Grid Scale, Off-Grid, Solar, Storage

Africa Mobile Pay-Go Solar Developer Beats the Odds, Raises $22.5M in Venture Capital

Mobile pay-as-you-go solar pioneer d.light on Sept. 21 announced that it has raised $15 million in Series D equity from KawiSafi Ventures Fund, Energy Access Ventures, Omidyar Network and NewQuest Capital Partners, as well as $2.5 million in debt funding raised through SunFunder.

Support from foreign and regional governments, multilateral development banks and non-profit agencies has provided the basis for growth in the pay-as-you-go market by providing credibility and security for investors, as well as critical early stage seed capital that is enabling this innovative new breed of community-based African clean energy services company to develop and grow.

Residents and businesses across large swathes of Sub-Saharan Africa are hindered by lack of access to electricity.

By and large, utilities and energy/power sector companies have been unable to bridge the energy divide despite financial and technical assistance from multilateral development banks and government agencies. Others have shied away completely, judging the risks and/or costs of building out conventional power generation capacity and grid infrastructure to be prohibitive.

The situation has changed dramatically in recent years as a small crop of innovative solar energy startups has emerged and grown. Leveraging low-cost PV solar, battery-based energy storage, mobile payments and cloud-based information and communications technology platforms, fast growing startups, such as BBOX, d.light and Powerhive, have seen surprising success in bringing affordable, reliable, emissions-free electricity to rural residents and businesses across Sub-Saharan Africa. They also have attracted the attention of, and early stage equity capital from, some of the world’s leading venture capital (VC) and private equity investment groups.

Shell Foundation, the U.S. Agency for International Development – Development Innovation Ventures and United Nations Capital Development Fund contributed more than $5 million to d.light’s latest funding round.

Some may find it surprising that leading VC and private equity investors are committing capital to d.light, as well as others in its peer group, such as Powerhive and BBOX. Even more surprising, it appears that d.light can, or is expected to, turn a healthy profit by doing so.

Beating the Odds

Developer of a growing line of off-grid, cloud-connected solar energy systems and consumer products, d.light is bringing clean, safe affordable and reliable light, electrical power, equipment and devices to local homes and businesses, many of whom have never had it before.

Off-grid solar is taking off as a result, and not only in Africa. To date, about 65 million people in Africa, India and Southeast Asia are enjoying the benefits, according to d.light. Management has set a goal of reaching 100 million by 2020.

Companies active in the off-grid solar market have received over $250 million since 2014, according to global clean energy market research and communications firm Mercom Capital’s Solar Funding and M&A report.

“With almost a billion people living off the grid globally the market potential is estimated to be in the billions of dollars,” Mercom Capital co-founder and CEO Raj Prabhu told Renewable Energy World. “Needless to say, there has been significant interest from investors over the past few years.”

According to Prabhu, investors in these companies are a mix of venture capitalists and private equity groups investing to make a great return, as well as social venture investors who want to invest for a social cause.

“Some of the companies that are attracting investments in this area are companies focused on off-grid solar lighting, plug-and-play solar, pay-as-you-go solar services, and innovative lending solutions,” he said.