Access to Energy for the Base of the - Ashoka

Patient capital with energy
sector expertise
Once some elements of an energy market are in place,
the next level of financing is found from patient
investors with energy sector expertise. Perhaps the
first and most influential social investor is E+Co. Since
1994, E+Co has been providing business development
support and technical assistance to clean energy
enterprises. They have invested $15m in capital for 200
companies. These portfolio companies have mobilized
$183m in capital and provided clean energy to 4.3m
people. At the same time, E+Co has returned 7.9% to
investors after write-offs.
Patient capital is more effective when combined with
market-building resources. The Acumen Fund, which
has an energy portfolio of $2.4m, partners with strategic
services providers to ensure cost-effective resources for
investees. This includes MIS software providers, HR
requirement firms, debt financing from local banks,
carbon credit consultants, and pro-bono and low-bono
legal services. Acumen also links energy enterprises
with other portfolio companies, for example those with
rural distribution infrastructure, to increase the reach of
energy enterprises.
Figure 19 Access Energie, an E+Co company, provides solarpowered
telephone service in Senegal
19 Innovation in Rural Energy Delivery; Soluz and Navigant Consulting, 2006, p. 20
20 Waste Concern, available at : http://www.wasteconcern.org/
The importance of the accumulation of expertise
after 14 years should not be underestimated. Soluz,
one of the very earliest SHS pioneers in Latin
America, once worried that they spent $100,000 to
educate a potential investor, only to have the deal
fall through at the end. 19 As E+Co and others
become sophisticated investors in the energy space,
they reduce the transaction costs for enterprises and
increase the quality of their own portfolio. For
example, E+Co has shared their expertise with the
AREED initiatives, and advised the Solar Energy
Foundation how to set up their revolving fund.
Triodos Bank in the Netherlands has financed many
types of clean energy projects, and knows how to
effectively evaluate a potential investee. The
existence of financiers who know the market and
can teach others is an immense resource to the next
generation of access to energy entrepreneurs.
Carbon markets designed to serve
low-income communities
One of the most powerful developments for the
access to energy market has been the introduction of
the Clean Development Mechanism of the Kyoto
Protocol, known as CDM. A clean energy project
based in low-income countries can sell Certified
Emission Reduction credits based on the release of
greenhouse gases the project has prevented. These
credits are sold on global markets at an agreed price
per ton to entities in rich countries that need to reduce
their carbon footprint. In this way, carbon reduction
strategies such as the EU’s cap and trade system
directly contribute to funding clean energy enterprises
in low-income communities.
CDM credits can have a significant impact on the
viability of a project - for biogas, CDM brings an
incremental IRR of 25% - 60%. The availability of
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