The Packard Foundation, Ceniarth, the Calvert Foundation, along with other, unidentified family offices will contribute up to$40 million to the investment vehicle, while the remaining $5 million will come from the U.S. Agency for International Development’s (USAID) Development Innovation Ventures program.
"This is the first financing vehicle of its kind for distributed solar in Africa and a critical milestone in the creation of a new asset class of institutional and impact investment," said the company in a statement released.
Under a partnership with the national government and Tanzanian Investment Center, the goal of Off Grid Electric, based in both California, the U.S., and Arusha, Tanzania, is to install solar and battery storage in one million homes across the African country over the next three years. Currently, it says it is installing solar in more than 10,000 homes and businesses a month.
In October, it raised $25 million in a series C investment round, led by DBL Partners. Commenting at the time, DBL Partners founder and managing partner, Nancy Pfund told pv magazine, "When we looked at the company, we saw the leasing model coupled with a real commitment to driving down costs, and also suiting the payment model to the Tanzanian and the African customer."
Off Grid Electric, which operates in Tanzania and Rwanda, and is involved in the entire business cycle, from design, manufacture, installation and maintenance, has created a distributed solar model, dubbed M-Power, to service the off-grid energy market.
Enabling everyone to benefit, it redirects the funds individuals were paying for kerosene and batteries to a solar lease. "We have pioneered a business model that allows consumers with no formal credit to use their existing energy budget to finance solar," said Xavier Helgesen, co?founder and CEO.
Africa in the spotlight
News of solar activity in Africa has been increasing in recent months. This is expected to step up following the climate talks, which concluded in Paris earlier this week. There, the continent took center stage, due to its particular vulnerability to the effects of climate change, as UN Secretary-General Ban Ki-moon put it.
Africas leaders launched the African Renewable Energy Initiative (AREI) at the beginning of COP21, in response to the fact 640 million people have no access to electricity, while 7 million have no access to clean alternatives. The overall goal of AREI is to produce 300 GW of electricity for Africa by 2030 from clean, affordable and appropriate forms of energy. By 2020, it intends to have 10 GW of new and additional renewable energy capacity, while by 2030, the plan is to "mobilize the African potential to generate at least 300 GW." Solar is expected to play a leading role.
Following the launch of AREI, Catherine McKenna, Minister of Environment and Climate Change announced Canada would contribute CA$150 million to support the deployment of such renewables as solar, hydro and wind power.
And, pledging their support in helping those without access to energy, the U.K. and U.S. signed a memorandum of understanding, also in Paris, that will see the U.K.s Energy Africa initiative join forces with the U.S.’s Power Africa Initiative.
Overall, the African Development Bank (AfDB) has identified over 11,000 GW of renewable energy potential on the continent, comprising 11,000 GW of solar, 350 GW of hydropower, 110 GW of wind power, and 15 GW of geothermal, which can be harnessed both by Africa and other countries.
In light of this, and in return for taking climate change seriously, it asked the world at the climate talks to join it in investing $55 billion in its energy sector annually, up until 2030. It has also requested at least $11 billion in annual climate financing to help it adapt to climate change. "Only 4% of the world’s total climate finance currently ends up in Africa, a situation that demands immediate reform," wrote the AfDB.
In the run up to the climate talks, the bank said it would triple climate financing to $5 billion a year by 2020, thus increasing such investments to 40% of its total new investments. Half of this will be used to reduce Africas greenhouse gas emissions via the implementation of renewable energy, particularly solar; while the rest will be used to help African economies adapt to climate change through climate-resilient crops, for example, and improving access to water.