ImpactAlpha, September 1 — Off-grid solar and other energy access companies, with razor-thin margins in tough markets, face a liquidity crisis. COVID-19 has disrupted supply chains, interrupted sales and frozen capital markets, Acumen’s Sarah Bieber told ImpactAlpha. One-third of off-grid solar lighting companies reported sales decreases of more than 50% in the second half of 2020.
The Energy Access Relief Fund, a blended finance vehicle created by Acumen with CDC Group, the UK’s development finance institution, has deployed 11 short-term loans.
Without the capital, many companies may be forced to pause operations or permanently close their doors, “which would disrupt energy access for customers at a particularly difficult time,” says Asad Mahmood of Social Investment Managers and Advisors, which was tapped to manage the fund.
The fund has aims to raise up to $80 million. A first-loss grant cushion from private foundations and government donors, along with a portfolio guarantee from the Swedish government, secured a $30 million investment from the Green Climate Fund and helped bring in development finance institutions. Acumen itself has committed $500,000.
The investment consortium also includes the IKEA, Shell and Rockefeller foundations, U.K. Aid, USAID, the International Finance Corp. and World Bank Group, Swedish International Development Cooperation Agency, Green Climate Fund, Power Africa and others.
The partnership, says Beiber, “required collaboration across governments, philanthropic donors and private capital providers.”