CrossBoundary Energy Access (CBEA) has raised $25 million from ARCH Emerging Markets Partners, Bank of America, and Microsoft Climate Innovation Fund to finance the development of solar minigrids in Africa.
This investment will build upon an additional $25 million in senior debt to deploy $50 million of capital into CBEA’s near-term pipeline of solar-powered minigrids.
The Rockefeller Foundation, Ceniarth, DOEN Foundation, Shell Foundation, and UK Aid provided initial funding. The fund was established in 2019 and expects to invest $150 million in solar projects over the next two years.
The minigrids will combine solar and batteries to provide 24/7 grid-quality power to households and businesses. This initiative will enable residential and small business subscribers to access renewable electricity for the first time. The solar-powered minigrids will help to bridge the gap by bringing clean electricity to rural areas of Africa that do not presently have access to electricity.
About 75% of the world’s population lives in Sub-Saharan Africa, which lacks access to power. South Sudan, Burundi, Chad, Malawi, Burkina Faso, Madagascar, and Tanzania are among the world’s least electrified countries and might benefit from sustainable energy sources such as solar and wind.
According to the International Energy Agency (IEA), the solar minigrid sector needs $187 billion of investment to achieve universal energy access by 2030. CBEA believes project finance is key to unlocking the long-term, infrastructure-type capital that the minigrid sector needs. CBEA first pioneered its blended project finance structures in 2019 with funding from the Rockefeller Foundation, Ceniarth, DOEN Foundation, Shell Foundation and UK Aid.
CBEA will deploy a total of $150 million over the next two years to bring clean energy to 1 million people in Africa. Minigrids combine solar power and batteries to provide 24/7 grid-quality power to homes and businesses. This initiative will allow residential and local small business subscribers to access renewable electricity for the first time. The solar-powered mini-grids will help bridge the gap by bringing clean electricity to rural areas in Africa that currently have no access to electricity.
According to the IEA, more than 600 million people in Africa do not have access to electricity. Solar minigrids solve this problem, unlocking the potential of those living without electricity. CBEA ‘s blended finance approach creates a new model for rural financing electrification in Africa, bringing renewable electricity to 1 million people once the $150 million target is fully implemented.
“Work is still needed on every aspect of mini-grids, including regulation, business model, and subsidy programs,” said Gabriel Davies, managing director and head of energy access at CrossBoundary. “But we’re excited by the step-change in scale and pace that we’re seeing from developers, investors, regulators, and donors. We’re also encouraged by the amount of capital the sector is prepared to absorb in the next 24 months.”
William Barry, managing director of ARCH Emerging Markets Partners’ Africa Renewable Power Fund, also said that distributed renewables, including minigrids will be a “critical component of Africa’s energy future.” He added CrossBoundary is helping to provide a “blended approach to the challenge of unlocking capital” for such initiatives.