The U.S. International Development Finance Corporation (DFC) and Shell Foundation (the UK-registered charity) today announced a new collaboration to bring affordable renewable energy to more than 5 million people in low-income areas of Africa and Asia by 2025.
The organizations recently signed a Memorandum of Understanding (MOU) that enhances their ability to support the growth of social enterprises that deliver essential renewable energy services to people living on $2 to $10 a day in off-grid areas, with the aim to enhance income, education, health, and women’s economic empowerment.
It said more than 800 million people worldwide currently lack electricity, and 2.8 billion more people have unreliable access, constraining recovery from the COVID-19 pandemic and long-term economic growth.
According to the agreement, the collaboration seeks to address the lack of investment into innovative small and medium-sized enterprises, particularly those owned by, led, or supporting women, that can address this challenge.
Also, the MOU will see Shell Foundation deploy more than $45 million grant funding by 2025 to build a pipeline of fast-growing, high-impact businesses that deliver distributed renewable energy (DRE) to households, farmers, and businesses in off-grid areas.
Similarly, DFC is in line to approve up to $100 million early-stage debt and equity to support the growth of these businesses and leverage capital for further scale subject to these projects meeting DFC’s eligibility criteria.
The collaboration is said to open numerous potential investment opportunities that DFC can make by providing deeper connections with a portfolio of energy investments that Shell Foundation has built in tandem with the UK’s Foreign, Commonwealth and Development Office (FCDO), Power Africa and the U.S. Agency for International Development over the last five years—and by providing insight, co-funding and guarantees that reduce the risk of supporting new types of businesses in nascent sectors.
“This new collaboration leverages DFC’s effective financing tools and Shell Foundation’s experience and portfolio to support companies that connect people living at the last mile to productive electricity, which will dramatically improve their lives,” said Acting DFC Chief Executive Officer Dev Jagadesan.
“We’re excited to work with the Shell Foundation to help companies scale with commercial financing—a sign of long term, sustainable development—while prioritizing women’s economic empowerment and supporting economic growth as countries continue to respond to the COVID-19 pandemic.”
“Innovative DRE enterprises are already providing more affordable, more reliable energy to tens of millions of people who cannot access the grid, mostly in ways that are far more cost-effective and quicker to deploy, yet they are unable to access significant growth investment,” said Sam Parker, Chief Executive Officer of Shell Foundation.
“DFC is particularly forward-thinking in acting to address this. By blending our capital, and by working with shared partners such as FCDO and Rockefeller Foundation, we can bridge the gap between social and commercial investors, unlock substantial funding and enable hundreds of millions of people to escape energy poverty by 2030.”
Also, DFC launched its inaugural development strategy, the Roadmap for Impact, with the goals of bringing energy access to at least 10 million people and deploying $2 billion towards the DRE sector by 2025.
The Roadmap is estimated to provide investment support to 12 million women in support of DFC’s 2X Women’s Initiative.
To date, DFC’s 2X Women’s Initiative has catalyzed over $7 billion in projects that economically empower women globally.