AFRICA – CrossBoundary Energy Access (CBEA), Africa’s first project financing facility for mini-grids, has announced US$25 million in new funding commitments from ARCH Emerging Markets Partners Limited, Bank of America, and Microsoft Climate Innovation Fund.
This investment will leverage an additional US$25 million in senior debt to deploy US$50 million of capital into CBEA’s near-term pipeline of solar-powered mini-grids.
CBEA will deploy a total of US$150 million over the next two years to bring clean energy to one million people in Africa.
The mini-grids combine solar and batteries provide 24/7 grid-quality power to households and businesses. This initiative will enable individual local residential and small business subscribers to access renewable electricity for the first time.
These solar-powered mini-grids will help bridge the gap by bringing clean electricity to rural areas of Africa that do not presently have access to electricity.
“CrossBoundary Energy Access has grown up with the sector and this fundraise is a testament to the work of the developers, governments, and donors over the last few years,” Gabriel Davies, Managing Director and Head of Energy Access at CrossBoundary, said.
“Confidence from ARCH, Bank of America, and Microsoft reflects the growing maturity of both the mini-grid sector and its ability to attract institutional capital. Our investors believe the mini-grid sector is ready to scale and that 2022 will mark an inflection point in its growth.
“Work is still needed on every aspect of mini-grids including regulation, business model, and subsidy programs. But we’re excited by the step change in scale and pace that we’re seeing from developers, investors, regulators, and donors, and we’re encouraged by the amount of capital the sector is prepared to absorb in the next 24 months.”
According to the International Energy Agency (IEA), the solar mini-grid sector needs US$187 billion to achieve universal energy access by 2030.
CBEA believes project finance is key to unlocking the long-term, infrastructure-type capital that the mini-grid sector needs.
CBEA first pioneered its blended project finance structure in 2019 with funding from Rockefeller Foundation, Ceniarth, DOEN Foundation, Shell Foundation and UK Aid.
According to the IEA, more than 600 million people in Africa do not have access to electricity. This puts a brake on economic growth, productive investment, job creation, and poverty reduction.
Solar mini-grids provide a solution to this issue, unlocking the potential of those living without electricity.
CBEA’s blended finance approach creates a new model for funding rural electrification in Africa, bringing renewable electricity to one million people once the target US$150 million is fully deployed.
“This is a crucial step for CrossBoundary Energy Access towards unlocking the private and public capital needed to scale the mini-grid sector,” Humphrey Wireko, Managing Director, CrossBoundary Energy Access, said.
“We look forward to mobilizing this investment to bring the projects in our pipeline to life and providing power to African homes and businesses through these distributed renewable assets.”
CrossBoundary Energy Access is the first project finance facility for mini-grids, which are small solar-storage grids that bring electricity to rural communities.
By using blended finance and an innovative project financing structure, CrossBoundary Energy Access unlocks capital for mini-grids with a mission to bring electricity for the first time to more than 1 million people. CrossBoundary Energy Access is a direct investment platform of the CrossBoundary Group.