ImpactAlpha, September 22 – Africa and Asia’s off-grid solar sector has been on an upmarket march in recent years, shifting away from individual households to small commercial or community solar users. But a new $90 million funding round for Greenlight Planet signals that investors are still committed to emerging markets’ first-time and low-income solar energy consumers.
Eleven-year-old Greenlight Planet was one of the earliest movers in the $1.8 billion small-scale off-grid solar market. It was a pioneering developer of low-cost solar lamps, chargers and home units at a time when photovoltaic solar panels were still a costly technology and when few companies were championing the buying power of remote consumers at the base of the global economic pyramid. The Chicago-based company has sold more than 15 million of its Sun King-branded products via more than 300 distributors in 65 countries.
The company’s mixed debt and equity funding round is one of the largest rounds secured by an emerging markets-focused small-scale solar company. Backers include European development finance institutions CDC, FMO, and Norfund, impact investors ResponsAbility, SIMA Funds, Symbiotics, Global Partnerships, and private equity firm ARCH Emerging Markets Partners.
It brings Greenlight Planet’s total funding to more than $170 million, and ushers in a new phase of growth for the company.
“This allows us to dramatically expand our pay-as-you-go financing business and put more units in the field,” Greenlight Planet’s Patrick Walsh told ImpactAlpha. It also helps Greenlight Planet consolidate some of its existing debt at a lower interest rate, which in turn enables the company to make its products more affordable, Walsh added.
More than 1.8 billion people—nearly a quarter of the global population—lack access to reliable sources of energy. While an enormous number, it represents an improvement from a decade ago: more than 420 million people now have basic or improved energy access through adoption of small scale solar products and systems, according to Lighting Global’s 2020 off-grid solar market report.
Progress on energy access is thanks in large part to companies like Greenlight Planet, whose early solutions to global energy poverty and the myriad of social and economic issues it touches (health, gender equality, education, household earning potential) were simple, clean, low-cost alternatives to kerosene, candles and other crude lighting sources used in off-grid households.
“In 2009, the only product we had was a simple solar lantern. Then a couple years later, we had these brighter solar lanterns with the ability to charge a phone. Back then, that was a game changer,” recalls Greenlight Planet’s Patrick Walsh.
A few other companies including d.light, M-Kopa, BBOXX and Off-Grid Electric (now Zola) hit the market around the same time, offering similar products and solutions. Then, scalability was limited by the cost of solar panels, along with last-mile distribution challenges. As the cost of solar technology fell, Walsh says the range and power of pico and small lighting products evolved quickly.
“We started releasing home solar systems with multiple lights and the ability to charge phone and radios,” he tells ImpactAlpha. “By that point, the big issue was offering financing so that people could afford to pay for bigger and more powerful products.”
Today, there is a host of companies carving off and claiming various pieces of the off-grid solar value chain, from product development to distribution to financing to monitoring and payment software. As the sector matures, “companies are moving into new geographies and underserved markets as established markets become more saturated,” states the Lighting Global report. “They are also accelerating the shift towards larger, higher-margin solar home system (SHS)” and larger off-grid utilities.
A spate of recent deals and partnerships in Africa’s off-grid energy market reflect these trends: Mali’s Energy+ raised $1 million to sell basic solar products to first-time users. Netherlands-based Lumos raised $35 million to expand solar system sales to Nigerian businesses and households; Broadreach Energy secured $25 million to build and operate both rooftop solar installations and utility-scale solar farms across Africa; and Solarise secured new funding as a solar project financing partner for industrial and commercial businesses in East and Southern Africa.
Design from scratch
As for Greenlight Planet, the company is roughly on par with its long-standing peers in terms of total funding. But while some like Zola Electric and BBOXX are shifting their focus up-market, Greenlight Planet plans to stay close to its original customers and help them climb the energy ladder.
To do that, the company building onto its range of new lighting products and appliances to complement the acceleration of its solar home system sales. This involves a lot of drawing board-based design.
“With rare exceptions, consumer electronics that were designed to be used with the electricity grid are just woefully inefficient. We end up having to reinvent everything,” from fans to televisions, Walsh explained. He says Greenlight Planet has worked to halve the amount of energy that early versions of its 32-inch television consumes, for example.
Walsh believes that investing in hardware development will pay off by unlocking the large and largely untapped market of emerging global consumers. Indeed, Lighting Global estimates that companies like Greenlight Planet have only tapped 17% of the available off-grid solar market.
“There’s almost limitless demand for these types of products and services,” said Walsh. “Even in some countries where you would think the market is becoming saturated, like Kenya, there’s just enormous growth in demand—even during the pandemic.”