Access to Energy for the Base of the - Ashoka
Access to Energy for the Base of the - Ashoka
Access to Energy for the Base of the - Ashoka
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82<br />
AFRICAN RURAL ENERGY ENTERPRISE DEVELOPMENT<br />
Clean <strong>Energy</strong> Finance<br />
Africa<br />
Executive Summary:<br />
The African Rural <strong>Energy</strong> Enterprise Development (AREED) investment facility was launched in 2000 by <strong>the</strong> United<br />
Nations Environment Program and <strong>the</strong> UN Foundation. It benefited from E+Co’s experience with energy finance, and<br />
<strong>to</strong>ok a progressive approach <strong>to</strong> building a market - first starting with loans <strong>to</strong> create business plans, and moving on <strong>to</strong><br />
bigger and bigger investments. Although cus<strong>to</strong>mers were not subsidized, <strong>the</strong> energy enterprises benefited from patient<br />
capital at a below-market rate. AREED portfolio <strong>of</strong>fered 2% - 6% risk adjusted returns from 2001 - 2006 on an investment<br />
<strong>of</strong> $4.3m.<br />
� Date <strong>of</strong> creation: 2000<br />
�� Service delivered:<br />
� Enterprise development services<br />
� Start-up capital<br />
� Geography: Africa<br />
� Cus<strong>to</strong>mers / beneficiaries: 44 sustainable energy<br />
enterprises since launch<br />
� Leadership: Initiative <strong>of</strong> United Nations Environment<br />
Program, UN Foundation<br />
Sodigaz (LPG)<br />
EcoHome (ELighting)<br />
AB Mgt (EEfficiceny)<br />
Gladym (ELighting)<br />
Motagrisol (SPV)<br />
Lambarj (LPG)<br />
LMDB (LPG)<br />
Seeco (SPV)<br />
KBPS (Biomass)<br />
Chavuma (EEffficiency)<br />
Anasset (LPG)<br />
RESCO (LPG)<br />
MBB (LPG)<br />
Mona (SPV)<br />
Aprocer (Cooks<strong>to</strong>ves)<br />
Bansim (LPG)<br />
AME (SThermal)<br />
Kalola farms (Wind Pump)<br />
EnergieR (SPV)<br />
FeeHi (LPG)<br />
Fadeco (SThemal)<br />
BETL (Biomass)<br />
VEV (Wind Pumps)<br />
Prosolel (SThermal)<br />
Foyer Amel (LPG)<br />
Translegacy (LPG)<br />
Rasmal (Cooks<strong>to</strong>ves)<br />
USISS (CropDeying)<br />
Ubwa<strong>to</strong> (Cooks<strong>to</strong>ves)<br />
Bagani (Bi<strong>of</strong>uel)<br />
TSADC (SThermal)<br />
RCI (Bi<strong>of</strong>uel)<br />
Project basic in<strong>for</strong>mation<br />
AREED Investments 2001 - 2006<br />
AREED’s portfolio, 2001 - 2006<br />
� Partners involved: Worked with E+Co <strong>to</strong><br />
design strategy<br />
� Operational infrastructure and mechanisms:<br />
� Begins by <strong>of</strong>fering small loans <strong>to</strong> create<br />
business plans<br />
� Then moves on<strong>to</strong> investments from $50 K - $120 K<br />
� Returns from enterprises go back in<strong>to</strong> fund <strong>to</strong><br />
support next investments<br />
Investment Category: Innovation<br />
•Total <strong>to</strong> date: $720,000<br />
•High risks, average loan default rates: 30%<br />
•Very low/non existent risk-adjusted returns: 2%<br />
Investment Category: Commercialization<br />
•Total <strong>to</strong> date: $500,000<br />
•High risks, average loan default rates: 26%<br />
•Low risk-adjusted returns: 4%<br />
Investment Category: Replication<br />
•Total <strong>to</strong> date: $620,000<br />
•High risks, average loan default rates: 3.7%<br />
•Relatively high risk-adjusted returns: 6%<br />
$50,000 $100,000 $150,000 $200,000
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