Press Release: Global Coalition Launched $80 Million Relief Fund To Protect Energy Access in Vulnerable Communities From COVID-19 Fallout
Today, a first-of-its-kind relief fund launched with a first close of $68 million and a target of over $80 million to protect energy access for at least 20 million people in sub-Saharan Africa and Asia. The Energy Access Relief Fund (EARF) is the culmination of an unprecedented partnership convened by Acumen, including CDC Group, U.S. International Development Finance Corporation (DFC), FMO, Green Climate Fund (GCF), Shell Foundation, IKEA Foundation, The Rockefeller Foundation, World Bank, International Finance Corporation (IFC), Swedish International Development Cooperation Agency (SIDA), Swiss Agency for Development and Cooperation (SDC), the UK Foreign, Commonwealth and Development Office (FCDO), USAID and Power Africa. The EARF, managed by Social Investment Managers and Advisors (SIMA), will provide relief capital in the form of short-term loans to an estimated 90 energy access companies in sub-Saharan Africa and Asia still struggling with disruptions wrought by Covid-19.
“Access to clean, reliable, and affordable energy is essential in lifting communities out of poverty. We could see that the pandemic was adversely impacting those who were most vulnerable and that we needed to take action. We couldn’t do it alone—it would take all of us,” said Jacqueline Novogratz, Acumen’s Founder and CEO. “The launch of the EARF illustrates the power of partnership and the moral imagination in a time of crisis.”
Broken supply chains, increased costs of solar components, and continued Covid lockdowns have crippled the energy access industry, which provides renewable energy solutions such as solar lanterns, household solar, mini-grids, and modern energy cooking equipment to customers in low-income and last-mile communities. A coalition of committed global investors and donors created the Fund to protect the industry’s progress toward United Nations Sustainable Development Goal 7: universal energy access.
“Together, CDC, DFC, and FMO are mobilizing our capital to ensure the survival of small and medium social enterprises extending energy access to the 800 million people living without power. The EARF’s flexible and innovative financial structure blends different types of capital to offer low-interest loans and liquidity while the health and economic consequences of the pandemic continue,” said Geoff Manley, Head of the Energy Access and Efficiency team at CDC Group.
SIMA’s analysis of energy access companies eligible for relief funding across 50 countries shows that 77% of potential borrowers require emergency financial assistance to stay afloat. Without it, many companies may be forced to take drastic measures such as pausing operations, laying off staff, or permanently closing their doors, which would disrupt energy access for customers at a particularly difficult time.
“We have innovated to create a robust underwriting approach that allows us to rapidly provide relief loans to companies that most need our support during the crisis. We have also implemented into our investment approach a comprehensive ESG process, including developing a gender action plan and supporting the companies to deal with Covid-19 challenges,” said Asad Mahmood, the CEO of SIMA, the EARF Fund Manager.
The EARF is an extraordinary example of stakeholders uniting in crisis, even as budgets were constrained and investments were at risk. “We have proudly worked alongside IKEA Foundation, The Rockefeller Foundation, IFC, UK aid, USAID, and the World Bank to leverage our collective grant capital to de-risk and catalyze senior investors in the Relief Fund. Small-scale renewable energy enterprises and innovators are scrambling to serve some of the world’s poorest communities. We hope similar collaborations follow this sector landmark—much more capital will be needed in the coming months to continue progress toward universal energy access,” said Sam Parker, Director at Shell Foundation.
The Energy Access Relief Fund (EARF) aims to safeguard gains made in the once-booming energy access sector. In the last decade, the industry has grown six-fold, providing 470 million people with energy access, employing more than 370,000 in green jobs, and avoiding 74 million tonnes of greenhouse gas emissions.
“The EARF is a critical tool to help us build back better and tackle climate change. It will ensure that social enterprises can continue to provide renewable energy solutions and advance climate mitigation and resilience across sub-Saharan Africa and Asia,” said Yannick Glemarec, Executive Director at the Green Climate Fund. “GCF is proud to be part of this innovative partnership, and delighted that it is moving ahead to launch.”
Through creativity, financial innovation, and fiscal discipline, the EARF intends to protect social enterprises that combat energy poverty and are leading the renewable energy transition across Sub-Saharan Africa and Asia.