Universal access to modern energy is like the engine to a country's growth.
According to 2013 estimates, however,1.2 billion people (17 % of world population) did not have electricity, with more than 95 % of that population living in sub-Saharan Africa and developing Asia. Also, 2.7 billion people (38% of world population) use solid fuels in traditional and inefficient ways to cook (Source: World Energy Outlook).
Women and girls are particularly affected by how cooking and lighting is done in households because they are usually the ones who take on domestic responsibilities. Energy is also a big household expense. A household in a remote village in Uganda can spend up to USD 20 per month on kerosene and mobile phone charging (Source: CleanStart). The quality of energy also affects people's ability to be productive, keep safe and healthy, and build climate resilience.
With current improvements in price and performance of off-grid solar products, efficient appliances and fuels, rural households and businesses now have the chance to leapfrog to modern, energy efficient way of living. However, a key barrier is access to finance for both consumers and providers of modern energy.
How we are helping?
UNCDF's CleanStart programme co-invests in early stage innovations from financial institutions, distributed energy service companies and other providers of wholesale or retail financing for clean energy. The goal is to fill a "missing middle" in energy financing, as well as facilitate access to additional, more commercial financing for proven business models to scale.
By 2020, CleanStart aims to invest US$26 million in 6 countries in Asia and Africa to set 500,000 people on a clean energy pathway, thereby affecting the lives of more than 2.5 million people. CleanStart contributes to achieving SDG 7 on affordable and clean energy for all.
The programme is composed of four pillars:
- Finance for clean energy to incubate scalable energy financing models with 18 financial and energy service providers by providing risk capital grants and/or concessional refinancing;
- Technical assistance for clean energy to increase the scale potential of financing models by providing value-added support such as linkages to experts and new value chain partners;
- Knowledge and learning to share widely implementation know-hows and promote customer-centric growth through demand-side research;
- Advocacy and partnerships to co-create ecosystems for scale in partnership with various stakeholders such as Government, investors, and development partners.
CleanStart uses a challenge funding mechanism to incentivize companies to invest in finding breakthroughs in consumer and value chain financing. CleanStart defines innovation as:
- A new financial product, service or approach in the market; or
- A tested model that can quickly be scaled up in a new sector or geographic area; or
- A new partnership format (financing or other) that delivers results.
What we will do next?
CleanStart will continue to incubate different energy financing models. The current portfolio includes the following:
- Retail microfinance institutions providing loans for clean energy directly to clients (Countries: Nepal, Kenya, Tanzania, Uganda, Ethiopia, Cameroon);
- Energy service companies doing asset financing through digitally-enabled pay-as-you-go model (Countries: Cambodia, Myanmar, Uganda)
- Development banks refinancing clean energy lending portfolios (Countries: Nepal, Ethiopia);
In Uganda, CleanStart will launch three new challenge rounds to support innovations in 1) clean cooking, 2) pico solar power, and 3) large solar power ; and complete two customer research pieces: 1) year-long energy ladder research to understand what the pico-solar adoption pattern looks like and the role of financing in facilitating uptake; 2) six-month energy diaries research to understand how people use energy through bi-weekly interviews.