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Renewable Energy and Adaptation to Climate Technologies (REACT) Round 3 GIZ workshop: “Strengthening the Mini-Grid Market in Kenya” Anjali Saini, REACT Adviser, AECF 25 June 2014
Renewable Energy and Adaptation to Climate Technologies (REACT) Round 3
GIZ workshop: “Strengthening the Mini-Grid Market in Kenya”
Anjali Saini, REACT Adviser, AECF
25 June 2014
3 points to remember!
Funding opportunity for business innovation – for profit private sector; commercial viability + potential to scale + development impact
Two opportunities in 2014 – REACT R3 and later in the year, Africa Agribusiness Window
REACT R3 launches 15 July, 2014. US$19m funding availability
What is the AECF?
The AECF is a fund of donor money available to the private sector on a competitive basis
It is a special partnership initiative of the Alliance for a Green Revolution in Africa (AGRA). AGRA is chaired by Koffi Annan and funded by Rockefeller and Bill and Melinda Gates
Funded by a multi-donor consortium (Dutch, DFID, DANIDA, SIDA, IFAD, CGAP). The donors form the Governing Council of the AECF
Managed by a KPMG led team (the Fund Manager). Y&R is the marketing partner. Triple Line services provides M&E support.
Initial capital was US$36m; now over US$200m
Aims and Objectives
Goal: accelerate pro-poor growth in Africa – increasing employment, livelihood opportunities and income and reducing poverty
Purpose: to make agribusiness, finance, renewable energy and information market systems work better for the poor in rural areas in Africa
Result: by improving the way market systems work, we aim to have a positive impact (jobs and incomes) on large numbers of people living in rural areas. Development impact.
Modus Operandi: The AECF works by supporting private sector companies to develop and test new and innovative business ideas
We seek projects that are commercially motivated & innovative to get systemic
impact
Commercial Motivation: Scale required for systems impact; scale will only be reached if business model is (very) profitable
Disruptive Innovation: as a key indicator of systemic change potential
• Upsetting the market such that others will copy and replicate – the more innovative the better
Principle: Start races rather than picking winners
Finding the Right ProjectsSCALE
(SOCIAL) IMPACTVIABILITY
What is the AECF REACT Window?A special funding window for business ideas that are based on renewable energy and adaptation to climate technologies
Goal: to contribute to reducing rural poverty in East Africa
Objective: to catalyse private sector investment and innovation in low cost, clean energy and climate change technologies
How much is available?The competition is funded by the UK Department for International Development (DFID) and the Swedish International Development Agency (SIDA) – approx $19m funds available (approx 25 companies)
Companies may be from the EAC or domiciled outside of the EAC, but all projects must take place in one or more countries within the EAC.
Application process goes live in, 2014 (exact date to be announced). Window remains open for applications for 2 months.
Key Strands in REACT: Increased access to low cost, clean energy for rural businesses & households
Products and services that help rural people adapt to climate change
Financial services that increase access to finance for low cost clean energy and climate resilient technologies or catalyse financial solutions
We are keeping broad definitions of the above, to “open the box” and see what innovations come through
Renewable Energy Adaptation to Climate Technologies
Financial Services
•Micro solar PV solutions for households & businesses that have little hope of grid access
•Power generation (eg from agricultural waste), supply to main or minigrids
•Drought resistant seeds
•Early weather warning systems that increase resilience and reduce vulnerability
•Small scale irrigation systems
•Increased access to finance for renewable energy & adaptation to climate technologies eg through credit guarantees
•Weather insurance for smallholder farmers
Project Examples
Lighting Africa ILRI ILRI
REACT so far…
Two rounds run in the East African Community (Burundi, Kenya, Rwanda, Tanzania, Uganda); One round run for Mozambique
32 companies awarded approximately US$24 million in grants and interest free loans; 12 companies in Mozambique ~ S$10 million
“Clusters” of companies with exciting business models to address some of the most pressing challenges facing energy access for low-income consumers, for example:– End user financing and affordability (pay-as-you-go solutions;
microfinance)– Creating markets for traditional fuel alternatives – Building rural distribution chains (franchising, telco partnerships)– Small scale Independent Power Producers and Mini-grids
Small Scale Independent Power Producers & Mini-grids
Few IPPs in renewable energy below 20 MW in the region– Regulatory & financing hurdles– Access to reliable information– Project implementation capabilities
Six REACT companies– Several have already invested in overcoming initial hurdles– Unlocking future pipeline
Innovations in power distribution– Combinations of grid sales, own use, mini-grids– Minigrids – connection rates; payment systems– “Pre-electrification” services / technologies eg EGG-Energy; solar PV & micro-
LED
Cummins Cogeneration - KenyaPower generation (11.5MW) using biomas gasification technology in Baringo country using prosopis juliflora as feedstock. Power sales to the grid.
AECF funding US$1,000,000 (US$500,000 grant, US$500,000 loan)
CCKL investment US$21,381,000
AECF funding to help build sustainable biomass supply chains with local community groups in this semi-arid area
2,000 rural households expected to benefit; large scale clearance of the prosopsis invasive weed
Similar business models:Teita Estate (Kenya)E A Power (hydro) Tanzania
Teita Estate - KenyaPower generation from sisal waste (both biogas and steam) – approx 10MW
Power for own operations, sales to grid and distribution to local villages through mini-grid
AECF funding US$1,000,000 (US$250,000 grant, US$750,000 loan). Teita Estate investment US$3,500,000
AECF funding to help with the riskiest elements of the project: mini-grid distribution network
6,000 rural households expected to benefit
Similar business models:Cummins Co-generation (Kenya)E A Power (hydro) Tanzania
Husk Power - TanzaniaSmall-scale power production and distribution using agri-waste
Gasifiers use rice husk as feedstock to produce the power, 32 – 250kW in size
Power distribution through mini-grids –already well established technology in India
AECF funding US$750,000 (US$500,000 grant, US$250,000 loan). Husk Power investment US$4,120,000
AECF funding to help transfer technology, develop local assembly capacity and build Tanzanian operations for the business
50,000 rural households and small businesses expected to benefit
Similar business models:SODEA SARL (Burundi)
La Terre (Kenya)
E A Power - Tanzania10MW small hydro in Mbeya region, Southern Tanzania – first significant SHP developed by an IPP in Tanzania
Power sales to grid, will increase power reliability on the region’s isolated grid.
AECF funding US$1,000,000 (US$150,000 grant, US$850,000 loan). EA-Power investment US$15,134,938
AECF funding to conclude detailed technical design and hence de-risk and crowd in investors; demonstrate commercial viability and local capacity to develop such projects
50,000 rural households expected to benefit
Similar business models:Cummins Co-generation (Kenya)
La Terre - Kenya(i) Biomass processing zone using rose waste to create high density briquettes (ii) manufacture of down-draft biomass gasification systems suitable for providing heat and power from large scale agri-wastes. Operations based in Naivasha, access to 35ton/day flower farm waste.
AECF funding US$250,000 (US$50,000 grant, US$200,000 loan). LT investment US$292,000
AECF funding to help establish gasifier manufacturing facilities and penetrate local charcoal markets
2,000 rural households expected to benefit
Similar business models:SODEA SARL (Burundi)
Husk Power (Tanzania)
M-KOPA - KenyaNew mobile payment and distribution technology
Helps low income consumers to purchase better performing, cost saving solar power systems
Customers pay a small deposit and then pay-as-you-go using mobile money transfers. The technology allows the systems to be monitored and connected/disconnected from a distance
AECF funding US$1,000,000 (US$250,000 grant, US$750,000 loan). M-KOPA investment US$3,500,000
AECF funding to expand distribution and sales
100,000 rural households expected to benefit
Similar business models:Mobisol & Off:Grid Electric (Tanzania)
Suntransfer and BBOXX (Kenya)
SolarNow (Uganda)
Additional examplesSmall hydro: 10MW E A Power (Tanzania)Power generation from Agri-Wastes / Biomass: 8MW sisal waste (Kenya); 10MW from prosopsis juliflera (Kenya)Microfinance: consumer products distribution (solar, cookstoves); carbon credits (EAC)Charcoal and firewood substitutes from biomass and agri-wastes (maize, flower wastes) – Kenya, RwandaSupply chain and end user financing for solar and human powered energy products (Rwanda, Kenya)Sustainable forestry products and carbon credits (Tanzania, Kenya)Biofuels from candlenut and other trees/crops (Uganda, Kenya)Biogas: mass produced biogas systems using plastic
MORE INFORMATION ON THE APPLICATION PROCESS
Eligibility CriteriaSame as for all AECF competitions (for profit private sector; trading track record; implementation in the EAC etc);
Applications must be for new and innovative business ideas
Request range from US$250,000 to US$1.5m, companies must match the funding requested in cash & kind
Project must contribute to environmental sustainability, including climate change aspects
Application ProcessSame as for all AECF competitions: online; two stage processThe competition launches at Stage 1
Stage 1 Stage 2
Likely Selection Criteria for Stage 1
Criterion Weighting
Capacity of company 20%
Strength of business case 20%
Development impact 35%
Innovation 10%
Environmental sustainability 15%
How much can I apply for?Applications can be for a mixture of grants / loans
Minimum amount US$250,000 maximum amount US$1.5m
Remember:
You must at least match the amount requested
We are also looking for leverage – scores a better mark
Applications for a higher % of loan compared to grant – scores a better mark
How do I apply?Go to www.aecfafrica.org
Online application process – companies must register first
Download the guidance notes – essential for completing application form
Online application form or PDF version
Extra information (attachments etc) will not be read
Visit our website www.aecfafrica.org
General enquiries: [email protected]
REACT Advisor: Anjali Saini [email protected]
