Q. Energise Africa (EA) has been mobilising investment for access to affordable solar energy in Africa since 2018. Recently, you launched your first campaign for a Green Mini Grid (GMG) operator. What motivated your decision to enter this particular market segment?
A. We see GMG as highly impactful. First and foremost, they provide reliable clean power to whole villages or areas in one go. Communities are consulted and involved in the design process, and as a result, a GMG is far more likely to deliver what the community needs than other solutions. Secondly, they are very effective in reducing CO2 and pollution as they are generally replacing inefficient diesel generators. Finally, GMGs are a long-lasting (generally at least 20 years) and flexible solution that can be scaled up as the community demand for power increases.
Q. GMGs are a new sector for EA and your investors. What are some key differences in terms of risk or repayment for crowd investor loans?
A. Generally, funding Solar Home System (SHS) suppliers means relying on pay-as-you-go (PayGo) revenue to the supplier to repay the debt (1). This approach works well in some instances however, because payments ultimately depend on each family’s ability to pay, it can be a hard risk to quantify. On the other hand, funding GMG developers, generally means taking a construction risk that the developer will be able to complete the project and draw down on the RBF grant to make the repayment to lenders. This is often an easier risk for us to assess and quantify.
(1) Pay-as-you-go refers to a consumer financing model in which customers make small, regular payments over time instead of paying the full price of the product upfront.
Q. Under Results-Based Financing (RBF) schemes, grants are typically disbursed only after new electricity connections are verified. This timing often leaves GMG operators facing funding gaps. How does your platform help bridge that gap so projects can keep moving?
A. We have seen that a lot of the new finance that is coming in to fund GMG is being structured as RBF grants. While these instruments are highly effective in de-risking for grantmakers – since payments are made only after project completion – they require that the construction risk be assumed by another party. Energise Africa provides construction finance to enable developers to build the GMG, make the connections, and draw down on the RBF grant. One of our concerns is that it is easier for larger multinational companies to access the finance needed to bridge these funding gaps. This risks leaving local operators, who will often know the market better and be able to deliver a better solution, starved of finance. Therefore, we have decided to prioritise lending to African-owned and -led businesses that have strong local connections to the community in which the GMG will be built.
Q. Since RBF payments are released in tranches after verification, how does Energise Africa structure its loans to align with these disbursement schedules and prevent liquidity crunches for developers?
A. We have redesigned our product offering to include greater timing flexibility, responding to developer feedback that accurately predicting construction timelines can be challenging due to uncertainties in shipping, customs, logistics, and weather. So, if a developer has an 18-month construction period, we will structure lending for 24-months and allow penalty-free repayments after 12-months. This gives the developer much-needed flexibility.
Q. Could you please elaborate on how bridging the financing gap for RBF grant holders via crowdfunding is de-risking for investors? What specific advantages does it offer for the crowd?
A. It is key for any lender to understand and minimize risk. When we are lending to a GMG developer that holds a RBF grant, we can generally be very confident that the RBF provider has the ability to pay out. This means that our counterparty risk is greatly reduced. We can then focus our assessment just on the developer’s ability to deliver the project as set out in the RBF agreement. By focusing all of our due diligence efforts on this narrower question, we can carry out a more effective and efficient risk assessment.
Q. Are there other off-grid or mini-grid projects in your pipeline? What criteria guide your selection of developers, technologies, or countries to ensure both financial soundness and social impact?
A. We have a number of GMG projects in our pipeline and expect RBF backed construction finance for GMG to constitute the majority of our lending in 2026. Assuming that a developer has secured a RBF grant and has a shovel-ready project, the commercial criteria that we will then look at are principally the experience of the developer in delivering similar projects and the financial position of the developer, including the securing of any equity funding to bridge the gap between the RBF amount and total project costs. We are relatively technology agnostic but also quite conservative, so we would tend not to lend to projects using new or untested technologies. We operate across all of Sub-Saharan Africa and do not prioritise particular countries.
Q. What roles has CEIA played for your platform in entering the GMG market and scaling investments into the off-grid sector in general?
A. CEIA has been key in supporting us in this market. As with any new product offering or sector, a lot of work has had to go into the preparation of legal, due diligence and finance structures. Additionally, CEIA has been able to provide us with Technical Assistance in order to support getting the initial transactions completed. We fully expect our transaction costs to come down to a commercially sustainable level over time, but this support has been vital in enabling us to get the first transactions completed in a way that keeps the finance cost affordable for developers. CEIA is also an important provider of finance to the sector and, unlike Energise Africa, can provide forgivable loans and RBF grants as well as debt funding. As nearly all GMG projects under consideration across Africa rely on blended finance, it is crucial that debt providers, such as Energise Africa, work in close partnership with other funders, including CEIA, to ensure the provision of viable and affordable financing solutions for developers.
Q. Looking ahead, how do you see the crowdlending for Green Mini Grids evolving? Could this model become a standard mechanism for financing verified impact in Africa’s off-grid energy sector?
A. We see direct investment as an important part of the finance mix. The very clear environmental and social impacts of GMGs make them very compelling for impact-oriented retail investors. We have seen strong demand from our investors for bonds issued by GMG developers, and we believe that as these projects are built, demonstrate their impact, and –importantly – repay investors, interest in them will continue to grow. Retail investors are also able to offer developers a degree of flexibility on repayment timelines that we think is vital for GMG development, so we anticipate increasing demand from developers for this form of financing.
