With a combination of excellent solar radiation, growing power needs and unreliable grids, much of Sub-Saharan Africa is ripe for the deployment of large amounts of solar PV.
However, many barriers remain, including not only issues of familiarity with the technology, but also the difficulty of financing the relatively high up-front cost of solar in poor nations where capital is often very expensive.
Today CrossBoundary Energy announced that it has closed on a fund which it hopes will address the latter of these issues, by allowing African solar developers to offer fully financed power purchase agreements (PPAs) for projects at least 100 kW in capacity.
CrossBoundary has closed on US$8 million in equity investments for its CrossBoundary Energy Fund 1, which will support its SolarAfrica platform. Through SolarAfrica, the company will offer its PPA in a box to African developers, which includes technical oversight and asset managmenet services from South Africa’s NVI Energy.
CrossBoundary is currently working with installers in Kenya, but says that it hopes to expand to three new nations in Sub-Saharan Africa in the next three to six months. The company plans to leverage the $8 million in the fund to deploy US$25 million in PV projects.
Mercom Capital CEO Raj Prabhu notes that CrossBoundary is one of the first solar companies to address the commercial & industrial (C&I) market segment in Africa. "This is one of the first funds that we are hearing about with the lease model," Prabhu told pv magazine. "But we have been seeing quite a few VC funding deals going into Africa this year."
It’s a signal that Africa is opening up to investors, and investors are realizing that there is a need in Africa and that it is a growing market.
The company’s first major investment is an 858 kW PV project at a newly opened mall in Nairobi, Kenya. The project at the Garden City Mall is the largest rooftop PV system in Africa and the largest solar carport system in Africa. CrossBoundary also notes that this the largest solar PPA that it knows of with a private off-taker in sub-Saharan Africa.
CrossBoundary has been strongly supported by the U.S. government. The U.S. Overseas Private Investment Corporation (OPIC) provided an early-stage grant to the company, and the U.S. Agency for International Development (USAID) provided a $1.3 million first-loss contribution to the CrossBoundary Energy Fund 1.
CrossBoundary’s announcement comes less than one week after M-KOPA Solar announced the close of a US$19 million fund to deploy its pay-as-you-go solar solutions in Africa.
Update: This article was modified at 12:25 Eastern Time (U.S.) on December 7 to include the quotes by Raj Prabhu.