Efficiency for Access Coalition and Acumen launch Investor Network to drive capital towards productive uses of energy
A message from Leslie Labruto, Associate Director, Global Energy at Acumen.
Ask most energy access investors, and they will tell you that productive use technologies are the next frontier of investments, and for good reason. The headline numbers and statistics are strong enough to pique the interest of any investor in the off-grid market: the off-grid fan market is valued to be worth $500 million; the off-grid refrigeration market is $1.1 billion; global demand has never been higher and efficiency improvements are promising.
However, few investments have been made. There is a lack of information on the maturity of productive use technologies, which are performing best, how accessible products currently are for customers, and what companies are positioned for success, despite investor eagerness. If investors don’t have answers to this key information, the market will struggle to scale.
This is why Efficiency for Access (EforA) and Acumen have partnered to create the Efficiency for Access Coalition Investor Network, a group of over 15 leading, like-minded investors who have expressed a great interest in making investments into productive use companies but want to gain a stronger insight into the market before making an investment.
The EforA Investor Network members agree that as the off-grid solar market continues to grow and evolve, off-grid appliances will be increasingly important. However, many businesses, ranging from cold chain solutions to water pumps, are far from being commercially viable. Often, little to no data exists regarding the comparative quality and performance of the technology. The EforA Investor Network seeks to break down these barriers so that investors can pinpoint where the market needs to further mature and where its capital can be catalytic.
The goal of this network is three-fold: (1) for debt and equity investors to gain market intelligence, (2) to build investable pipeline; and (3) to allow investors to ask more technical questions about specific technologies during their due diligence. Together, we hope to ultimately stimulate the flow of risk capital from investors to entrepreneurs.
This network is just one piece of the puzzle. Investors and companies both know that more partnerships will be required. Whether productive use companies directly with customers or work through distributors, productive use companies will need to rely on existing companies and networks to get their products to market. Additionally, they will need partnerships to help figure out how to integrate consumer finance to improve affordability, especially in rural areas.
And of course, other sources of capital are needed. Grants will be required to fund companies through the research, development and pilot phases of their business. To reach true scale, productive use companies that are showing good customer traction, strong performance track records, and financing mechanisms to put their products within reach of low-income customers will need investment capital. Both equity and debt will be required to fund and scale core operations and finance inventory, respectively. This is where the EforA Investor Network will offer a shortcut for promising companies to access capital.
As the distributed energy sector acknowledges productive use as the next frontier, investors are joining the movement to bring these technologies within reach. Together, Acumen and the Efficiency for Access Coalition hope to ultimately stimulate the flow of risk capital from investors to entrepreneurs.