Packard Foundation: $15M in Debt Capital to Scale Solar ‘Beyond the Grid’

Equity gets the glory, but sometimes it’s debt that gets the job done.

fullstackThe David and Lucile Packard Foundation this week committed $15 million to Simpa Networks, SunFunder, and Off-Grid Electric, which each finance access to clean energy “beyond the grid” in east Africa, India and other emerging markets. The so-called program-related investments will be in the form of low-interest loans to help scale up deployment of distributed solar systems, and are part of the foundation’s growing commitment to climate and energy investments. The foundation's approval of the investments was announced at the U.S. State Department’s Invest in Climate conference.

“Our investments are structured as debt to fund the deployment of these systems, which is a key financing gap and impediment to the growth of these solutions worldwide,” said Susan Phinney Silver, the foundation’s PRI program manager. “Our investments are designed to build on existing equity investments in these social enterprises, and also to leverage and attract other new debt capital from a range of other impact-oriented investors to grow and scale these promising business models for increasing the availability of distributed renewable energy.”

Off-Grid Electric, based in Tanzania and California, has attracted large equity investments with the success of its pre-paid leasing model. The company last week announced $25 million in Series C financing. The round was led by Nancy Pfund of DBL Partners, which was also an early investor in Solar City and Tesla.

Simpa Networks, operating in the Indian state of Uttar Pradesh, is deploying pay-as-you-go solar systems thst enable customers to pay for electricity with their mobile phones.

SunFunder says it has financed $2 million in solar projects, with 16 solar companies in 6 countries, helping more than 250,000 people get access to solar energy.

The off-grid solar market has reached $300 million a year, with more than 13 million off-grid solar products sold in developing countries to date, according to the World Bank Group and the Global Off-Grid Lighting Association. In Africa, sales have tripled in the last three years.

Justin Guay, Packard’s climate program officer, said beyond-the-grid solar electricity displaces heavily polluting fuels such as diesel and kerosene. “We support beyond-the-grid distributed clean energy solutions because they are the fastest, cheapest, most effective way to displace these costly and harmful sources of power, while directly providing affordable and reliable power to low-income communities,” he said.

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