Two investors backed by the charitable foundations set up by energy giants have seed-funded the cash pot to lend to African solar companies, who will be able to buy solar kit cheaper thanks to the economies of scale offered by the aggregation of orders.
Amid repeated calls for innovative approaches to unlock the potential of African solar, two impact investors have committed $5 million each to back an aggregated buying program in Nigeria which will aim to lower the wholesale cost of PV equipment, logistics and finance.
Lagos-based All On – which is funded by the Shell Foundation set up by the Anglo-Dutch energy giant – and the Global Energy Alliance for People and Planet (GEAPP) led by the Rockefeller Foundation established by Shell’s U.S. peer, have provided a $10 million cash pot to the Demand Aggregation for Renewable Technology (DART) program.
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The DART fund will be loaned to eligible solar equipment suppliers to enable them to purchase products at a cheaper rate, thanks to the aggregation of orders centrally by Colorado-based renewables data and technology business Odyssey Energy Solutions.
The program will initially lend to solar companies approved by Nigerian state entity the Rural Electrification Agency to supply its Nigeria Electrification Project, and will then be rolled out into four other, unspecified African “pilot countries.”
It is hoped lower solar system prices, driven by the aggregation of demand, will attract more investors to the solar business case in Africa, not least commercial banks who could be persuaded to offer cheaper finance.
“This is an example of the kind of innovation and collaboration needed to close the energy access gap, enable a just and inclusive energy transition, and unlock a sustainable future for all,” said Damilola Ogunbiyi, CEO and special representative of the UN secretary-general for sustainable energy for all, quoted in a press release issued yesterday on behalf of DART project partners All On, GEAPP and Odyssey.
Ahmad Salihijo, MD of the Rural Electrification Agency, said: “This could be a breakthrough in bridging the finance gap that hinders the growth of small and medium sized enterprises in the nascent renewable energy sector in Nigeria.”
The recently-launched, $10 billion Global Energy Alliance for People and Planet has members including the Bezos Earth Fund established by Amazon owner and world’s richest person Jeff Bezos, and the Ikea Foundation connected to the Swedish furniture giant. Publicly-funded partners include the World Bank, USAID, the Asian Development Bank, the European Investment Bank, and the International Renewable Energy Agency.
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Source: pv magazine