Context
Globally, Sub-Saharan Africa experiences one of largest energy access gaps.
Electricity reaches only about half of its people, while clean cooking only one-third; roughly 600 million people lack electricity and 890 million cook with traditional fuels.
This has a disruptive impact on social infrastructure such as schools and hospitals which lack reliable electricity.
A clean energy revolution in sub-Saharan Africa is urgently needed to win the fight against energy poverty.
Stakeholders involved
- GreenMax Capital Advisors established GreenStreet Africa
- Public-private partnerships at country level with local public agencies
- Projects tendered to service providers such as independent power producers (IPPs) or energy services company (ESCOs) for construction and operation
Problem
- Despite technology and market development, policies and patterns of finance and investment are off track.4
- Funding and financing to date has not recognised the transformative potential of solar off-grid and mini-grid solutions to deliver clean energy access, nor has it accounted for the significant social and economic benefits of electricity access (i.e. clean cooking).
Innovation
- GreenStreet Africa develops and aggregates portfolios of distributed solar projects at public health and education facilities for implementation by private IPPs or ESCOs, financed with local capital markets solutions.
- The innovation comes from the combination of a public-private partnership, portfolios bundling together individual projects, and guarantee-backed local-currency debt financing. This is relatively unique in distributed solar development models for the public sector.
- To minimise risk to investors the debt is backed by a guarantee while the energy supply contractors are covered by third-party payment guarantees.
- The bundled approach creates portfolios large enough to appeal to institutional investors, while enabling the development of smaller projects to access affordable funding.
Timeline
Results and impact
- Nigerian Pilot: Nigeria’s Rural Electrification Fund as the public agency partner and InfraCredit as the local bond underwriter and guarantor. The pilot portfolio is supplying reliable solar energy and battery storage solutions for as many as six healthcare facilities. The facilities currently source electricity from diesel generators and unreliable grid connections.
- Future potential: Within 5 years of initial deployment, the Lab estimates that GreenStreet can drive the development of more than 150 megawatts of distributed solar. This would eliminate over 40,000 metric tons of CO2 emissions per year, while also reducing both local air pollution and high energy costs associated with diesel generators.
Key lessons learnt
- Economies of scale: Bringing project sourcing and development under the umbrella of an aggregated portfolio structure unlocks economies of scale, enabling faster development of solar distributed generation sited at public facilities. This approach creates portfolios large enough to appeal to institutional investors, enabling smaller projects to develop and gain critical access to affordable funding.