There are 1.2 bn people in developing countries with no access to electricity, while another billion only have unreliable access. Solar power now offers an economic solution for people living off-grid in rural areas, providing lighting, mobile phone charging and even highly-efficient televisions and fridges. A new generation of solar companies have emerged to deploy these systems commercially, but many have struggled to access mainstream financing to fuel their growth.
The USD 9 m facility is SolarNow’s third structured asset finance instrument (SAFI) arranged by SunFunder. It will enable the company to deploy 17,500 new off-grid solar systems to customers in Uganda, along with a range of appliances.
The SAFI is a tailored receivables financing structure designed by SunFunder for solar companies deploying systems through pay-as-you-go and solar leasing models. SAFI finances their credit offerings directly, allowing them to reach more customers.
SolarNow CEO Willem Nolens commented: “This syndication and the SAFI structure allow us to minimize the fundraising burden and to focus on our business instead. By selecting the right clients and treating them well, our credit portfolio remains healthy and we create a strong foundation for sustainable growth.”
The new systems will amount to around 2.5 MW of new installed off-grid solar capacity, resulting in over 210,000 tons of greenhouse gas emissions avoided through displaced kerosene for lighting. Among the expected impacts, the company estimates that over 70,000 Ugandan women will gain improved energy access.
SunFunder’s Director of Investments Surabhi Visser commented: “We have just had our 5-year anniversary working with SolarNow, and this takes us to USD 19 m in investments that we’ve arranged or made directly in the company. We are proud to have backed SolarNow’s growth delivering top quality solar systems and appliances throughout Uganda.”
The new investment marks the 5th anniversary of SolarNow’s partnership with Nairobi-based SunFunder. It is also the second time that Oikocredit and the responsAbility-managed private debt fund have participated with SunFunder to finance the company, after a similar USD 6 m syndication 14 months ago.
The facility is the third syndication arranged by SunFunder with responsAbility and Oikocredit, showing the ongoing importance of specialist origination and collaborative investments for emerging market solar. The three investors also worked on a multi-currency syndicated debt facility for PEG Africa in Ghana and Cote d’Ivoire.
responsAbility’s Stefan Issler, Head of Direct Investments, Energy Debt Financing, added: “We were excited to see SolarNow’s successful growth ever since we teamed up with SunFunder to finance the company a little over a year ago and look forward to supporting SolarNow as a long-term financing partner.”