January 8, 2019 | Read Time: 2 minutes
To illustrate how Blue Haven Initiative (BHI) has played across the returns continuum, let’s look at a series of investments that target renewable-energy access in sub-Saharan Africa. A 2017 World Bank report estimated that 630 million people lack access to electricity across sub-Saharan Africa. This is a complex problem and involves several kinds of actors.
BHI has participated in the energy-access story in a few different ways in addition to being active members of the Power Africa initiative of USAID. In our Ventures portfolio, we have made three market-rate investments. We have invested in M-KOPA Solar, the leading pay-as-you-go (PAYG) solar-home-system company operating in East Africa. We have invested in PEG Africa, another PAYG solar-home-system company that focuses on sales and distribution in West Africa. Additionally, we have invested in Cross Boundary Energy, a platform that finances commercial and industrial solar projects across the continent.
We also evaluated several opportunities in the minigrid space, but we concluded that seeking market-rate returns wasn’t appropriate at this time because minigrid projects still need substantial subsidization to prove the economics of their models. However, we acknowledge the potential that minigrids have to bring high-energy capacity at lower costs to rural communities if scale can be demonstrated. We participated in a blended-finance facility that aims to add 3,200 connections in rural Tanzania operated by PowerGen Renewable Energy, a leading minigrid developer. Our grant, in addition to a subsidy provided by the Rural Electrification Agency of Tanzania, will help unlock $1.35 million in investment capital from private investors and help PowerGen achieve lower connection costs at scale. Although technically a grant (100 percent loss), we consider it a catalytic investment because of its unique position in a blended-finance facility.
We have also made a grant to the Global Off-Grid Lighting Association, the industry association serving many different distributed solar companies and service providers. Specifically, our grant was to help it hire a government-relations professional in West Africa. We consider it an investment to help create an enabling and fair policy environment for private off-grid operators.
A version of this content originally appeared as part of the Beyond Trade-Offs series on The Economist digital platform: http://beyondtradeoffs.economist.com/impact-across-investments-family-offices.