PEG Africa raises $1.5 million from leading debt investors to support distribution of solar home systems in Ghana
Accra, Ghana. PEG Africa (PEG) has announced a $1.5M USD debt raise to fund the purchase of solar home systems that will reach 75,000 people in Ghana. The funding was raised from leading energy access debt providers, and follows a $7.5 million equity round in June 2016. It will help PEG reach its goal of providing financing to half a million households in West Africa by 2020.
Hugh Whalan, the CEO of PEG Africa says, ‘This debt deal is a landmark in West Africa for the off-grid pay-as-you-go solar sector, and will allow us to focus on continuing to grow our business. We are also proud to have received the support of our legal advisers, Nixon Peabody, on this innovative transaction. ‘
Speaking for ResponsAbility, which led the round and is providing PEG with technical assistance to develop a larger debt facility, Stefan Issler commented,”We are delighted to be a part of PEG’s success story and bring electricity to thousands of households in Ghana through a financially viable business model. This transaction is a great example of how different lenders can successfully cooperate to provide funding to unlock growth in the energy access sector.”
PEG provides financing for solar products to low-income households that typically live in rural areas and earn $5-$10 per day, spending up to 30% of that income on poor quality fuels such as kerosene, candles and batteries. While these customers have little ability to purchase a solar home system for cash, the pay-as-you-go plan allows them to purchase it over time, building ownership of the product over 12 months with daily payments of 50 cents.
David ten Kroode, Oikocredit’s Renewable Energy Manager, said, “This partnership builds on Oikocredit’s experience of providing innovative local currency financing for the development of promising renewable energy businesses. We’re proud to be partnering with PEG and expanding our support of off-grid solar into West Africa.”
Each solar system has a battery, an 8 watt solar panel, 2 bulbs, a torch, a radio and a phone charger. After 12 months of payments, the system is fully paid off and the customer is will generate as much as $800 in energy savings over the remaining life of the solar system. In addition, they qualify for additional financing for productive and useful assets such as cook stoves, smart phones and solar powered TVs.
David Battley, Director of Structured Finance at SunFunder, said, “This is our second deal with PEG. We’re delighted to have helped them build their track record to become a leading solar company in West Africa, and look forward to furthering our partnership.”