The Brief: Subsidizing solar for all in India

Greetings Agents of Impact!

⚡Plugged In: Disrupting for good at Citi Impact Fund. In her latest conversation on LinkedIn Live, ImpactAlpha contributing editor Sherrell Dorsey hosts Meredith Shields, head of the $500 million Citi Impact Fund, to talk about her system-change framework for investments in financial, social and climate resilience and the future of work. Get Plugged In, Wednesday, Aug. 21, at 8am PT / 11am ET / 4pm London. RSVP now.

The Call: Investing behind federal funding for water quality, community health and climate resilience. Cities and rural communities in the US are scrambling to take advantage of once-in-a-generation federal funding to upgrade critical water infrastructure. They need help developing projects, catalyzing capital and floating bonds to stretch the funding. Join North Star Strategy’s Radhika Fox, who led the Environmental Protection Agency’s Water Office for three years, and Rogelio Rodriguez of the nonprofit WaterFX, which helps communities finance equitable water infrastructure, to identify high-impact water investment opportunities, Thursday, Aug. 29 at 10am PT / 1pm ET / 6pm London. RSVP today. 

In today’s Brief:

• Ambitious residential solar push in India
• Gender-inclusive clean energy in Africa
• Outcomes bond to reforest the Amazon
• Greenhouse Gas Reduction Fund shifts into high gear

Featured: Sustainable Development

India’s residential rooftops sprout solar panels with generous government subsidies. The US is not the only country seeking to spread “Solar for All.” Coal-dependent India’s adoption of rooftop solar to power homes is getting a dramatic boost from a new subsidy program for off-grid solar technologies. Surya Ghar Muft Bijli Yojana – literally the “Solar Home Free Electricity Program” – is generating consumer-led momentum for a shift to cheaper, cleaner and reliable renewable energy. The government is investing 750 billion rupees, or $9 billion, to facilitate rooftop solar for 10 million households, ImpactAlpha contributing editor Shefali Anand reports from Delhi. “India has tried in the past to promote rooftop solar, but didn’t meet targets,” Anand writes. This time, the government’s household-focused approach is similar to the incentives and tax credits in the US for catalyzing green home upgrades under the Inflation Reduction Act, including grants and affordable financing for low-income households under the Solar for All program. Targeting middle and lower-middle class homeowners will fuel “a people-led energy transition” in India, says Neeraj Kuldeep of the Council on Energy, Environment and Water policy shop. “It will be the middle class championing it.”

• Record-breaking heat. Fainting politicians and heat-related deaths during India’s recent election underscored the urgency of the country’s shift from coal to renewable energy. “Thanks to innovation and falling prices in renewables, India does not have to choose between economic growth and climate action,” Mahesh Yagnaraman of Acumen writes in a guest post on ImpactAlpha. Surya Ghar, as the solar subsidy program is known, is part of India’s plan to reach net zero by 2070 and to increase its renewable energy production to 500 gigawatts by 2030, up from around 195 gigawatts today. As many as 250 million solar-suitable homes in India could generate an estimated 637 gigawatts of solar energy.

• Solar-powered livelihoods. A new generation of solar startups is moving beyond affordable access to focus on livelihoods and resilience. Aurangabad-based S4S Technologies is helping reduce food waste and generate income for farmers with solar-powered food processing. Ecozen in Pune offers solar-powered cold storage for farmers to preserve their harvests before sale. “Most commercial funders are cautious and are waiting for further business model and market validation,” observes Yagnaraman. Read his guest post.
  
• Signs of progress. Surya Ghar has “generated remarkable response,” with 1.4 million applications since February, according to Finance Minister Nirmala Sitharaman. Freyr Energy Services, a rooftop solar company in Hyderabad, has seen its solar installations grow to roughly 100 per week this year, compared to 100 installations in all of 2021. Rooftop solar startup SolarSquare Energy’s business has tripled since the program was rolled out. “People have become more comfortable thinking of solar as an investment that they want to make,” says Manish Advani of the VC firm Elevation Capital, which bet on SolarSquare in 2022. Household energy demands in India are growing 10% to 15% each year, notes Freyr’s Saurabh Marda. “It’s a multi-decade opportunity.”
  
• Keep reading, “India’s residential rooftops sprout solar panels with generous government subsidies,” by Shefali Anand on ImpactAlpha. 

Dealflow: Climate + Gender

KawiSafi’s gender-inclusive climate fund gets $10 million from the African Development Bank. The Acumen subsidiary invests in clean energy technologies and access in emerging markets. The firm is looking to raise $200 million for its second fund, which is deepening its focus on women in the clean energy transition. “We want to source a pipeline that has gender representation,” KawiSafi’s Amar Inamdar told ImpactAlpha. Women-led or owned companies must make up 30% of the portfolio. The Nairobi-based fund manager is also earmarking $10 million for technical assistance to support gender inclusion across its portfolio. The African Development Bank’s junior equity investment comes from its $95 million Sustainable Energy Fund for Africa, which aims to pull more private investment into clean energy. The investment follows an anchor investment last year from the Green Climate Fund.

• Follow-on capital. Acumen launched KawiSafi in 2016 to make patient, growth-stage investments in Africa’s clean energy companies. It closed its $67 million first fund three years later; its portfolio includes early off-grid energy players like Bboxx and d.light. “Our key learning from our first fund is we need more capital for follow up,” Inamdar said. The firm has also seen more female entrepreneurs in the market raising capital, especially since a climate + gender event on the sidelines of last year’s Africa Climate Summit in Nairobi. The fund will cut equity checks of up to $5 million for e-mobility, distributed renewables and batteries-as-a-service companies.
  
• Share this post. 

Swedish investor EQT acquires KJ Environment for recycling and waste-to-energy in Korea. The €246 billion ($271 billion) investment group is acquiring Seoul-based waste management company KJ Environment and affiliated companies from Genesis Private Equity, a South Korean buyout firm. With its second infrastructure deal in South Korea, EQT hopes to establish a waste management platform that focuses on plastic recycling and waste-to-energy generation at scale. “South Korea holds tremendous potential and is strategically important to our regional investment strategy,” said EQT’s Sang Jun Suh.

• Color-coded waste. South Korea is a sustainable waste management leader, with a recycling and composting rate of around 60%. Its waste management system mandates that waste items are separated into color-coded bags. South Korea aims to slash its plastic waste in half – and recycle 70% of it – by 2030. EQT made the investment via its sixth infrastructure fund, which has a €20 billion fundraising target.
   
• Share this post.

World Bank’s Amazon reforestation-linked outcome bond attracts $225 million. The nine-year bond provides Nuveen, T. Rowe Price, Velliv Pension, Mackenzie Investments and other investors with a principal-protected coupon linked to the generation of carbon removal units from reforestation projects in Brazil’s Amazon rainforest. The World Bank says it is the largest outcome bond and the first to link financial returns to carbon removed from the atmosphere, rather than from avoided emissions. 

• Carbon removal projects. Of the proceeds, $36 million will go to Brazilian carbon removal startup Mombak for acquisitions and partnerships with landowners in the Amazon rainforest on reforestation projects. Mombak last year raised $100 million for the Amazon Reforestation Fund for projects that generate high-quality carbon removal credits, improve soil quality, enhance biodiversity, and create local jobs (see, “Reforesting the Amazon”).
  
• Check it out.

Dealflow overflow. Investment news crossing our desks:

• Pepea, an East Africa-focused inclusive finance fund managed by Goodwell Investments, made its first investment in Gaea Foods, a women-led potato processing enterprise in Nairobi. (Africa Private Equity News)

• CruxOCM raised $17 million from Raven Indigenous Capital Partners, Microsoft’s venture fund M12 and other investors to deploy its “co-pilot” technology for energy-efficient control rooms. (CruxOCM)

• UK-based Promethean Particles clinched £8 million ($10.3 million) in Series A funding, led by Aramco and Mercia Ventures, to make metal-based materials for carbon capture and storage. (Tech.eu)
  
• Impactpool, a Swedish AI-powered career platform that connects professionals interested in development and humanitarian work with impact employers, snagged $4 million in a Series A round. (CTOL)

Signals: Deploy!

Green banks and community lenders shift into high gear with the release of $27 billion in federal climate grants. Community lenders were getting busy within hours of the Biden administration’s release of $27 billion in Environmental Protection Agency grants to catalyze America’s green transition. On Friday, Appalachian Community Capital, a nonprofit in Christiansburg, Va., was awarded $500 million from the Greenhouse Gas Reduction Fund; it promptly announced the formation of the Green Bank for Rural America, which aims to leverage private capital to finance $1.6 billion for 2,000 new energy projects across the Appalachian region. The awards by the EPA to such green banks, community development financial institutions, nonprofits, and state, tribal and territorial governments, represent one of the largest expansions of community lending in US history. The Greenhouse Gas Reduction Fund aims to unlock at least seven times the grant amounts in private capital for climate-friendly upgrades for homes, schools, community centers and businesses – and to leave behind a nationwide ecosystem of green lenders. 

• Deployment constraints. Now comes the hard work. Grant recipients must get buy-in from local and state agencies. They must create and deploy new green lending products and mechanisms, including complex financing schemes like secondary markets for green loans and municipal bonds to finance green infrastructure. They must accelerate their vetting of project developers. And they must leverage private capital to ensure that GGRF projects multiply their bang for the bucks (see, “Investors ready products to amplify US green bank funding”). “As the next phase of work shifts from hammering out the fine print to capital mobilization and deployment, the hurdles are now likely to shift to one of network coordination and deployment constraints,” says Rachel Halfaker of the Milken Institute.
  
• Cross-sector partnerships. Grant recipients are “rapidly coordinating partnerships across sectors, bringing communities and capital providers together in new ways,” Climate United’s Beth Bafford tells ImpactAlpha. She says she is already fielding requests from businesses, communities and individuals “looking to take advantage of this once-in-a-lifetime opportunity.”
  
• Keep reading, “Green banks and community lenders shift into high gear with release of $27 billion in federal climate grants,” by Lynnley Browning on ImpactAlpha.

Agents of Impact: Follow the Talent

Illumen Capital promotes Leila Mengesha to senior impact associate… Social Finance adds Kandasi Griffiths-Williams, previously with Ruthless for Good, as an impact investments associate director… Robert Wood Johnson Foundation has an opening for an impact investment officer in New Jersey… Blue Forest is looking for a project development manager or senior manager… Elemental Excelerator seeks an impact director.

Ownership Works is hiring a senior manager of data and impact in New York… Quantified Ventures seeks a senior associate or associate director of climate finance in New England … MassMutual Catalyst Funds is recruiting an impact investment principal… GAWA Capital seeks a climate expert in Madrid… The REAL Mental Health Foundation will host The REAL Summit, Oct. 17-18 in New York to explore the intersection of finance and mental health.

👉 View (or post) impact investing jobs on ImpactAlpha’s Career Hub.

Thank you for your impact!

– Aug.19, 2024