Renewable Energy and Adaptation to Climate Technologies (REACT) Round 3

1. Renewable Energy and Adaptation to Climate Technologies (REACT) Round 3 GIZ workshop: “Strengthening the Mini-Grid Market in Kenya” Anjali Saini, REACT Adviser, AECF 25 June 2014

2. 3 points to remember! Funding opportunity for business innovation – for profit private sector; commercial viability + potential to scale + development impact Two opportunities in 2014 – REACT R3 and later in the year, Africa Agribusiness Window REACT R3 launches 15 July, 2014. US$19m funding availability

3. What is the AECF? The AECF is a fund of donor money available to the private sector on a competitive basis It is a special partnership initiative of the Alliance for a Green Revolution in Africa (AGRA). AGRA is chaired by Koffi Annan and funded by Rockefeller and Bill and Melinda Gates Funded by a multi-donor consortium (Dutch, DFID, DANIDA, SIDA, IFAD, CGAP). The donors form the Governing Council of the AECF Managed by a KPMG led team (the Fund Manager). Y&R is the marketing partner. Triple Line services provides M&E support. Initial capital was US$36m; now over US$200m

4. Aims and Objectives Goal: accelerate pro-poor growth in Africa – increasing employment, livelihood opportunities and income and reducing poverty Purpose: to make agribusiness, finance, renewable energy and information market systems work better for the poor in rural areas in Africa Result: by improving the way market systems work, we aim to have a positive impact (jobs and incomes) on large numbers of people living in rural areas. Development impact. Modus Operandi:The AECF works by supporting private sector companies to develop and test new and innovative business ideas

5. Finding the Right Projects We seek projects that are commercially motivated & innovative to get systemic impact • Commercial Motivation: Scale required for systems impact; scale will only be reached if business model is (very) profitable • Disruptive Innovation: as a key indicator of systemic change potential • Upsetting the market such that others will copy and replicate – the more innovative the better • Principle: Start races rather than picking winners

6. What is the AECF REACT Window? • A special funding window for business ideas that are based on renewable energy and adaptation to climate technologies • Goal: to contribute to reducing rural poverty in East Africa • Objective: to catalyse private sector investment and innovation in low cost, clean energy and climate change technologies

7. How much is available? • The competition is funded by the UK Department for International Development (DFID) and the Swedish International Development Agency (SIDA) – approx $19m funds available (approx 25 companies) • Companies may be from the EAC or domiciled outside of the EAC, but all projects must take place in one or more countries within the EAC. • Application process goes live in, 2014 (exact date to be announced). Window remains open for applications for 2 months.

8. Key Strands in REACT: • Increased access to low cost, clean energy for rural businesses & households • Products and services that help rural people adapt to climate change • Financial services that increase access to finance for low cost clean energy and climate resilient technologies or catalyse financial solutions • We are keeping broad definitions of the above, to “open the box” and see what innovations come through

9. Project Examples Lighting Africa ILRI ILRI

10. REACT so far… Two rounds run in the East African Community (Burundi, Kenya, Rwanda, Tanzania, Uganda); One round run for Mozambique 32 companies awarded approximately US$24 million in grants and interest free loans; 12 companies in Mozambique ~ S$10 million “Clusters” of companies with exciting business models to address some of the most pressing challenges facing energy access for low-income consumers, for example: End user financing and affordability (pay-as-you-go solutions; microfinance) Creating markets for traditional fuel alternatives Building rural distribution chains (franchising, telco partnerships) Small scale Independent Power Producers and Mini-grids

11. Small Scale Independent Power Producers & Mini-grids Few IPPs in renewable energy below 20 MW in the region Regulatory & financing hurdles Access to reliable information Project implementation capabilities Six REACT companies Several have already invested in overcoming initial hurdles Unlocking future pipeline Innovations in power distribution Combinations of grid sales, own use, mini-grids Minigrids – connection rates; payment systems “Pre-electrification” services / technologies eg EGG-Energy; solar PV & micro-LED

12. Cummins Cogeneration - Kenya • Power generation (11.5MW) using biomas gasification technology in Baringo country using prosopisjuliflora as feedstock. Power sales to the grid. • AECF funding US$1,000,000 (US$500,000 grant, US$500,000 loan) • CCKL investment US$21,381,000 • AECF funding to help build sustainable biomass supply chains with local community groupsin this semi-arid area • 2,000 rural households expected to benefit; large scale clearance of the prosopsis invasive weed Similar business models: Teita Estate (Kenya) E A Power (hydro) Tanzania

13. Teita Estate - Kenya • Power generation from sisal waste (both biogas and steam) – approx 10MW • Power for own operations, sales to grid and distribution to local villages through mini-grid • AECF funding US$1,000,000 (US$250,000 grant, US$750,000 loan). Teita Estate investment US$3,500,000 • AECF funding to help with the riskiest elements of the project: mini-grid distribution network • 6,000 rural households expected to benefit Similar business models: Cummins Co-generation (Kenya) E A Power (hydro) Tanzania

14. Husk Power - Tanzania • Small-scale power production and distribution using agri-waste • Gasifiers use rice husk as feedstock to produce the power, 32 – 250kW in size • Power distribution through mini-grids –already well established technology in India • AECF funding US$750,000 (US$500,000 grant, US$250,000 loan). Husk Power investment US$4,120,000 • AECF funding to help transfer technology, develop local assembly capacity and build Tanzanian operations for the business • 50,000 rural households and small businesses expected to benefit Similar business models: SODEA SARL (Burundi) La Terre (Kenya)

15. E A Power - Tanzania • 10MW small hydro in Mbeya region, Southern Tanzania – first significant SHP developed by an IPP in Tanzania • Power sales to grid, will increase power reliability on the region’s isolated grid. • AECF funding US$1,000,000 (US$150,000 grant, US$850,000 loan). EA-Power investment US$15,134,938 • AECF funding to conclude detailed technical design and hence de-risk and crowd in investors; demonstrate commercial viability and local capacity to develop such projects • 50,000 rural households expected to benefit Similar business models: Cummins Co-generation (Kenya)

16. La Terre - Kenya • (i) Biomass processing zone using rose waste to create high density briquettes (ii) manufacture of down-draft biomass gasification systems suitable for providing heat and power from large scale agri-wastes. Operations based in Naivasha, access to 35ton/day flower farm waste. • AECF funding US$250,000 (US$50,000 grant, US$200,000 loan). LT investment US$292,000 • AECF funding to help establish gasifier manufacturing facilities and penetrate local charcoal markets • 2,000 rural households expected to benefit Similar business models: SODEA SARL (Burundi) Husk Power (Tanzania)

17. M-KOPA - Kenya • New mobile payment and distribution technology • Helps low income consumers to purchase better performing, cost saving solar power systems • Customers pay a small deposit and then pay-as-you-go using mobile money transfers. The technology allows the systems to be monitored and connected/disconnected from a distance • AECF funding US$1,000,000 (US$250,000 grant, US$750,000 loan). M-KOPA investment US$3,500,000 • AECF funding to expand distribution and sales • 100,000 rural households expected to benefit Similar business models: Mobisol & Off:Grid Electric (Tanzania) Suntransfer and BBOXX (Kenya) SolarNow (Uganda)

18. Additional examples • Small hydro: 10MW E A Power (Tanzania) • Power generation from Agri-Wastes / Biomass: 8MW sisal waste (Kenya); 10MW from prosopsisjuliflera (Kenya) • Microfinance: consumer products distribution (solar, cookstoves); carbon credits (EAC) • Charcoal and firewood substitutes from biomass and agri-wastes (maize, flower wastes) – Kenya, Rwanda • Supply chain and end user financing for solar and human powered energy products (Rwanda, Kenya) • Sustainable forestry products and carbon credits (Tanzania, Kenya) • Biofuels from candlenut and other trees/crops (Uganda, Kenya) • Biogas: mass produced biogas systems using plastic

19. MORE INFORMATION ON THE APPLICATION PROCESS

20. Eligibility Criteria • Same as for all AECF competitions (for profit private sector; trading track record; implementation in the EAC etc); • Applications must be for new and innovative business ideas • Request range from US$250,000 to US$1.5m, companies must match the funding requested in cash & kind • Project must contribute to environmental sustainability, including climate change aspects

21. Application Process • Same as for all AECF competitions: online; two stage process • The competition launches at Stage 1 Stage 1 Stage 2

22. Likely Selection Criteria for Stage 1

23. How much can I apply for? • Applications can be for a mixture of grants / loans • Minimum amount US$250,000 maximum amount US$1.5m Remember: • You must at least match the amount requested • We are also looking for leverage – scores a better mark • Applications for a higher % of loan compared to grant – scores a better mark

24. How do I apply? • Go to www.aecfafrica.org • Online application process – companies must register first • Download the guidance notes – essential for completing application form • Online application form or PDF version • Extra information (attachments etc) will not be read

28. Visit our website www.aecfafrica.org • General enquiries: info@aecfafrica.org • REACT Advisor: Anjali Saini anjali.saini@aecfafrica.org