Transcript Similar business models

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
Finding the Right Projects
We seek projects that are commercially
motivated & innovative to get systemic
impact
SCALE
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
VIABILITY
(SOCIAL)
IMPACT
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
Project Examples
Renewable Energy
Adaptation to Climate
Technologies
Financial Services
•Micro solar PV solutions
for households &
businesses that have little
hope of grid access
•Drought resistant seeds
•Increased access to
finance for renewable
energy & adaptation to
climate technologies eg
through credit guarantees
•Power generation (eg
from agricultural waste),
supply to main or
minigrids
Lighting Africa
•Early weather warning
systems that increase
resilience and reduce
vulnerability
•Small scale irrigation
systems
ILRI
•Weather insurance for
smallholder farmers
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 lowincome 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 & microLED
Cummins Cogeneration - Kenya
Power 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
Similar business models:
Teita Estate (Kenya)
E A Power (hydro) Tanzania
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
Teita Estate - Kenya
Power generation from sisal waste (both
biogas and steam) – approx 10MW
Power for own operations, sales to grid and
distribution to local villages through minigrid
AECF funding US$1,000,000 (US$250,000
grant, US$750,000 loan). Teita Estate
investment US$3,500,000
Similar business models:
AECF funding to help with the riskiest
elements of the project: mini-grid
distribution network
Cummins Co-generation (Kenya)
E A Power (hydro) Tanzania
6,000 rural households expected to benefit
Husk Power - Tanzania
Small-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
Similar business models:
SODEA SARL (Burundi)
La Terre (Kenya)
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
E A Power - Tanzania
10MW 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
Similar business models:
Cummins Co-generation (Kenya)
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
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 agriwastes. 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
Similar business models:
SODEA SARL (Burundi)
Husk Power (Tanzania)
AECF funding to help establish gasifier
manufacturing facilities and penetrate local
charcoal markets
2,000 rural households expected to benefit
M-KOPA - Kenya
New 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
Similar business models:
Mobisol & Off:Grid Electric (Tanzania)
Suntransfer and BBOXX (Kenya)
SolarNow (Uganda)
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
Additional examples
Small 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, Rwanda
Supply 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 Criteria
Same 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 Process
Same as for all AECF competitions: online; two stage
process
The 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]