Investment firm launches $25m solar fund to power African businesses

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Investment firm CrossBoundary Energy has announced the first close of CrossBoundary Energy Fund I, a dedicated fund for commercial and industrial solar that will deploy over US$25 million in solar solutions to power African enterprises over the next 18 months.

CrossBoundary Energy said due to falling costs solar was now a viable alternative energy source for businesses in Africa, but such projects still needed finance to be attractive.

“For many of the businesses that drive Africa’s growth, solar power is now an alternative source of cheaper and cleaner energy. However adoption remains low due to two barriers. First, solar has a substantial upfront cost,” said Jake Cusack, co-managing partner at CrossBoundary.

“Without financing, solar installers are typically only able to offer upfront purchase of the solar system. This means that the customer has to pay the full cost of 25 years of electricity on the first day. Second, many customers are unfamiliar with solar and reluctant to take responsibility for the technical and operational details of the system.”

Fellow co-managing partner Matt Tilleard said in markets such as the United States (US) these barriers had been removed through the introduction of financed solar solutions.

“Instead of paying upfront, the financier builds the solar asset and the customer enters into a long term Power Purchase Agreement (PPA). With today’s announcement, we are bringing the same financed solar solutions to Africa. Financing is now available to make cheaper, cleaner energy a reality for African enterprise,” he said.

CrossBoundary Energy will deploy its investment capital through SolarAfrica, a platform that provides solar installers with a fully financed ‘PPA in a box’ to offer customers. The platform will combine CrossBoundary Energy’s financing with technical oversight and asset management services from NVI Energy.

“SolarAfrica already has a strong network of partners and we are actively looking for new installers or developers who are interested in offering a financed solar solution to their potential customers,” Tilleard said.

“We are currently in operation in Kenya and are hoping to expand to up to three additional countries in the next three to six months. Our funding is available for solar projects above 100 kWp that serve commercial and industrial customers.”

CrossBoundary Energy has raised US$8 million in equity to provide solar power for African enterprises, while after debt leverage it intends to invest a total of over US$25 million in solar assets over the next 18 months.

Cusack said the fund was a unique and innovative financing platform that will pioneer an entire new asset class in Africa.

“It is backed by a prestigious group of investors from the USA and Australia attracted both by the commercial returns and the opportunity for positive environmental and economic impact,” he said.

Investors include Blue Haven Initiative, TreeHouse Investments and Ceniarth, while Power Africa has been a supporter of the firm, providing an early-stage grant to support establishment costs. The Shell Foundation has also provided grant funding and business support.

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