As the decade is coming to an end, one billion people – mostly concentrated in South Asia and Sub-Sahara Africa – still live without proper access to electricity. For the past ten years the Access to Energy Fund (AEF) has contributed to overcome this global challenge. To create more sustainable access to renewable energy, more finance and innovation is needed.
AEF’s strategy focuses on five themes: (i) access to energy for households as yet unreached; (ii) captive power production for SMEs; (iii) Transmission & Distribution projects to ensure that power generation assets that have been developed will also be connected to the grid; (iv) impactful and scalable tech-related energy innovations; and (v) clean cooking solutions, including more efficient cook stoves and biodigesters.
AEF is a first mover in high risk countries. AEF 2018 development impact results show 979,013 jobs supported (442,437 for women), 215 MW produced and 915,317 tCO2eq/yr greenhouse gas emissions avoided. Most importantly, AEF investments created access to energy for 2.4 mln people and catalyzed EUR 1.4 bln public funding and EUR 781.6 mln commercial funding.
In 2018 production included four off-grid investments: (i) a convertible grant to Envirofit, a clean cooking company, for the roll-out of its smart gas cooking business in Kenya; (ii) an equity investment in d.light, an off-grid solar company (co-investment with IDF); (iii) an increase of existing equity exposure to Mobisol, another off-grid solar company; and (iv) a senior loan in local currency to OGE Tanzania, a syndicated co-investment with FMO and Symbiotics. AEF also successfully completed the transfer of two assets to FMO; one debt investment (Gigawatt) and one equity investment (Lereko Metier Bokpoort).
AEF experienced commitment challenges in high-risk countries in Africa. In on-grid transactions, developers often face regulatory constraints to obtain the required licenses. In addition, it is more difficult to attract the required total funding budget. The opening up of AEF to all countries on the OECD-DAC list will help AEF to explore and support a much larger pool of high-impact investment opportunities and mitigate these commitment challenges.
In 2018, FMO received a 10-year renewal of its mandate to manage AEF with a refined investment strategy and a EUR 40 mln top up of the fund capital. In the coming years AEF will further expand its work in promising innovations that have the potential to transform markets. These include (i) the exploration of co-investment opportunities to increase development impact and strengthen the bankability of end clients benefiting from AEF funding; (ii) an expansion of investment in social enterprises; and (iii) research on gender impact mapping in climate mitigation projects. Such innovations face bankability and scalability challenges. A EUR 5 mln Capacity Development and M&E budget has been made available by DGIS to tackle such challenges. In close collaboration with FMO's Capacity Development and Environmental & Social specialists, the AEF team will use these funds to help communities to address social and cultural barriers that hinder community and market transformation and help secure access to renewable and affordable energy.