CrossBoundary Energy Access (CBEA) has announced that it has raised $25 million from ARCH Emerging Markets Partners, Bank of America, and Microsoft Climate Innovation Fund to finance solar mini-grids in Africa. This investment will leverage an additional $25 million in senior debt to deploy $50 million of capital into CBEA’s near-term pipeline of solar powered mini-grids.
“This is a crucial step for CrossBoundary Energy Access towards unlocking the private and public capital needed to scale the mini-grid sector. We look forward to mobilising this investment to bring the projects in our pipeline to life, and providing power to African homes and businesses through these distributed renewable assets,” said Humphrey Wireko, Managing Director at CrossBoundary Energy Access.
The mini-grids will combine solar and batteries to 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.
“Through this investment, Bank of America is supporting clean energy solutions in rural, hard to reach areas of Africa and helping to drive the transition to clean energy for all. This innovative blended finance structure by CrossBoundary Energy Access aggregates renewable energy mini-grid projects to achieve scale and reduce risk, which more readily enables large institutions to invest,” said Amy Brusiloff, Community Development executive for Environmental, Social and Governance, at Bank of America.
According to the International Energy Agency (IEA), the solar mini-grid sector needs $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.
“Reaching universal electrification in Africa requires scaling affordable and clean energy solutions. CrossBoundary Energy Access’s innovative approach to mini-grids unlocks clean energy solutions for the millions of Africans who still lack access to power. Microsoft is proud to help scale mini-grid solutions that advance climate equity by providing clean energy access to more businesses and communities,” said Brandon Middaugh, Director, Microsoft Climate Innovation Fund.
Solar mini-grids role in accelerating energy access
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 $150 million is fully deployed.
“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,” said Gabriel Davies, Managing Director and Head of Energy Access at CrossBoundary.
“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,” Davies concluded.