The Off-Grid Energy Access Fund has reached a first close for its a mission to “catalyze capital markets support for innovative energy access strategies.” The African Development Bank is spearheading the fund, with backing from the Nordic Development Fund, the Global Environment Facility, Calvert Impact Capital and Nigeria-based energy impact investor All On backed the fund.
OGEF is part of the African Development Bank’s $500 million debt-based Facility for Energy Inclusion, which aims to bring other capital providers into inclusive energy deals on the continent.
A key part of the fund’s approach will be helping off-grid energy companies in Africa access debt and lines of credit in local currency to serve their customers.
Off-grid energy companies often grapple with currency mismatch that affects their business models: they get paid by customers in local currency, but often borrow from international lenders in dollars or euros. It’s an issue that other energy sector players, like solar lender SunFunder, are trying to address. Companies like MFX Solutions are addressing currency risk in impact finance from the investor side.
Off-Grid Energy Access Fund’s, or OGEF, emphasis on local currency also helps diversify the capital sources coming into the off-grid energy sector.
“FEI is part of a broader Bank strategy to unlock more financing in decentralized energy companies, which also entails direct investments in market leaders, lines of credit for local banks and programmatic support to countries in scaling-up their energy access agendas,” a statement said.