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Nicaragua | April 17 | Impact Investing in Solar

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Mackenzie Welch GP

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Nicaragua | April 17 | Impact Investing in Solar

  1. 1. Smart Villages Workshop April 28, 2017 Impact Investing in Solar
  2. 2. Expanding opportunity for people living in poverty MISSION AND MODEL Families in Poverty Social Enterprises High-impact products & services Impact Investments Investors Donors $225 million in impact investments with 101 partners in Latin America and East Africa.
  3. 3. CHALLENGE STATEMENT WHO IS SERVED WHAT IS DELIVERED WHY IS THIS IMPACTFUL HOW IS THIS SUSTAINED Roughly 1.2 billion people worldwide have no access to electricity and spend an estimated $27 billion annually on dangerous alternatives. GP aims to improve the economic position and quality of life of off-grid households by investing in manufacturers and distributors that provide access to quality, low cost solar lights and home systems. Target demographic is off grid populations, many of whom live on less than $3.10 a day. Solar products that offer choice with a focus on: • Solar lights • Solar light with charging • Small solar home systems (SHS) Household economics and quality of life improve due to: • Reductions in fuel and phone charging costs • Increased productivity • Decreased smoke from kerosene • Increased study time for their children Client pays for the product upfront or pay-as-you- go. Once paid off, the solar light products create savings compared to spending on kerosene or candles SOLAR INVESTMENT INITIATIVE
  4. 4. LESSONS LEARNED • Large reach working with manufacturers and large distributors • Organizations excelling at section of the value chain, while branching out through partnerships, from perspective of GP’s capital (debt) • Pay-As-You-Go is a socially and financially appealing model • Positive household impact: Reduced up front cost provides access to lower income families while enhanced features provide more value • Strong financing structure: Ability to lock and reclaim system reduces portfolio risks by lowering risks associated with lending • When clients have access to solar product, there is high demand • Market study (n=400) in Nicaragua showed 50% of respondents wanted large home system, though ability to pay was low • 42% wanted combination of portable and plug systems, 100% adoption
  5. 5. CHALLENGES • Lack of investor attention leads to fewer solar enterprises developing • Focus on solar in Africa and Asia over need in rural Americas • Small solar distributors in Americas have limited reach due to small size but do not qualify for larger investor financing that would help growth • Other lenders and earlier stage capital are not yet filling the gap. • MFI adoption slower in Latin America and reach is limited to client base, risk of over indebtedness • Generics from copycats in China can create market spoilage, though uncommon in the Americas
  6. 6. POSITIVE DEVELOPMENTS • Opportunity to build energy ladders to increase rural incomes • Solar, particularly PICO and small home systems, is household product • Focus on larger systems for productive use in the future (i.e. Refrigerators for produce, charging barbers clippers) • Rural businesses can increase their income by reducing the costs of energy and free, rechargeable energy • Decreasing cost of solar components: Cheaper photovoltaic panels, batteries and LED bulbs continue to speed adoption and increase access. • Charging solutions for mobile phones continues to spur growth • Some increasing investor focus and enterprises overcoming pioneer gap
  7. 7. THANK YOU

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