Publication - LIGHTING THE WAY - Roadmap to Exits in Off-Grid Energy

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Title

LIGHTING THE WAY - Roadmap to Exits in Off-Grid Energy

Publisher

Acumen

Published in

November 2019

Abstract

Off-grid energy is proving to be one of the most attractive sectors for impact investing with year-on-year increases in lives reached, units sold, dollars invested and income generated. Over the last decade, more than 800 million people gained access to energy, with 360 million gaining access through off-grid solar products, some of which leverage pay-as-you-go (PAYG) financing to boost affordability. Meanwhile, off-grid energy raised a total of $1.4 billion from 2012 to 2018, equivalent to 35 times the total amount of capital invested before 2012.

Despite the capital flowing into the sector, exits remain a challenge. Exits serve as proof points for later-stage commercial investors to gain confidence in the sector, while also allowing early-stage investors to recycle their capital into new, pioneering off-grid companies. This is a critical component of building the robust capital market needed to support continued innovation and scale in the off-grid energy sector, which offers a cheaper, faster, and cleaner alternative to traditional on-grid power.

However, there have been few exits in off-grid energy to date. This report seeks to understand why and, more importantly, to identify the most viable pathways to exit, so companies, investors and other stakeholders can facilitate more exits.

Successful exits demonstrate that companies can serve low-income customers and scale sustainable businesses, thus driving more capital to the sector. The continued growth of the off-grid energy sector is crucial in solving one of the world’s biggest problems and improving the lives of millions of low-income people. That growth is only possible if exits occur and the market has a chance to thrive.

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