Overseas Private Investment Corporation (OPIC), the US government’s development finance institution, has provided financing to SunFunder, a solar energy finance business with offices in the US, London and Nairobi working to scale up clean energy access in Africa and Asia by financing solar companies active in off-grid and weak-grid communities.
The Solar Energy Transformation Fund (SET Fund) is one of a group of investment vehicles managed by SunFunder. SET Fund supports businesses providing solar solutions to millions in Sub-Saharan Africa and India who lack access to electricity.
The financing is part of a $25 million commitment of senior and junior debt OPIC entered into last September. Since OPIC committed to the financing, two other lenders have also committed loans, bringing the first close total raised to $42.5 million. This blended financing package includes $7.5 million from Calvert Impact Capital and $5 million from Ceniarth. The IKEA Foundation also provided a grant of $5 million as catalytic capital for the fund.
“This project will advance OPIC’s mission of empowering people in some of the world’s poorest countries by bringing affordable electricity to remote areas that are not connected to an electricity grid,” said Ray W. Washburne, OPIC President and CEO. “As we’ve seen from the additional financing raised, it is also a testament to OPIC’s ability to mobilize additional investment.”
Improving energy access
SunFunder projects that SET Fund will improve energy access for three million people and mitigate 480,000 tons of CO2 emissions annually over the nine year life of the fund. To date, SunFunder has deployed $65 million of debt financing to 46 solar borrowers in Africa and Asia.
“SunFunder has now closed over $100 million in diversified solar debt funds and the SET Fund opens up new opportunities. As our largest fund and with a nine-year tenure, the SET Fund increases both the range and size of debt capital offerings that we can provide, especially for productive use solutions and commercial projects,” said Ryan Levinson, SunFunder founder and CEO. “We’re grateful for the support from this investor group and pleased to be growing these long-standing relationships.”
OPIC’s support of this project advances several Agency priorities including the 2X Women’s Initiative, which supports women-owned and women-led businesses.
SunFunder was founded in 2012 by Ryan Levinson and Audrey Desiderato, with a commitment to provide financing for working capital, construction, inventory and structured finance loans to emerging markets beyond the grid solar projects and companies.
By bringing electricity to some of the hardest to reach communities in Africa, these projects also advance the US Power Africa initiative to bring electricity to more of the hundreds of millions of people in Sub-Saharan Africa who live without power.
US pledges to support solar energy in Uganda
OPIC previously committed financing to another SunFunder-managed fund, the Beyond the Grid Solar Fund, which has provided financing for off-grid companies in Africa, India, the Pacific Islands and Jordan. Calvert Impact Capital and Ceniarth also invested in previous SunFunder debt funds.
“The IKEA Foundation is supporting SunFunder with a $5 million grant for its important work in serving the off-grid communities in East and West Africa and India because we believe that helping families access renewable energy will enable them to afford a better everyday life while also protecting the planet,” said Jolanda van Ginkel, Renewable Energy Program Manager at IKEA Foundation.
“We’re excited to work with this group of lenders to meet SunFunder’s growing capital needs. Continuing to scale proven fund managers like SunFunder is critical to creating access to capital for local businesses that are leading the energy transformation,” said Jennifer Pryce, President and CEO of Calvert Impact Capital.
“Ceniarth has been an active energy access investor for the past four years and has monitored activity closely across the sector. SunFunder has grown into a sophisticated and responsible lender in a market that continues to have significant complexity, but critical impact. We are excited to invest alongside OPIC and Calvert Impact Capital in expanding the SET fund,” said Diane Isenberg, Founder and Director of Ceniarth.
Sunfunder expanding to Mozambique
SunFunder announced in January that they are expanding into new markets, with first transaction in Mozambique with SolarWorks!, the country’s leading Pay-As-You-Go (PAYG) solar home system and energy services provider.
The $2m debt facility will allow SolarWorks! to directly impact 65,000 people with improved energy access while displacing at least 26 tonnes of CO2 emissions. The deal took an innovative multi-currency approach through partnership with US-based currency hedging company MFX Solutions.
Avi Jacobson, Senior Investment Officer, who led the transaction said that, “Based on their performance, strong management, and impressive group of investors, we see that SolarWorks! is a company with the potential to scale up while improving the lives of tens of thousands of Mozambican families in the coming years. For SunFunder, this transaction aligns with our position as a preferred long-term finance partner for off-grid solar companies in Africa.”
Mozambique has an electrification rate of less than 30% and limited availability of debt capital to support off-grid solar solutions. SolarWorks! will use the debt facility primarily for working capital to accelerate their growth in Mozambique.
Arnoud de Vroomen, CEO and co-founder of SolarWorks!, commented, “We are very proud to have closed this facility as we really appreciate SunFunder’s vision of aiming for long-term partnerships. The potential in our region is enormous so partners like SunFunder are of crucial importance in order to have large-scale impact on millions of people’s lives and at the same time deliver good financial returns for our finance partners.”
SolarWorks! began activity in Mozambique in 2011 and has recently expanded into Malawi. The company provides a basic solar home system comprising lights and charging ports that can power phones, radios and small appliances as well as more powerful systems that can support small businesses and middle income households with reliable power.
Brian Cox, CEO of MFX Solutions, commented, “We are excited to be able to support this transaction which allows SolarWorks! to expand its vitally-needed solar services to households in Mozambique. With few options for local financing, renewable energy companies in frontier markets need to rely on external capital which can be risky if the local currency depreciates.”
