Acumen, climate fund have $250m solar plan for Africa’s poorest nations

The world’s biggest climate fund is backing Acumen, a US-based company that promotes universal energy access, in establishing a $250 million facility to bring electricity from off-grid solar projects to 72 million people in some of Africa’s poorest countries.

The Hardest-to-Reach Initiative will cover 16 countries ranging from the Democratic Republic of Congo to Somalia across a continent where about half of the population have no access to electricity, according to Jacqueline Novogratz, Acumen’s chief executive officer.

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In the countries targeted 506 million people aren’t connected to electrical grids.

The Incheon, South Korea-based Green Climate Fund will contribute $65 million in the form of grants and junior equity, which means it will be the last to be compensated should the program collapse, the company said in response to a query. The initiative plans to fund the entry of solar-companies into the nations as well as back them later with debt facilities.

There’s “a facility that will focus on building markets where none exist,” Novogratz said in an interview. “Enabling companies to go into those places where there’s really no market whatsoever for very low-income people. And then there will also be a debt facility to allow companies to grow and to stay within those nations.”

The initiative will also receive funding from USAID’s Power Africa program, philanthropist and hedge fund manager Christopher Hohn, the Global Energy Alliance for People and Planet and South Korea’s Shinhan Bank Co., Acumen said in a statement.

The initiative is part of a drive by a number of companies to tackle’s Africa’s lack of electrification with solutions ranging from solar-powered mini-grids to the sale of home solar systems that can be paid off in installments using payments by mobile phone in some of Africa’s most remote areas.

Husk Power Systems, owner of the world’s largest number of mini-grids, in October said it raised $103 million to pay for a sevenfold expansion in India and Africa, with a focus on Nigeria and Congo. Angola won funding from Standard Chartered to install mini-grids in rural areas earlier this year.

Still, most of those programs have initially gained traction in just a few countries such as Nigeria and Kenya.

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Acumen’s plan is to bring electricity to “sub-Saharan Africa’s poorest regions, often neglected by traditional investors,” said Mafalda Duarte, the executive director of the Green Climate Fund. “The Hardest-to-Reach program blends debt, equity, grants and technical assistance to create and open up markets in new regions.”

The idea is also to head off future emissions of climate-warming gases as the proportion of Africans with access to electricity grows.

The countries covered by the program all have an electrification rate of less than 46%. They include Benin, Burkina Faso, Burundi, Chad, Guinea, Guinea-Bissau, Lesotho, Malawi, Mozambique, Niger, Sierra Leone, Togo, Uganda and Zambia.

Acumen has already begun to make loans under the program in countries such as Sierra Leone and has also attracted funding from philanthropists, Novogratz said.

Acumen also operates in India and Pakistan, according to its website.

© 2023 Bloomberg

Harry Byrne

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