The year 2023 saw a significant increase in investor interest in Productive Use of Renewable Energy (PURE) technologies, particularly those focused on solar irrigation and cold chain solutions. Despite a 43% decline in funding for the global off-grid solar sector, PURE technologies raised an impressive $65 million, more than double the amount raised in the previous year.
Growing Investor Interest in PURE Technologies
The growth in investor interest can be attributed to the transformative impact of these technologies on livelihoods through innovation. As Laura Fortes, Senior Access to Investment Manager at GOGLA (Global Off-Grid Lighting Association), noted:
"These solutions mitigate climate change, enhance resilience and offer increased income opportunities for beneficiaries, including smallholder farmers and health clinics. By replacing outdated diesel water pumps and fossil-fuel-dependent coolers, especially in the face of climate change, they bolster resilience and small farmer incomes."
PURE Technologies: A Breakthrough in Solar Irrigation and Cold Chain
PURE technologies include a range of appliances and products that allow for improved or new revenue-generating activities, primarily in the agriculture sector. These innovative solutions include:
- Solar-powered water pumps: enabling farmers to access clean water for irrigation
- Refrigerators and cold rooms: preserving perishable crops and reducing post-harvest losses
- Agri-processing equipment: increasing efficiency and productivity in food processing
Off-Grid Solar Sector: A Mixed Bag
The off-grid solar sector as a whole saw a decline in funding, with $425 million raised across 158 deals, representing a 43% decrease from the previous year. However, a significant portion of this funding went towards debt financing, totaling $281 million.
Debt Financing Dominates Off-Grid Solar Investments
The top investors in the off-grid solar sector accounted for 58% of total investments, with companies like Sun King, d.light, Engie Energy Access, M-KOPA, Zola, and Bboxx leading the pack. These startups or scale-ups primarily operate in Africa, providing essential products and solutions to address energy access challenges.
Energy Access: A Critical Global Challenge
Globally, 75% of the population lacks access to electricity, with 46% residing in Africa. The low equity investment in household solar startups raises concerns about the industry’s ability to nurture new companies focused on electricity access, crucial for achieving global development goals.
Addressing the Funding Gap: A Call to Action
GOGLA’s Fortes emphasized the need for more de-risking instruments and concessional financing to support off-grid solar growth:
"2023 investment data shows that without more de-risking instruments and concessional financing, off-grid solar will not reach the scale needed to achieve global development goals. While many examples of successful blended finance structures already exist, we need more of them to multiply industry funding by seven."
Conclusion
The growth in investor interest for PURE technologies is a welcome trend in the off-grid solar sector. However, it’s essential to address the broader funding gap and support startups focused on electricity access to achieve global development goals.
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About the Author
Annie Njanja is a seasoned journalist covering startups and tech news in Africa. With a background in technology, business, and health reporting, she brings a unique perspective to her writing. Annie holds an MSc degree in Data Journalism from Columbia University and can be reached at annie.techcrunch@gmail.com.
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