and often dangerous sources like kerosene and diesel. But there’s hope for change in Africa, as small-scale solar power companies are providing new and clean electricity to millions. Power Africa, through a new investment via the Overseas Private Investment Corporation, is giving a boost to this critical market.
In late April, the Overseas Private Investment Corporation (OPIC), the U.S. government’s development finance institution, announced a $15 million loan to a new investment vehicle managed by SunFunder Inc., a U.S.-and-Tanzania-based solar energy finance business and Power Africa partner. SunFunder’s new, $50 million “Beyond The Grid Solar Fund” will provide financing to companies operating in developing countries that manufacture, distribute, and install solar lighting and energy systems. The OPIC loan will also help SunFunder deliver on its commitment to support Power Africa's Beyond the Grid sub-Initiative.
The support to SunFunder utilizes OPIC’s Innovative Financial Intermediaries Program (IFIP), a $500 million pilot program that focuses on smaller investment funds that apply innovative approaches to address specific development challenges.
OPIC’s President and CEO, Elizabeth Littlefield, describes the partnership with SunFunder as a great example of the kind of public-private endeavor that makes initiatives like Power Africa so important. Since Power Africa’s launch in June 2013, OPIC has committed more than $1.6 billion in financing and insurance to power projects in sub-Saharan Africa. “OPIC is proud to partner with SunFunder in delivering innovative financing solutions for off-grid and grid-deficit solar energy in developing countries,” she said. “The fund will facilitate access to financing by companies that provide clean energy products and services.”
Through the Beyond The Grid Solar Fund, SunFunder will provide receivables financing, project financing, and inventory/working capital loans to the manufacturers, distributors, installers and retailers that provide solar energy in countries such as Tanzania, Kenya, Rwanda, Ethiopia, Zambia, Uganda, and Ghana. The types of solar products will range from portable solar-powered lamps, to 200-watt solar home systems, to 500-kilowatt diesel replacement systems.
The greatest beneficiaries of this investment will be the millions of people across Africa who can switch from kerosene and diesel to solar energy. As a more affordable and cleaner option, solar power enables low-income households and businesses to cut their energy costs with a safer, cleaner, and more eco-friendly power source. Having bright, durable and safe energy will enable businesses to stay open longer and allow children to study at night.
“Solar energy is the most viable solution to replace dirty and unreliable fossil fuel energy sources and to increase energy access for those who really need it,” said Ryan Levinson, SunFunder’s Founder and Chief Executive Officer. “To support solar’s growth in emerging markets, access to sector-specific financing is key. OPIC’s investment in SunFunder's Beyond The Grid Solar Fund will help expand our ability to respond to the financing gap that exists for off-grid and grid-deficit solar. Getting this kind of support and validation from OPIC will open up more opportunities not only for solar enterprises but also for investors worldwide.”
Learn more about the benefits of Power Africa partnership at www.usaid.gov/powerafrica/partnerships.
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