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To this end, Arc reached out to the Sierra Club, a US-based environmental protection organization, as well as various product manufacturers including d.light, MpowerD, Greenlight Planet and EKOTEK, to coordinate the logistics, including financing, sending and distribution, of solar lights to the capital San Juan.

EKOTEK, a Haitian energy company, and Sogexpress (a money transfer company based in Haiti), both Arc Finance partners, enthusiastically joined this initiative, immediately launching a ‘rapid response’ shipment of 4,300 high quality, durable solar lighting systems with strong luminosity and mobile charging capacities, that arrived in Puerto Rico in the middle of November. In addition, MpowerD and d.light sent 983 and 200 portable solar lighting products respectively.

The Sierra Club was integral to this initiative with its engaged donor base and extensive network. It has frequently assisted in the delivery and on-the-ground support to local communities in the aftermath of natural disasters, including those exacerbated by climate change. Arc’s key contribution was its sector-building network capacity, ensuring that all the key players were mobilized quickly and connected so as to achieve immediate impact.

Stephan Nasr, CEO of EKOTEK, said: “When we were contacted by Arc Finance and the Sierra Club, we saw we were in a position to help and we acted on it. We want to show that there are companies in Haiti and other developing markets that are evolving along with the technologies we offer. We want to show solidarity with the people of Puerto Rico, and to demonstrate too that companies like ours care about the positive impact that our products can have. We are right here next door and we are in a position to organize and help quickly.”

Niki Armacost, Arc’s Managing Director said she was grateful that Arc’s friends were willing to coordinate so quickly in an unusual reversal of typical relief support: “This is a remarkable response: two organizations from Haiti - the poorest country in the Western Hemisphere - mobilize to help citizens of one the richest countries on earth who are facing enormous hardships right now. Solar lighting products are a godsend for those who are without power. They make people feel safe, they help businesses re-start, they prevent dependence on dangerous and dirty alternatives, and even help doctors and nurses save lives.”

She added that Arc was grateful to its friends at the Sierra Club, EKOTEK, Sogexpress d.light and MpowerD who rallied together and were willing to step up to help those whose lives are in ruin after this disaster. Efforts are continuing with other donors, energy and water filtration companies who have pledged to provide yet more assistance. Niki expressed Arc’s hope that this response could set a precedent for partnership between energy companies and others to channel immediate help to those suffering as a result of natural disasters, especially those caused by climate change.

Held at Hotel Karibe in the capital, the workshop was an opportunity to shine a light on Arc’s partnership with Sogexpress which features both a remittance financing model and an agent trade finance mechanism that address issues of energy poverty and affordability as well as distribution challenges.The workshop was opened by Arc’s Managing Director Niki Armacost, and the Executive Director of Sogexpress Dominique Policard, who described the four-year program’s evolution, made possible by technical assistance funded by the Multilateral Investment Fund (MIF), a member of the Inter-American Development Bank Group, and USAID, and implemented by Arc Finance. The initiative leverages both the US-Haiti remittance corridor through the creation of a dedicated online platform, www.KlereAyiti.com, that enables Haitians in the diaspora to send solar lights to relatives in Haiti, and also the Sogexpress distribution network in Haiti by selling products through their stores and the network of agents across the country. In fact, this initiative has piloted a consignment trade finance model enabling agents to sell solar lighting products within their local communities in Haiti.

In the second session, entitled Rationale, Core Components and Business Models, Niki walked the audience through the goals of the initiative, including:

1. To allow Haitians in the diaspora to provide solar products to their families via KlereAyiti.com;
2. To expand access to solar products in Haiti through the Sogexpress network of flagship stores and agents; and
3. To provide Sogexpress agents with a new business opportunity through a consignment model that enables them to sell solar products.

Niki explained that the initiative provides market-based solutions to the energy crisis in Haiti, it promotes renewable energy for even some of the poorest Haitian households, it creates jobs in Haiti, both for Sogexpress staff and the network of agents, and it engages the diaspora. This new commercial business model has raised consumer awareness about clean energy in Haiti, as well as the resulting economic, health, and social benefits.

The remittance model, called ‘Klere Ayiti’ – “Light-up Haiti” in Creole – is a platform that responds to a unique context where only 28% of the population has access to electricity, and where remittances represent over 26% of GDP. To marry this supply and demand, the platform features a dedicated website that allows local customers and senders living abroad to order the solar light kit of their choice. Orders are fulfilled by Sogexpress in three to five working days.

The other main component of the initiative, the consignment finance model, involves a nation-wide agent network which assists in the important job of awareness-building, especially in terms of the financial benefits of switching to solar from traditional fuels.

In the third session, entitled Results, Arc’s Haiti project lead Yara Akkari and Dominique summarized the impact of the programs so far, including the sale of over 86,000 solar devices, benefitting more than 430,000 people, and the creation of thousands of jobs for solar entrepreneurs.

Finally, Niki summarized many of the lessons learned, recommendations and next steps for the initiative, and Sogexpress Executive Vice President Franck Lanoix closed the workshop with an enthusiastic assessment of the present and future of the initiative. “At Sogexpress we want to help all Haitians benefit from our natural resource – an abundance of sunlight. With these solar lights children can study at night, families will feel more safe and secure, businesses can stay open longer and people can charge their phones. Having a cleaner and more accessible alternative for electricity with the solar lights has the potential to transform the lives of millions of Haitians,” he said.

The ‘Diaries’ have generated huge interest since the research phase of the project finished in late 2015, with the results presented at conferences in Washington DC (to USAID staff), in New York (to a wide range of investors and other stakeholders in the energy finance space), in Delhi (to a large audience of Indian practitioners, investors and policy-makers), and through another webinar back in June, to a global audience.

This time, GIIN invited Arc to present to GIIN’s own investor base, many of whom are involved either in renewable energy or financial inclusion, but few of whom will be involved in the end-user finance of distributed renewable energy products, and the lives of the rural poor who need to access that finance.

How the Rural Poor Buy, Use and Think About Energy was the theme of the presentation, and describes very clearly what the Diaries are about. Developed under USAID’s Renewable Energy Microfinance and Microenterprise Program (REMMP), the Energy Diaries took place across three rural sites in India. It is an adaptation of the now-well trodden Financial Diaries methodology, and involved studying energy usage and spending at the household level to improve understanding of the daily realities of being energy poor; the types of energy sources people choice and why; how energy poverty may impact women and men differently; what gendered needs suggest about optimal energy products and services for this market; and what are the relevant policy implications for stakeholders to better meet the needs of poor households.

Each diarist – most of them women – kept a daily record of all household expenditure, energy transactions (including purchases, sales or gatherings), the usage of different energy sources, and the activities that those energy usages made possible. The daily diaries were supplemented by weekly interviews with trained researchers in the field, and after all data were collected (over 40,000 cleaned data points – a veritable treasure trove of original research), a series of qualitative Focus Group Discussions took place in the field with many of the project’s respondents.

From this emerges an unprecedented – although still incomplete – look at the energy lives of the rural poor, including their use of Distributed Renewable Energy (DRE) products like solar lanterns and home systems.
After an introduction by GIIN’s Allison Spector, Arc Finance Managing Director Niki Armacost walked attendees through the background, remit, methodology, enrollment data on energy expenditure as a percentage of overall household income, the electrification rates and energy sources reported by households, and top level findings of the research, including:

• That households are developing energy portfolios;
• That creation of an energy portfolio is driven by household income and expenditures, social/geographical context
and family customs; and
• That there are clear benefits in providing clean energy, especially increased reliability and larger marginal benefits for women.

Niki then handed over to Guy Stuart, Executive Director of Microfinance Opportunities, Arc’s project partner, to dig a bit deeper into how the data revealed these findings. Guy walked the attendees through some individual household case studies, fuel usage by income segment and age, prevalence of energy usage by source and location, and comparisons of solar versus non-solar households in terms of overall energy access.

As they both put it, the Diaries showed, like the households in the original financial diaries research, the energy lives of the rural poor are sophisticated and complex. Instead of the “ladder” notion of energy – in which households move up in discrete shifts from one traditional fuel source to a cleaner, better and more expensive fuel, families above a minimum income threshold manage an energy portfolio, driven by cost and availability of energy sources/ devices. Families buy, gather and use a range of energy sources for cooking, lighting and mechanical power. They mix and match “traditional” and “modern” energy sources to maximize their utility in a similar way to how they manage their financial portfolio.

But this is driven not only by respondents’ income and expenditures, but also by context, cultural factors and family customs – such as for example the preference among households with older people present for solid fuel like dung and wood for cooking, over cleaner and more modern cooking fuels such as LPG.

In terms of lighting, most households have some basic access to the electricity grid, but they seldom pay for it, and it is almost always unreliable. By contrast, the Diaries and the follow-up focus groups illustrated that while solar has its limitations in what it can power, households with solar lighting value its reliability, versatility and simplicity of use above all.

These attributes are disproportionately felt by women, too – the primary users and beneficiaries of improved lighting, irrespective of who the client of the financing institution is, or who ‘owns’ any product. The Diaries in fact provided welcome support for the arguments made by Arc, USAID and others in the sector for a long time – that providing finance for clean energy has enormous benefits for women, in terms of health, time management, and their ability to oversee their children’s education – an irrefutable theme from the study.

But DRE providers like asset finance companies or microfinance institutions doing solar energy lending face significant obstacles, not least that they are “competing against free”, as Niki put it. Grid energy is often obtained by end-users at no cost, and traditional fuels are heavily subsidized, making market penetration challenging.

But this challenge is only one of the many implications of the research for different stakeholders, and Niki finished the webinar presentation by summarizing the implication for financial institutions, donors and policy-makers, energy companies, and – perhaps most valuable for this audience – for investors.

Paul Needham is CEO of Simpa Networks – an asset finance company selling solar home systems and fans in India through a ‘progressive purchase’ finance model and one of the institutional partners in the Diaries research, and he joined us for the webinar. He outlined several ways he and his team have adapted their offering based on this better understanding of clients’ energy usage and activities, including marketing by women to women, based on women’s clear energy needs.

Finally, the webinar was opened up for audience Q&A, including on the challenges of making a pay-as-you-go business models work in challenging working-capital demanding contexts (especially as it concerns financial forecasting), and on the gaps in the research, and the prospects and potential subject scope for Energy Diaries II, perhaps to look at completely off-grid farmers, urban energy usage, and the seasonal patterns which this short pilot could not.

For those of you interested in more detail of the study, a fact sheet is available on the Arc website here, and a longer report is forthcoming. The Arc team would like to thank MFO, USAID, and of course GIIN for hosting this discussion, and bringing in such a high-level audience to hear the findings, and better think about the impact investment opportunities available in the distributed renewable energy sector.

The vehicle Sogexpress has chosen to achieve this goal is through its agent network, especially its street agents. To test the initial viability of this approach Sogexpress introduced a pilot to encourage 340 of its 1,000 street agents to sell solar lanterns. Sales were strong, but the test demonstrated a need for a source of supplier credit to finance the inventory the agents planned to sell.

Market research conducted by Arc Finance in 2014 indicated that the consignment model was the best financial mechanism for this pilot: as it lowers risk for the agents and Sogexpress as compared to a more formal loan product. Sogexpress was not prepared to bear the risk of handing over large amounts of inventory without some sort of guarantee, and the agents were uncomfortable borrowing money to purchase inventory for new, unfamiliar products and carry the risk until those products were sold.

So Sogexpress, with the assistance of Arc Finance, the IDB’s Multilateral Investment Fund and United States Agency for International Development (USAID), spent several months developing the consignment mechanisms, structure and policies. It also upgraded and adapted the Sogexpress IT and Management Information Systems to ensure they were fit for the purpose of tracking the credit and status of agents.

Towards the end of 2015, Sogexpress started implementation of its retail consignment program. The agents or shop retailers don’t have to purchase the products they sell. Instead, the company lends them its products on “consignment”, which allows Sogexpress to increase the working capital of its street retailers, diversify its portfolio, and expand its business and increase revenues.

A background check and selection process involving several steps mitigates the risk of lending. Firstly, Sogexpress’ démarcheurs (trusted senior agents) identify prospective street agents and recruit them. Next, store managers create and evaluate files on each potential agent. The store manager interviews selected candidates. The store manager registers the approved agents, and sends their files to the selection Committee. Once the Committee approves an agent’s application, the street agent signs a consent form. This form describes the agent’s commitment, duties and responsibilities in detail.

The new agent pays a 300 HTG (approximately US$5) deposit to a Sogexpress store manager to be enrolled in the consignment “Loyalty Program” and receives a special “loyalty card” as identification of membership. This program has various objectives, including: to track sales data and agents’ performance; to allow agents to accumulate loyalty points; and to track consignment portfolio quality, with an alert system in place to flag delinquencies or other problems.

After agents are registered, they are given a credit limit of 3,000 HTG (US$50), with which they can borrow energy products from the company (the value of approximately three solar products). Later, once the agent has demonstrated creditworthiness, he or she may receive a limit of up to 50,000 HTG (about US$900). Each new agent is given a kit that includes different models of solar lamps with a maximum value of 3,000 HTG (US$50), a branded backpack in which to carry the lamps, and flyers with descriptions of the products.

In order to support its new agents, Sogexpress provides marketing support through sound trucks and advertising. Training sessions based around product details and selling tactics further bolster the agents’ capacity to effectively engage with prospective customers.

As of August 31st 2016, Sogexpress has enrolled 561 agents in this program. In the summer of 2016, Sogexpress and Arc Finance conducted a first review of the pilot, collecting feedback and data to make the consignment process faster and easier. As the company moves forward, it is aiming to increase its efforts to retain active agents. Arc is helping Sogexpress to grow this program, and to reach its target of enrolling 1,000 agents by the end of the year – especially outside Port-au-Prince where the competition among energy companies is less intense. It is also in these rural areas where people are in the most need of reliable and safe lighting solutions, such as the solar lights for which this model is so well suited.

Dominique Policard, Executive Commercial Director at Sogexpress, foresees that:“This program has not only the advantage of facilitating access to clean energy but also of helping the street agents access financial services. Sogexpress is very proud of this new program and hopes to scale it in the future.”

Yet, Haiti remains one of the most financially excluded markets in the hemisphere, with only 20 percent of Haitians having a bank account. To help address this, Sogebank has developed a new product called SogeIzi (pronounced Soge-EASY). SogeIzi is a savings model targeted at poor and rural Haitians. The target market includes street agents that sell solar lighting products on consignment with support made possible by technical assistance funded by the Multilateral Investment Fund (MIF), a member of the IDB Group, and USAID, and provided by Arc Finance.

Recognizing that like many other Haitians, many of these agents are financially excluded, Sogebank is offering them the possibility to save their income as well as make payments using a debit card (Izicash card). They will be able to use a range of locations within the broad Sogebank Group network (not just the brick-and-mortar Sogebank branches), including Sogexpress stores and ATMs. The clients benefitting from this program, including potentially many of Sogexpress’ solar agents, will be able to access a basic bank account, enabling them to save, earn interest and conduct transactions all over the country, in rural or urban areas, irrespective of whether there is a Sogebank branch nearby.

Simplicity is a hallmark of the program. Sogexpress believes it is important to make it as easy as possible for financially excluded customers to make financial transactions while keeping operating costs low. Accounts can be opened in 10 minutes, using a single identification document and a low initial deposit (HTG 300, or US$5). Customers are provided with a starter kit of an Izicash debit card, explanatory documentation, a PIN, transaction registration, and free enrolment in the Sogemobile (mobile bank account access) and other Sogebanking programs.

SogeIzi is particularly valuable for the agents selling solar lighting products under the program Arc has implemented with Sogexpress. The initiative helps to bring them into the formal financial sector with the associated advantages. It works in tandem with the consignment finance model, which provides solar products on credit to the agent. The extended opening hours of Sogexpress stores (including Saturdays, Sundays and holidays) compared to Sogebank branches is designed to accommodate the needs of clients such as agent entrepreneurs, as is the 24/7 access to their account and execution of transactions through ATMs, Sogebanking and Sogemobile.

As Dominique Policard, Executive Commercial Director at Sogexpress, describes it, this new product is timely, “enabling Sogexpress to take another step in supporting the network of sales agents to increase their livelihoods through financial access and by facilitating savings”. Policard says that the Sogebank Group wants to bring the financially excluded in Haiti into the financial sector, ensuring that even the very poor have access to basic and affordable financial services. This effort is particularly significant in Haiti, which is the poorest country in the hemisphere, with very low levels of financial access and literacy.

The agent consignment model launched by Sogexpress with the support of USAID, MIF/IDB and Arc Finance will benefit over 1,000 agents by the end of 2016. Hopefully many of these people will be able to benefit from the financial access and flexibility of this innovative new program. SogeIzi will be an important way to bring these entrepreneurs into the formal financial sector; enabling them to save, pay and transfer money safely, quickly and affordably as they build their businesses and bring quality clean energy to their customers.

The 200,000 customers – of which 67% are women – have received access to products such as solar lanterns, solar home systems (SHS) and efficient cookstoves under a range of consumer financing mechanisms which seek to bridge the affordability gap inherent in providing products like these to the poor. REMMP has also addressed distribution challenges posed by the “last mile” through promoting “supplier” financing mechanisms.

These financing mechanisms range from different microfinance loan models built and expanded under REMMP by Arc’s MFI partners, to asset finance offered by energy enterprises, remittances from migrants, and trade finance for agents conducting cash sales. Arc’s goal under REMMP remains to pilot, test, evaluate and scale different financing mechanisms for distributed renewable energy products (such as small-scale solar for off-grid households) and in doing so, pave the way for commercial scaling of this sector by demonstrating the viability of these models.

In order to facilitate sales, REMMP partners have disbursed over US$13 million in loans and over US$29 million in investment has been leveraged under the program. Over 37,000 tonnes CO₂e has been displaced by the clean energy products sold and the equivalent of 2.1MW of solar capacity has been installed. A recent annual phone survey reveals 98% product satisfaction among clean energy customers, and 87% likelihood to recommend the product to friends or family.

After spending several years laying the groundwork through capacity building, partner and product evaluation, and all of the other critical steps to building local capacity – mostly from scratch – REMMP is seeing sales accelerating. In fact, the milestone of 100,000 clients reached was just passed in July 2015. REMMP expects even more rapid scaling in the coming months as the affordability gap for clean energy products continues to narrow through the hard work of our partner organizations.

SunFunder began lending to SolarNow in 2013 with small, crowdfunded inventory loans. Through these initial loans, SolarNow established a repayment track record that helped enable SunFunder to unlock capital from accredited investors for larger and longer-term loans needed to match SolarNow’s growing working capital needs. In 2015, SunFunder extended facilities totaling over $800,000 of loans to SolarNow. The new SAFI facility builds on SolarNow’s strong track record in sourcing high-quality customers and extending credit on appropriately sized solar home systems based on customers’ energy needs and their ability to repay. The facility will scale SolarNow’s capacity to build and service such customers with contract terms in the future and multiply the positive impact SolarNow can make in the region.

“SunFunder has been a fantastic partner throughout this process,” said SolarNow’s Managing Director Willem Nolens. “With this financing in place, the board and management believe our business is now well placed to accelerate our growth in Uganda and beyond.”

“The launch of SAFI marks a new chapter in our long-standing relationship with a top-quality solar company,” said Audrey Desiderato, SunFunder’s Co-Founder and COO. “Starting with small crowdfunded inventory loans in 2013, we provided larger working capital facilities funded through our Solar Empowerment Fund. The launch of SAFI marks a next step in our relationship and aims to efficiently deliver scale. We are proud to announce this market-leading transaction with SolarNow and play an important role in their continued success in the market.”

About SolarNow
SolarNow offers a range of high-quality solar home systems and electrical appliances that are designed to fit the needs of rural households and entrepreneurs. Their solar home systems range 50 to 5,000 watts and because the systems are modular, customers can easily upgrade existing their systems to increase their system’s power capacity over time. The company offers a wide range of electrical appliances, including high quality LED lights, televisions, fridges, water pumps and flat irons. Through their network of 36 branches in Uganda and by extending appropriate credit to their customers for up to 24 months, SolarNow makes solar accessible and affordable for rural, low-income households and businesses. The company already installed over 10,000 solar systems in Uganda since 2011. These clients benefit from 5 years free service.

Press contact: Mr. John Kizito, Group Controller ([email protected], tel. 0788 916 641)

About SunFunder
SunFunder is a solar energy finance business with a mission to unlock capital for solar energy in emerging markets, where over 2 billion people live without access to reliable energy. SunFunder offers short-term inventory loans, working capital facilities and structured finance facilities to residential and commercial solar companies with a proven track record for quality and growth. SunFunder raises the capital for its loans through private debt offerings that give accredited investors an opportunity to invest in a diversified, vetted, and high impact portfolio of solar loans. The company aims to raise and deploy $1 billion into solar projects around the world by 2020.

Press contact: Mr. David Battley, Director of Structured Finance ([email protected])

Dominique demonstrated four solar products on the remittance platform ranging in price from $55 to $180, described the options, price configurations and benefits of each, and explained the payment process. She described how a customer in the diaspora can place an order on www.klereayiti.com and then pay for the product at any participating Western Union using Quick PaySM services.

The focus of the interview was on the extensive benefits to customers in terms of education, health, security and livelihoods that have been tested and demonstrated over the course of Arc’s engagement with Sogexpress. The Klere Ayiti platform enables the Haitian diaspora to use remittances to finance renewable energy products for families and friends in Haiti, where a large majority of the population does not have access to electricity.

The platform features a dedicated website that allows diaspora-based customers to pre-order the solar light kit of their choice at www.klereayiti.com. They select the product and then use their order number to complete payment at participating Western Union Agent locations via the Western Union® Quick PaySM platform (present in over 174 countries around the world). Orders are fulfilled by Sogexpress in 3 to 5 working days.

All the products for sale have the capacity to recharge mobile phones, a highly desirable feature in Haiti, and were carefully selected by the Sogexpress team with the help of Arc Finance. All products come with a warranty by local distributors in Haiti.

The Klere Ayiti platform was launched in late July 2015 in Port-au-Prince and Miami. It was the culmination of many months of preparation and hard work by the Sogexpress and Western Union teams, and was made possible with support from the USAID-funded Renewable Energy Microfinance and Microenterprise Program (REMMP) and the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB).

Here at Arc, we’re delighted to see this program reaching the Haitian community in the U.S., and look forward to working with all the partners to increase clean lighting access in Haiti.

When regional distributors, networks, retailers and agents cannot purchase inventory because they don’t have the working capital they need, the supply chain cannot function. And if banks or MFIs don’t offer appropriate finance, improved energy products remain out of reach of those who need them most.

What we see here is not one deficit, but a series of deficits. What they have in common is a shortfall of various capital coming into an industry in which demand is massive – and growing. To address these deficits, new ‘crowdfunding’ models provide alternative means by which energy suppliers and consumers can access the finance they need, beyond the traditional triumvirate of donor/grant support, debt, and equity investments. Raising money in small amounts from the public – the ‘crowd’ – isn’t new: charities and religious entities have been doing it for centuries. But crowdfunding via online platforms involving a pool of funders that is potentially global in scope for high social impact purposes in developing nations is definitely something new and different, and potentially game-changing.

What is the “Crowd,” and What Is It Funding?
In general terms, “crowdfunding” describes the practice of raising funds in small increments from large numbers of non-institutional sources. Typically, activity is mediated via an online platform and promoted through social media. While a handful of popular crowdfunding websites such as Kickstarter, Indiegogo and RocketHub continue to maintain market share and command considerable brand recognition, hundreds of other platforms occupy an increasingly segmented, specialized and competitive online marketplace through which over US$5 billion had been raised as of last year.

Crowdfunding’s appeal is its potential to unlock new sources of funds for purposes that conventional sources of investment and charitable giving are generally unwilling or ill-equipped to support, or even incapable of identifying in the first place. However, in addition to realizing greater funding availability, crowdfunding usually offers important cost and flexibility advantages as well. Funds sourced through platforms from informal networks of personal contacts (“friends and family”), shared interest communities and consumers are typically less expensive and impose fewer demands and expectations on fund-seekers compared to conventional private, public or charitable sources.

Crowdfunding in Practice
For this reason, crowdfunding has gained interest in providing low-cost, high-quality energy services to the world’s Energy Poor. Indigogo, based in San Francisco, is one of the world’s leading commercial crowdfunding platforms. Since launching in 2008, over US$100 million has been raised through Indiegogo’s website for over 275,000 campaigns in over 200 different countries. Indiegogo is a for-profit, private company that generates revenue by charging a fee to users of its platform. Fees are based on the amount of funds that users raise. While many campaigns support creative/artistic projects and new commercial technologies and products, the platform has also become a popular choice for social enterprises, non-profits and charitable campaigns that are explicitly focused on affecting positive social outcomes. Indiegogo places virtually no restrictions on who can raise funds and for what purpose, provided that the campaign initiator has a bank account and that the intended funding objective does not break any laws.

Campaigns that reach their goal pay a fee equal to four percent of the total amount raised, whereas campaigns that do not reach their goal are charged a nine percent fee. Indiegogo charges no entry or membership fees to use its platform, and campaigners only pay the company if and when they raise money. Campaigners are required to make some investments, such as a short campaign video. However, the scale of investment in both time and money are entirely up to the campaigner.

The company’s business model means the incentives of the company and the campaign are aligned: it has a direct stake in helping members reach their goals. It incentivizes success by increasing the visibility and audience of campaigns that register the highest level of funding activity. Indiegogo’s proprietary algorithm, “Gogofactor,” measures funding activity and elevates successful campaigns to featured spots on the homepage, increasing passive exposure by site visitors. In addition, various tools, tips and suggestions for success based on best practices can be found and accessed for free on Indiegogo.com.

Kiva is by far the best-known philanthropic P2P crowdfunder. Set up in 2005, it was created to enable individuals to lend mwww.kiva.orgividual micro-entrepreneurs via its website. Kiva partners with MFIs, community-based organizations and private companies to facilitate the provision of loans to individuals or small groups of borrowers. The borrowers repay the partner, which repays Kiva, which repays the lender. While the lender is lending at zero interest, the vast majority of loans are then recycled and kept in the system. In this sense, these small loans are de facto donations. As of last year, over one million online lenders had lent over US$691 million to 1.2 million borrowers. It works with 297 different field partner organizations and businesses in 86 countries worldwide.

One aspect of Kiva’s model which distinguishes it is the low risk aversion of its lenders, which allows it to experiment more than a commercial lender can, and this is allowing a steady diversification of its lending activities beyond conventional finance for micro-entrepreneurship to include consumer and SME finance, and its “Kiva Labs” initiative, which allows more rapid testing of new ideas, with lower due diligence requirements: the ‘testing’ is a form of due diligence itself, according to Kiva.

In response to demand from field partners, Kiva has also expanded into several new, high-social-impact verticals. In 2011, the term “Green Loans” was coined to describe diverse forms of Kiva lending that support both entrepreneurial and consumer investments that result in positive environmental impacts. Renewable energy and energy efficiency loans have emerged as an important segment within this new and growing category of Kiva lending. So far, Kiva’s green borrowers have received loans to finance energy efficiency upgrades and the installation of low emissions cook stoves at home (Mongolia); the purchase of domestic solar hot water heating systems (Palestine); and investments in biomass digesters that convert agricultural waste into both clean cooking fuel and organic fertilizer (Mexico).

Another lending platform is Milaap, an Arc Finance partner based in Bangalore. Founded in 2010 by three entre¬preneurs from the microfinance, off-grid lighting and mobile technology fields, Milaap raises loan capital for Indian microfinance institutions (MFIs) engaged in specifically energy, education, clean water access and other forms of essential service lending. By channeling low-cost, flexible loan capital from both online and offline lenders to a select group of MFI field partners, Milaap aims to overcome critical cost barriers that keep such services out of reach for millions of low-income Indian businesses and households. Milaap’s broader mission is to demonstrate the viability of essential services lending to the wider Indian microfinance sector and its commercial funders.

By early 2015, Milaap had raised and channeled over US$4 million into a diverse portfolio of over 26,000 loans, impacting the lives of over 100,000 people, while maintaining a 100 percent repayment rate from field partners – figures which have further grown in the year since. Funds are raised from an increasingly global crowd of lenders and disbursed to borrowers across ten Indian states through a network of 15 different field partners. The company’s energy portfolio continues to advance through its active partnerships with three microfinance institutions based, respectively, in the states of Orissa, West Bengal and Manipur. Due to the comparatively small size of loans for clean energy products such as solar portable lanterns and improved cook stoves, energy represents only ten percent of Milaap’s total portfolio. However, with over 2,000 borrowers financed to date, energy accounts for nearly one quarter of all loans disbursed.

Milaap’s “retail lending” model shares much in common with Kiva’s peer-to-peer approach. Milaap also works through a growing network of field partners that includes non-profit, community-based microfinance organizations as well as private companies. One hundred percent of funds provided by lenders goes towards borrowers, and, like Kiva, Milaap sees very high rates of relending, enabling the company to continuously revolve funds.
However, there are important differences. Milaap is a private social enterprise that operates on a for-profit basis. The company generates revenue by applying a small interest fee (typically five to eight percent) to field partners that receive and disburse the credit that it provides. Unlike Kiva, Milaap is exclusively focused on India, at least at present. And while Kiva’s energy-access lending can be seen as part of a broader portfolio diversification that occurred organically over time, energy lending has been a core part of Milaap’s vision since the company’s inception. Indeed, Milaap was launched for the explicit purpose of providing capital for unconventional “essential service” loans, such as energy lending, that mainstream commercial institutions and wholesale capital providers commonly view as high risk and therefore tend to eschew.
Milaap capital is flexible because the company does not dictate to field partners either the interest rates or terms that it must offer to its clients. This can translate into a variety of different benefits for partners and borrowers: loans can be structured in different ways to increase affordability, and thus bolster demand, as well as the ability to pay, among borrowers.

A final example of an online platform being used to fund renewable energy is SunFunder – a US-based private solar financing company that sources low-cost, short-term debt for solar companies operating in off-grid, emerging markets. To date, the company has maintained a focus on East Africa and has recently expanded to India. In contrast to Milaap and Kiva, which focus on providing loans to end-users and energy micro-entrepreneurs, SunFunder aims to meet the comparatively larger working capital and project finance requirements of established solar SMEs. Its website is designed to simplify the process of project review, selection and oversight, and to be as simple as possible for lenders as well, allowing credit card or Paypal-based payments. The minimum investment that lenders can make is US$10, and the maximum is whatever amount remains unfunded. Like both Kiva and Milaap, lenders are repaid on a monthly or quarterly basis.

SunFunder is still a start-up, but in the long run, it aspires to secure capital for off-grid solar companies through a variety of different means, and has deployed crowdfunding as a means of rapidly entering the space, and to demonstrate the bankability of off-grid solar companies to a wider field of lenders and investors. In this sense, SunFunder uses crowdfunding as a strategic bridge to larger sources of investment. One SunFunder loan recipient is the solar lantern distributor SunnyMoney, which, with more than one million units in sales, is the most prolific distributor of retail solar products in Sub-Saharan Africa.

Sunfunder’s mission is to ensure better debt funding through crowdfunding and also directly from private investors: SunFunder blends funds raised from its online platform with capital that it raises from accredited and institutional investors in the form of Solar Empowerment Notes (SENs) - a debt instrument that, unlike funds raised through the crowd, offer a financial return. SunFunder closed its first issuance SENs in September 2013, raising US$250,000 from four separate investors.

SunFunder generates revenue by charging a one-time capital sourcing fee to all borrowers and nine percent to 15 percent interest on all funds disbursed. Unlike Kiva and Milaap, the company does view the ultimate prospect of sharing profits with its network of lenders as a long-term goal, once regulatory reforms permit. SunFunder currently does, however, enable lenders to direct the reinvestment of interest gained to subsequent borrowers through its impact point program. In short, impact points represent small amounts of interest that are repaid with principal to the lender; while that interest cannot be withdrawn by lenders, it can be added to additional investments made by the lender.

Crowdfunding’s Role
Crowdfunding is unlikely to ever solve, alone, the demand for low-cost capital in the small-scale energy finance sector. It requires an investment in time and effort – far beyond putting a campaign or some beneficiaries on a website. Further, campaigns must be focused in order to succeed.
The focus of campaigns is critical to success, with a specific product orientation and if possible, rewards for lenders. If this is done, the benefits of crowdfunding can extend beyond capital to include valuable promotional and marketing benefits. By nature, crowdfunding is audience-driven and the ability of fundraisers to clearly and persuasively articulate and promote their ideas and products to large numbers of people drives success. So increased exposure to companies, projects, products and ideas can bring future customers, investors and media attention that can be leveraged further than small donations or loans alone. And if one thing is clear, it’s that bringing to a global audience the nature of energy poverty and the exciting affordable solutions to it which now exist, can be an important part of the expansion phase this sector is now in.

The Prime Minister addressed entrepreneurs and technology leaders in Silicon Valley as part of the day-long event promoting the “India-US Startup Konnect 2015,” a program to promote and further develop the strengths of India’s start-up ecosystem and encourage Indian-US collaboration. Organizers Nasscom and the Indian Institute of Management-Ahmedabad’s Centre for Innovation, Incubation and Entrepreneurship (CIIE) nominated Boond for this significant honor. Simpa Networks, an Arc partner under the Renewable Energy and Microfinance Microenterprise Program (REMMP), has also been in the news this week, winning the WWF Climate Solvers and Savers award by WWF India in Delhi. Simpa is a pioneer in enabling thousands of Indians to access affordable clean energy through a proprietary pay-as-you-go model called “Progressive Purchase,” and was one of two winners in the Energy Access category, recognized for its innovative business model by a diverse group of government officials and public sector stakeholders. After winning the award, Simpa was congratulated by Shri Prakash Javadekar, the Indian Minister of Environment, Forest & Climate Change, in a video message conveyed during the award ceremony. We’d like to congratulate both of these remarkable organizations for their recent successes, and fast-growing international reputations. They represent just a small glimpse of the innovation and entrepreneurship underway in the Indian clean energy space today.

Arc Finance’s profile of microfinance institution Utkarsh’s solar lending program, “Utkarsh Brings Light to Uttar Pradesh, India,” was shot by our photographer and videographer Souradeep Ghosh, and was produced as part of our Renewable Energy Microfinance and Microenterprise Program (REMMP), which is funded by USAID. “Remittances and Solar Energy,” our profile of Haitian money transfer org Sogexpress’ remittance and energy program, is a result of a public-private partnership between Arc Finance, Sogexpress and the Multilateral Investment Fund (MIF) of the Inter-American Development Bank (IDB), and the filmlet was funded by the MIF/IDB. The video highlights the key innovation of using remittance corridors to finance clean energy products.

We are delighted for Utkarsh, Sogexpress and all the other entities involved in the production of these two informative, elegant and warm films, which show the impact that small-scale clean energy can have on people’s lives.

We congratulate all finalists in all categories, and send our thanks to our digital media team, our partners, and the talented Souradeep Ghosh for all their work in getting us this far!

Arc’s partner the Societe Generale Haitienne de Transferts S.A (Sogexpress), a leading money transfer and payment service company in Haiti, and the Western Union Company, a leader in global payment services, have launched a new platform called Klere Ayiti, Haitian Creole for “Light up Haiti.” This platform enables the Haitian diaspora to use remittances to finance renewable energy products for families and friends in Haiti, where a large majority of the population does not have access to electricity. This collaboration expands on a pilot implemented from 2012 to 2013 by Arc Finance with support from the Multilateral Investment Fund, a part of the Inter-American Development Bank Group (MIF/IDB).

The platform features a dedicated website that allows local customers and senders living abroad to pre-order the solar light kit of their choice at www.KlereAyiti.com. They then use their order number to complete payment at participating Western Union Agent locations around the world via the Western Union® Quick PaySM platform (present in over 174 countries around the world). Orders will be fulfilled by Sogexpress in 3-5 working days.

This platform was launched in late July 2015 in Port au Prince and Miami, the culmination of many months of preparation and hard work by the Sogexpress and Western Union. The process involved market research, product selection, website construction, adaptation and development of IT and web platforms, marketing and promotion. The platform will provide an enormous opportunity for innovation in using an established remittance corridor to finance renewable energy in the poorest country in the Western hemisphere.

Only 28% of the Haitian population has access to grid electricity , and the 2010 earthquake was devastating in both human and economic capital. The country receives a considerable percentage of its GDP in remittances (over 20 percent of GDP ), with a huge diaspora population living in the US – about 420,000 Haitians live in the New York area alone. Thus, Haiti was an idea choice to test remittances as an end-user financing and distribution mechanism in the 2012-13 pilot phase, and the success of that program has led to its current expansion stage.

The results of the pilot phase were encouraging, and led to a joint venture between USAID and the IDB’s Multilateral Investment Fund to fund Phase III, which will, after months of careful review, provide the Sundaya T-Lite for purchase exclusively at Sogexpress e-commerce site at KlereAyiti.com. The T-Lite is a modular solar light kits, available as a kit with two or three lights, will be sold for US$140 and $180.

Both systems have the capacity to recharge mobile phones, a highly desirable feature in Haiti. Awango by Total, an initiative of the company Total to market affordable solar lamps in developing countries, is committed to bringing only the highest quality products to Sogexpress customers and backs this assurance with a two-year warranty. The selected systems have been sold in more than 16 countries, with total sales exceeding 600,000 units.

Already, training delivered by Sogexpress, Awango by Total, and Arc Finance in February 2015 has increased the capacity of Sogexpress sales staff to effectively market, sell, and service the Sundaya T-Lite products that will be sold through the remittance platform.

Staff from all 57 Sogexpress stores were trained on the Sundaya products to ensure the staff had optimum knowledge of the lamps’ features, use, and after-sales service, through ongoing training throughout the course of the program, recognizing the importance of client satisfaction in the success of this initiative.

This exciting new program will target 5,000 sales across the remittance platform, with marketing reaching 300,000 existing remittance senders in the Diaspora and 500,000 recipients in Haiti through an awareness-building campaign, which will use energy literacy and promotional programs to educate Haitians both at home and in the diaspora on the economic and social benefits of switching to clean energy products.

Schneider’s involvement is a boon for SunFunder in particular and for small-scale energy finance in general. The role that both have played in working with Arc Finance partners makes this deal something Arc Finance is proud to highlight.

Based in San Francisco and Tanzania, SunFunder provides short-term working capital and project finance loans for solar home systems, microgrids and commercial solar projects in emerging markets. The company raises debt capital through the Solar Empowerment Fund, offering accredited investors a risk-reduced, fixed-income investment opportunity in diverse portfolios of high-impact solar loans across multiple countries and solar technologies. The company is creating a solar finance ecosystem that aims to catalyze billions in financing for solar beyond the grid.

Schneider’s partnership in this venture is a true watershed. An energy giant that has operations in 100 countries and annual sales of US$30 billion in 2013, Schneider has products ranging from circuit breakers to power plants, distributed solar products to AC and DC microgrids. Its involvement is a sign that small-scale solar is moving beyond a niche market and into a mainstream, global one. For Schneider, financing will unlock working capital in order to finance distribution of its wide range of products. Schneider is working on launching its new US$80 million energy access fund with bilateral agencies like the U.K.’s DFID and the EU’s EIB to help unlock capital.

SunFunder, which has provided US$425,000 to Ugandan Arc partner SolarNow (an Arc case study of which can be found HERE) plans to raise and deploy US$100 million in the next three years into solar projects around the world and to expand its capacity in local markets, starting with East Africa. The IEA estimates that the world requires US$44 billion of investment to expand electricity infrastructure to achieve universal energy access by 2030. Of that US$44 billion, it is estimated that US$26 billion will be put towards toward decentralized systems that have been largely powered by renewable energy, according to SunFunder.

SunFunder’s platform for attracting capital to the small-scale, off-grid sector includes the Solar Empowerment Fund (SEF) – a debt facility that issues Solar Notes to accredited and institutional investors, offering a rare opportunity to invest in a diversified, vetted, and high-impact portfolio of off-grid and grid-deficit solar projects with an attractive risk/return profile. In Sept 2013, SunFunder closed its first issuance of Solar Notes, raising US$250,000 from four investors.

In addition, SunFunder is continuing to fundraise from accredited and institutional investors and from its crowdfunding platform, in which non-accredited investors anywhere can invest as little as US$10 in any of the projects listed on SunFunder.com (and is profiled in an Arc Finance briefing note on Crowdfunding, available HERE).

Once a project is fully funded, SunFunder facilitates low-cost financing to the solar partner to fund its implementation. As projects get repaid, investors earn their investment back (without interest, due to current regulatory limitations), which they can invest again or withdraw. SunFunder’s solar partners pay a modest interest rate on the financing that they receive, which is passed back to SunFunder’s investors as Impact Points, which can be reinvested into other projects. See Arc’s Briefing Note on Crowdfunding for a more detailed explanation of how this works.

Ryan Levinson, CEO of SunFunder, shares Arc’s view that access to reliable finance is the main barrier preventing solar energy providers from reaching scale and leapfrogging the grid in target markets. “In the last two years, SunFunder has established a solid track record and proven that the market is economically viable. This investment round will allow us to expand our capacity in local markets and substantially grow our loan portfolio,” he says. For more on Ryan’s thoughts, see Arc’s YouTube channel for a panel discussion video at Arc’s Innovations in Finance conference.

So far, SunFunder has financed more than US$1.7 million for solar projects, with 15 solar companies in six countries, and maintains a zero percent default rate, helping over 140,000 off-grid people in developing countries access affordable solar energy.

At Arc Finance, we’re proud to see SunFunder and Schneider, funders of two key Arc partner organizations, pass this key milestone. As this important and young sector attracts mainstream financing, it demonstrates to new investors that investing in renewable energy for off-grid customers is a sustainable commercial venture – and here to stay.

With support from Arc Finance, which was Simpa’s very first investor, Simpa created a pay-as-you-go solar business model enabled by its proprietary metering technology. Simpa sells solar-as-a-service to energy-poor households and micro-enterprises in rural India. Simpa will use the new finance to expand its reach from a current base of 25,000 beneficiaries to up to 200,000. The scale of the future opportunity is considerable, as an estimated 400 million people in rural India still do not have access to an electricity grid.

As Paul Needham, Simpa’s President and Co-Founder, tells it, distributed solar-powered electricity systems are dramatically improving the quality of life for energy-poor families while promoting economic activity by enabling small businesses to extend their working days. This new debt investment – the first of its kind in India – will help Simpa scale its for-profit solution to the problem of energy poverty, and vindicates Simpa’s and Arc’s belief that clean electricity for rising rural India is an investible, scalable and sustainable proposition.

“Support from Arc Finance has been instrumental at several stages of our development,” said Paul Needham. “Arc Finance initially provided seed capital to help us pilot our solar-as-a-service model, and it was Arc Finance, under the REMMP program, that helped us improve our credit models and processes so we can scale up.”

Simpa operates in rural Uttar Pradesh, an Indian state with a severe power deficit. This unprecedented new debt facility will enable Simpa to reach hundreds of thousands of “energy poor” households with clean, reliable electricity services, in a business with high working-capital demands. Simpa’s tested model – a patented technology platform that integrates a meter into a complete solar home system and includes after-sales support – has already provided over 770,000 energy days equivalent, delivered over 65 MWh, created over 2,800 full and part time jobs in rural India, and saved over 75 tonnes of CO2 equivalent emissions.

Simpa operates in India as Simpa Energy India, and has pioneered the solar-as-a-service business model. Simpa customers make a small initial payment for a solar electric system installed in their home or business. Customers then purchase “energy days” using a prepaid or pay-as-you-go mobile payment system. Upon completion of the contract, customers own their systems, affording them free, clean electricity for the rest of the system’s life.

Elizabeth Littlefield, OPIC’s President and CEO is a big supporter of what Simpa is trying to do. She has said that “The kind of technological leap Simpa and like-minded innovators are achieving proves that off-grid, clean energy in emerging markets is not merely viable, but a true opportunity both financially and environmentally.”

For GDF Suez, in Simpa there is an opportunity to help a growth-stage company scale up its impact to reach tens of thousands more people with affordable, clean, renewable electricity. Says Jérôme Broutin, CFO of the company’s Rassembleurs d’Energies program: “We invest in for-profit solutions that can scale to meet this challenge.”

We at Arc Finance are enormously proud of the growth and innovation at Simpa, which alongside several other partner organizations across India, Uganda and Haiti, is testing and demonstrating the viability of a variety of sustainable business models for solving affordability and distribution challenges in small-scale clean energy. We are thrilled that Simpa has been able to close this debt round, and look forward to working with Simpa as it passes many more milestones in the future.

Durmusi village is situated in the Gopinathpur Gram Panchayat of Thuamul Rampur block of the Kalahandi district in Odisha. A largely tribal block, Thuamul Rampur is the poorest block in the district and lacks even the basic infrastructure of roads, water, communication and electricity. Illiteracy rates are high – 95% for men and 97% for women. Socio-economic and gender disparity rates are also among the highest in the country. Durmusi consists of 47 households, with 230 people. Most are small-scale farmers, people scavenging in the forest for produce to sell, and some daily wage workers. MSF is one of the few financial institutions or NGOs working in what is one of the least developed parts of India.

After promising results with sales on credit of efficient cookstoves and small-scale portable solar lighting, MSF with Arc’s support conducted a needs assessment of the area, concluding there was scope for installation of a solar microgrid. TERI New Delhi and Utkal Alumina Kashipnded supported the installation, and the microgrid is now operating in the center of Durmusi, with solar modular units allowing generation capacity to scale up easily to meet demand.

Demand has been considerable. Out of 47 households, 40 are connected through fixed wiring with two LED lights per house. Operation and maintenance costs are only INR 30 (USD $0.50) per month per household. Power is generated during the day, charging four battery banks, and consumed during the night. The whole system is controlled by a main switch, installed in one household – that of a designated Village Level Entrepreneur (VLE). The two LED lights were selected to provide superior lighting quality to kerosene – the previously dominant lighting source. A Users’ Committee has been formed, involving all active households, and a President and Secretary appointed to ensure smooth management of the grid.

When the grid was installed, the villagers requested that one grid node be used for a street light in the center of the village, which is the social focal point of Durmusi. This allowed villagers to meet in the evenings, and will enable them to celebrate local festivals all year round. As Sri Bagi Majhi, one of the village leaders, says: “The light brings our village together now.”

Totaguda is close to the block headquarter Kolanara, in Odisha’s Rayagada district, and includes 33 households with around 150 people. The Government of Odisha has launched a program called Biju Grama Jyoti, with the objective of supplying grid electricity to each household. However, Totaguda’s remoteness means there is no grid connection at all. Like the villagers in Durmusi, most residents depend upon income from agro-forestry, or have small plots of land, and rely on rainwater for irrigation. Infrastructure is virtually non-existent. There is no school, health center, nursing or veterinary facilities in the village. Totaguda villagers are entirely dependent on the villages of Khamasing and Kolnora for any medical, educational or other support. The only infrastructure or services of any kind is, again, MSF.

Totaguda was therefore a clear choice for a microgrid pilot project, because of the immense impact that regular, clean and inexpensive electricity would have on its residents. It was during a village borrowers’ meeting that one of MSF’s solar sales officers identified the issue of grid inaccessibility in the region, and raised the issue of switching Totaguda to a microgrid. Interest and enthusiasm only continued to increase after educational sessions informed the residents of the benefits and responsibilities involved.

After a needs assessment study by MSF, TERI New Delhi supported MSF with a CSR fund of from SBI in Mumbai. Out of 33 households, 32 are now connected to the microgrid, which is similar in design and capacity to the slightly larger one in Durmusi. As in Durmusi, there is a Villagers’ Committee, with a President and Secretary. A joint savings bank account has been opened in Mahashakti Primary cooperative in Rayagada in the name of the President and Secretary. The usage fees, (again, INR 30/month per household) are tied to previous monthly expenditure on kerosene.

Besides the intangible community benefits of having lighting at night, several villagers have expressed plans to use the after-dark lighting for income-generating activities, extending their potential working hours, as well as encouraging children who are in school to do homework after dark.

Roji Madangi, 29, is a typical Totagudan. As darkness falls, she scampers to wind up her daily evening chores. Like most other women in her village, she heads to her kitchen to prepare dinner long before dinnertime, because preparation and cleaning under the light of kerosene is almost impossible. Roji’s husband is a farmer and the sole breadwinner for the family, earning about INR 3,500 (US$56) per month, which isn’t enough to provide even two meals per day for everyone in the family. This is a typical story, but one which has dramatically changed since the installation of the microgrid. The microgrid lights the village for more than seven hours per night, meaning villagers can prepare food and eat after dark, spend less on kerosene, and work longer productive hours. At night, the women are now able to earn income for the household by stitching sal leaves together to form Kholi, a plate made out of leaves. Roji herself now earns more than INR 2,000 (US$33) per month – adding half again to her husband’s monthly household earnings.

“Before, we could not even imagine this freedom in our families,” she tells the Arc team. “Our rice production was barely enough to support us, yet now I feel more empowered because I contribute to the household by not only making food for us, but by earning too.” Roji adds, “I make 100 to 150 Kholi each day, which we sell at one rupee each, and we get enough money from our hard work to afford both plenty of food and to save.”

A village ward member, Sri Naria Mandangi, says that she has been encouraging her neighbors to start new income-generating activities and make use of the additional productive hours at night. With access to modern electricity, each household in this small settlement will have an inspirational story to share. At Arc Finance, we’re proud to see the results that our partner organization MSF is achieving, and look forward to sharing more of these stories in the months and years to come.

Providing a range of modular 50-500 Watt solar home systems and DC appliances through a franchise model to mainly rural customers in Uganda, this investment will enable SolarNow to expand its branch network, further upgrade its Management Information System (MIS), and invest in R&D.

Willem Nolens, CEO of SolarNow, says that with this investment, SolarNow will focus on fulfilling the growing demands of its existing clients, expand to under-served areas of the country, and prepare for expansion into other East African markets in the medium term.

“Our business has high working capital demands. The more we sell the more money we need. We are buying the best components and selling them to low-income customers, with just a 20 percent deposit payment. However, this does mean a company like ours needs a steady and ready supply of capital, both to finance the systems before installments are complete, but of course also to plan for future expansion. Equity can stimulate further debt capital, and so this equity investment by two partners who share our vision, is so welcome. It will allow us to do what we are doing, better, and to do it with many more people.”

“We see Novastar Ventures and Acumen’s support as a great acknowledgment of our business model, and a shared assessment of the future plans we have. We’re not just a solar product company or a pay-as-you-go service provider; we are an asset finance and distribution company with a focus on renewable energy. Bringing together affordability and distribution with great products is what justifies this trust,” Nolens concludes.

Mauritius-based Novastar Ventures and US-based Acumen have invested €2,000,000, based on what they believe to be a great opportunity for scale into the region and product diversification.

Andrew Carruthers of Novastar Ventures said: “We are impressed by SolarNow’s well-developed distribution network as well as the quality of equipment and service they provide. They raise the bar for low-income customers in terms of affordability, reliability and service guarantees. We look forward to working with them to scale rapidly into this poorly served market.”

Duncan Onyango, East Africa Director at Acumen said: “We are excited about our investment in SolarNow, a company whose solar products clearly improve the lives of rural households in Uganda.”

A recent update has been published to a 2012 Case Study written by Arc Finance, which is supporting SolarNow under the USAID-funded Renewable Energy Microfinance and Microenterprise Program (REMMP). This case study update, which provides more information on SolarNow’s business model and strategy, can be found at Arc Knowledge.

How can MFIs best work with energy companies to bring renewable energy (and finance for it) to remote communities? How can these organizations make sense of the growing market of renewable energy products available? How can the sector access the long-term, low-cost debt required to reach scale in a working capital-intensive industry? And how can Arc Finance continue to help its partner organizations and other institutional friends to move from idea to business model to pilot to scale? These were among the questions discussed in a workshop round-table format with twenty CEOs and managers from Arc’s REMMP partner organizations in India (representing almost a dozen organizations across several states in India) and the Arc Finance team.

Funding challenges and opportunities were arguably the key issue of the day, with Arc partners FWWB and Milaap.org leading the discussion about the challenges of accessing low-cost and longer-term debt finance. Over the past several months, Arc Finance has been undertaking stakeholder research on debt finance needs by MFIs specifically for energy lending. The findings show strong demand and interest for an energy specific debt facility for MFIs, and this was reinforced by Arc’s partners at the Delhi Meeting. All present agreed that the market is ready for innovative new financing initiatives to scale the sector.

Results-driven business model experimentation was also a particular theme of the day. The partners discussed their experiences and lessons-learned from experimenting with different business models. The willingness to experiment and adapt when things aren’t working is a characteristic of successful organizations in any sector; energy finance is no different, as Utkarsh, WSDS, Mahashakti Foundation and Grameen Koota demonstrated when sharing their experiences.

The partners then took a deeper look at different sales models, which are central to any organization’s energy finance business model. Should an organization retain mobile agents such as Village Level Entrepreneurs (VLEs) to carry and demonstrate products to potential customers? If so, should the VLE’s offer informal credit to customers who cannot afford to buy in cash? How does the institution get the products into the hands of agents – through micro-consignment, for example? With whom lies the responsibility for timely after sales service in the case of a defective product?

Several of Arc’s partners in India and other countries are exploring these options, identifying and adapting the right model for energy lending. DCBS (a small MFI in West Bengal) and Simpa Networks (a developer of proprietary metering technology for solar home systems which now uses a direct sales model) have both shown innovations in sales models – particular through agents. And while anecdotes are not evidence, sometimes one deserves a moment’s spotlight: the son of a DCBS client who received a loan for a solar lantern recently placed 44th out of more than a million candidates nationwide in tertiary entrance exams, something he attributes in large part to being able to study in the evenings thanks to his solar lamp.

How to transition from “push” products (supply-led) to “pull” products (demand-driven) was a dominant theme as well. The primary market barrier for energy products is lack of trust – particularly when government initiatives in the past have introduced poor quality products, hindering their reputation and making energy programs all the more difficult down the track. But as so many stakeholders know, energy clients very often become repeat energy clients – who increasingly “pull” new products as their trust and energy needs and appetites grow.

The final session of the day was interactive and more open. The participants were asked to articulate their visions and dreams for the small-scale renewable energy finance sector in the years to come. Beyond sales targets, what do they want the future to look like? Arc’s wide range of partner organizations had various aspirations, from product expansion to unlocking new sources of financing. But one common thread was the recognition that this sector is not just about providing lighting to off-grid communities. Rather, it’s about understanding and supporting the so-called “energy ladder,” or “escalator.” Partners are committed to providing broad solutions to help clients climb this ladder while increasing household economic productivity along the way.

The willingness of Arc’s partners to share information so freely is clear evidence that they see themselves all heading in the same direction and that ending “energy poverty” is a shared goal. This partners’ meeting built upon an Arc-workshop held in Manila last October in conjunction with the Microcredit Summit, and there is strong enthusiasm for this group to morph into a de facto network. Arc Finance provides a range of services to stakeholders, from Technical Assistance (which includes product identification, marketing, human resources, business model and sales support) to loan guarantees, catalytic grant funding and training. But core to its mission is being a “conduit” of sorts, a hub to develop new partnerships in small-scale energy finance. To this end, this partners’ meeting in Delhi was an exciting platform that Arc Finance was proud to organize, and from which the Indian sector can continue to grow.

Presenting in a panel discussion entitled Crowdfunding as Financing Mechanisms for Clean Energy, Yara demonstrated to her high-level audience how tapping the “crowd” provides much-needed capital opportunities for MFIs that aim for social benefits – namely, clean water, clean energy, education and sanitation.

“Crowdfunding enables MFIs to tap into new sources of funding: it fills the gap for essential-service lending by using financial resources sourced from large numbers of lenders – a form of ‘unconventional lending,’” she said, and then put its role in the context of financial services to the poor as they stand. Microfinance Institutions (MFIs) – several of which Arc partners with – “can play an important role in the removing the barriers to affordability in adopting new sustainable energy products.”

However, she argued, “The Indian microfinance sector has been slow to embrace energy lending as a mainstream practice. While a number of factors contribute to this situation, lack of access to affordable capital from conventional sources of debt and investment is a significant one. Milaap’s crowdfunding platform was developed to close this gap.”

Milaap.org is one of Arc’s partners under the USAID-supported Renewable Energy Microfinance and Microenterprise Program (REMMP), the goal of which is to “increase access of underserved populations to clean energy products in order to improve livelihoods and quality of life among these target recipients while minimizing climate-damaging emissions.”

With the support of USAID, Arc Finance launched REMMP in 2012 to test a range of business models that are designed to increase financial access to clean energy for poor people around the world. REMMP partner organizations include FWWB-I (an “apex” microfinance organization); Bandhan (by some measures the world’s largest MFI); Basix-IGS (within which Arc is “greenfielding” an energy-lending enterprise); Simpa Networks, which is pioneering metering technology for solar home systems; SolarNow, which provides an innovative in-house credit facility for solar systems to rural farmers in Uganda; Sogexpress, a money transfer organization in Haiti that, with Arc’s support, is using remittance channels to enable the diaspora to remit clean energy technology; and Milaap – a crowdfunding platform with a focus on using MFIs as a means to help people get clean energy products for their homes and businesses.

Crowdfunders that partner with MFIs to lend to microentrepreneurs are not new. Kiva.org was the first to reach scale doing this, and has lent over US$500 million dollars since 2005. Milaap is newer and much smaller, but is differentiated in its specific focus on water, energy, and education. Put another way, and as Milaap’s founders have put it at various Arc Finance events, microfinance is “a means to an end, not an end in itself.” Lenders coming to the platform are not lending to small businesses; they’re lending to help people access clean water, energy or education, and the livelihood and income development that comes with each.

Milaap (“connecting people” in Hindi and Urdu) was initiated in June 2010 by three young MBA graduate entrepreneurs who wanted to change people’s concept of giving by making it a personal, transparent and sustainable process. The end-borrowers on this platform are the deserving, working poor of India – students, small businesses, families – for whom a small amount of capital will significantly change their lives for the better.

One hundred percent of a lender’s funds go to the end-borrower for energy, water, sanitation or education purposes. Milaap charges its field partners a 5 percent fee on the funds raised, which currently covers a fraction of Milaap’s costs while it works towards achieving financial self-sufficiency. The shortfall until it reaches scale and when the fee is enough to break even is covered by investment from individual and institutional investors and donors.

It’s been a rapid learning curve, said Yara. By mid-2014, Milaap has raised and channeled nearly over US$1.5 million into a diverse portfolio of nearly 10,000 loans, impacting the lives of 50,000 people, while maintaining a 100 percent repayment rate from field partners. Funds are raised from an increasingly global crowd of lenders and disbursed to borrowers across ten Indian states through a network of 15 different current field partners. The company’s energy portfolio continues to advance through its active partnerships with three Arc-partnered MFIs based, respectively, in the states of Orissa, West Bengal and Manipur. Due to the comparatively small size of loans for clean energy products such as solar portable lanterns and improved cook stoves, energy represents only ten percent of Milaap’s total portfolio – but is increasing.

After taking the audience through the Milaap.org website, the loan-disbursal and repayment cycle (see figure), selected client profiles, and the filters that lenders can apply to direct their loans to specific regions, sectors or purposes, Yara gave a short profile of DCBS – a small MFI in Eastern India which is a sub-partner of Arc Finance under REMMP, and a beneficiary of Milaap’s crowdfunders.

DCBS is a small, community-based MFI that operates in 200 village communities in West Bengal. It has an active client base of 8,000 women borrowers. In December 2012, DCBS began promoting a new solar lantern loan product to existing clients (through a line of credit provided by Milaap, funded by the crowd), which is now expanding to non-clients.

As of mid-2014, DCBS’ solar lending program has a 100 percent repayment rate, has seen rapid portfolio growth and high penetration in the target communities, a consistent validation of this type of energy-lending as sustainable and commercially attractive, and early but positive social impact results. Other MFIs supported by Milaap and Arc Finance are also providing finance for a range of products, from clean cookstoves to multi-light and multi-appliance solar home systems.

Not everything has worked perfectly, of course. As Yara told the audience, there is always an element of trial and error in piloting new and innovative channels in order to demonstrate the commercial viability of a model for scale. Learning lessons along the way is important, and inevitable. Not all MFI partners have had the same success. Due diligence conducted by the crowdfunding platform to determine the capability (and, crucially, the dedication) of the MFI to introduce energy lending, is paramount. Finding the right field MFI partner is a necessary criterion for success.

What’s more, just providing MFI clients with access to credit for energy products isn’t enough either. Providing marketing support, client education, after-sales service, quality and appropriate products that are demand-driven, efficient “last mile” distribution, and appropriate pricing and financing options are all crucial. It is the role of the crowdfunder to assess – and where appropriate, assist – with these variables for success. It is this type of specialized technical assistance that Arc Finance has been providing to DCBS and other Milaap partners under REMMP.

Finally, Arc’s experience has been that training and awareness-raising are crucial elements which should be included as part of the clean energy program. Whether funding comes from donors, funds or in small increments from a crowdfunding platform like Milaap, and whatever the business and distribution model the MFI uses, a highly-engaged and informed staff, capable of talking to clients about their energy usage, costs and needs, is indispensable.

Yara finished with Q&A from the audience (which was particularly interested in product selection and warrantee challenges in remote communities). Arc looks forward to being invited back to further ECN events as it works with crowdfunding platforms to fill the working capital “gap” in pioneering small-scale, clean-energy finance.

The 2014 Ashden International Award finalists were winners in five categories: Financial Innovation; Avoided Deforestation; Clean Energy for Women and Girls; Energy for Agriculture; and Sustainable Buildings. Each of the winning organizations is working on a solution to the problems that are part of Arc Finance’s core mission, which includes helping scale the clean energy finance sector by shining a light on enterprises that are leading the way through innovation.

Infosys wins the Sustainable Buildings Award

One of India’s largest IT companies, with campuses at ten locations across the country and offices around the world, Infosys has been designing new, low-energy buildings and retrofitting existing buildings with the technology applied in new construction – decreasing electricity consumption per staff member by 44% across its Indian business campuses in the last five years.

Infosys has realized annual savings of US$200 per employee, and 39 percent of the company’s electricity is now generated or purchased from renewable sources. GHG emissions have been cut by 57 percent (or 210,000 tons per year), three quarters of which is from efficiency measures alone.

For true sustainability, improved efficiency has to make a “single bottom line” case – it can’t be just for environmental and social reasons. To this end, Infosys invested with the goal that the cost of retrofits would be paid back in energy savings within three years.

The company seizes every opportunity to reduce energy consumption, from reducing the size of chiller plants for air conditioning, to painting roofs white to reflect the heat. Cutting-edge design for new buildings also helps keep offices cooler and maximizes natural light. With US$80 million cut from its energy bills and targets of halving electricity use per employee and all electricity coming from renewables by 2018, Infosys has made the bottom-line case for large companies to invest in energy efficiency.

The Financial Innovation Award goes to Off.Grid:Electric

Off.Grid:Electric is a Tanzanian company that has emerged as a leader in the field of using mobile money to sell affordable pay-as-you-go solar power – of particular interest to Arc Finance, which works with different partners with various approaches to the affordability challenges of solar.

East Africa – countries like Kenya, Tanzania and Uganda (where Arc’s partner SolarNow is based, and is using a hire-purchase credit facility to provide a different affordability mechanism) – is an exciting “petri dish” of experiments in clean energy innovation. Mobile Money, through M-PESA, first reached scale in Kenya, and the model is now being replicated across several sub-Saharan countries. Leveraging mobile money infrastructure to allow poor customers to pay for clean energy in regular, small amounts is an opportunity that Off.Grid:Electric (among others) is capitalizing upon.

Off.Grid:Electric considers itself a service, more than a solar, company. The founders wanted to make solar electricity a mass-market option by focusing on exceptional customer service, including an all-day customer-care telephone line and ongoing support from a local agent. With more than 15,000 homes taking up Off.Grid’s service so far, benefitting 70,000 people, customers are being connected as fast as systems can be manufactured and distributed, thanks in part to a cloud-based customer registration process and product-tracking system app.

Off.Grid:Electric provides an agreed-upon level of electricity service through a five or ten Wp Solar Home System (SHS), including mobile phone charging, which is rented by the customer and installed after payment of a deposit of US$6 or $9. The entry-level model costs roughly US$0.20 per day (the top-end system costs about 63 cents per day) paid over a mobile money platform – with a minimum of one day’s purchase per transaction.

A network of local agents is used to find customers, install systems, and provide ongoing after-sales support. Custom smartphone apps keep customer data, usage, system and payment information integrated and accessible to agents. For the very few customers without a mobile phone, agents can take cash payments.

Crucially, the company prioritizes flexibility of payment for the customer, recognizing the cash-flow limitations typical of poor customers. Service level can be changed, and payment history builds a credit rating for the customer that can be used for other purchases. Off.Grid:Electric currently has about 90 staff – half of which are female – and a network of several hundred local agents. It is financed mainly through equity investment, supplemented by debt and grant funding.

Sustainable Green Fuel Enterprise wins Ashden’s Avoided Deforestation Award

Deforestation and its dire environmental consequences – air pollution, soil erosion and desertification – remain a critical problem in certain countries. Sustainable Green Fuel Enterprise, a Cambodian business turning leftover coconut shells and other bio waste into clean-burning char-briquettes for use as cooking fuel, was the winner of Ashden’s Avoided Deforestation Award.

Most Cambodians cook on wood charcoal, resulting in the world’s worst case of deforestation: the country lost 2.9 million hectares (14 percent of its total land area) in two decades (1990-2010). In addition, the negative health effects of burning wood charcoal, particularly indoors, are well known, and include eye and respiratory disease.

To reduce wood charcoal use, French NGO GERES had already introduced efficient charcoal stoves to the markets, and wanted to expand to tackle charcoal supply as well. In 2009, it partnered with a children’s charity to launch Sustainable Green Fuel Enterprise (SGFE).

Led by Carlo Figa Talamanca, SGFE can scarcely keep up with demand. SGFE produces the char from waste coconut shells (widely discarded and accessible) using low-emission TLUD kilns, and it also buys wood-char from electricity generators. The char is mixed with water and a binder and extruded into briquettes, which are then dried using the waste heat from the kilns.

To date, over 650 tons of char-briquettes have been produced, and production is accelerating. The 47 tons produced in March 2014 alone equals the cooking needs of 1,250 households. Each ton saves ten mature trees, so the equivalent of over 6,500 mature trees have been saved to date. GHG emissions have been cut on the order of 4,500 tons equivalent in 2013, all while introducing a superior product to the market at a cost – 34c/kg – similar to wood charcoal, and cheaper to use due to its reduced waste and uniformity of heating.

A more expensive product – the “diamond briquette,” made from 100 percent coconut shell char – costs double the regular briquette, but its slow and sustained burn has made it particularly popular with food vendors.

Production will double in 2014 thanks to a recent grant from the Global Alliance for Clean Cookstoves (GACC), and further private investment will allow yet another doubling of production, according to SGFE’s team.

Greenway Grameen: winner of the Clean Energy for Women and Girls Award

The Clean Energy for Women and Girls Award was won by Indian cookstoves business 
Greenway Grameen, co-founded by two Indian women two years after completing their MBAs. Greenway’s mission is to provide an affordable, desirable cookstove to improve quality of life for Indian women – who along with their daughters in a male-dominated nation typically bear the lion’s share of household duties, with crippling repercussions on the health and education of the next generation of girls. Despite this, most rural households in India have mobile phones and televisions – so aspiration for consumer goods is alive and well; it’s just a man’s preserve. “The biggest women’s issue in India is men,” argued CEO Neha Juneja, to wide applause.

Collecting and cooking with wood and dung, as hundreds of millions of women are still forced to do, is time-consuming and horrifyingly harmful – indoor air pollution kills more people than diarrhea, malaria and HIV combined – and the majority of victims are women.

To address this, Greenway Grameen’s simple and stylish stoves dramatically reduce kitchen smoke, cook more quickly, and stay cleaner longer. Perhaps most significantly, their design was demand-led from the start; extensive market testing led to an iterative design process focused on women’s needs and aspirations. Marketed as the essential part of a modern kitchen, more than 120,000 stoves have been sold so far, benefitting over 600,000 people in Karnataka, Kerala and Maharashtra states. Two-thirds of the stoves, which retail for US$23, are financed through partnerships with MFIs.

Besides the obvious health benefits of reducing indoor air pollution and the reduction of GHG emissions (over 200,000 tons/year CO2e), considerable time is saved (on average, more than 30 minutes per meal), improving the lives of women and allowing daughters more time to study. But the economic argument is the “clincher”: a stove can pay itself back in 14 weeks through reduced expenditure on wood.

Greenway plans to continue its rapid expansion into other Indian states and then beyond into other markets, as well as introducing a broader range of products.

Proximity Designs wins the Energy for Agriculture Award

Finally, the Energy for Agriculture Award went to a fascinating and inspiring company in Myanmar, Proximity Designs, which is introducing
treadle pumps, solar irrigation systems and other sustainable agriculture technologies to this recently-opened nation for the first time.

For rural farmers, lifting water from wells and carrying it across fields is backbreaking and time-consuming work. Until the 1990s, farmers in Myanmar had no access to energy for irrigation in the 20,000 villages that need 3,000 liters per day per small plot. To address this, Debbie Aung Din and husband Jim Taylor traveled to the country in 2004 to head the national program for international NGO iDE. In 2008, their program to introduce access to energy for irrigation morphed into Proximity Designs. Proximity Designs has introduced foot-operated treadle pumps that draw up water from wells and combined them with water-saving drip irrigation technology. Together, these can dramatically increase agricultural yields and incomes.

The results have been transformative. As of this year, 90,000 treadle pumps are in use in 5,000 villages, benefitting almost half a million people. The pumps were designed and manufactured locally, supporting the burgeoning economy, and two further models were introduced, capable of lifting water to raised storage units. The drip irrigation kits were also locally developed and manufactured, and their introduction allows the cultivation of higher-value crops such as eggplant, which require more water. These products are marketed and sold by a growing network of agents, as well as agro-dealers. Pumps range from $25-38, drip irrigation kits are $38, and tanks $25. Some customers pay cash, but many have availed themselves of the low-cash credit facility Proximity has offered in the absence of a mature microfinance market.

The return on these investments by farmers is considerable – with farm incomes increasing by an average of $250 per year. And Proximity Designs – which the Ashden panel described as “the first to bring energy to agriculture in Myanmar…adapting fast to the needs of the rapidly changing country,” is already working on a solar-powered pump, to be introduced in the near future.

Each of the Ashden International Award finalists addresses key challenges to bringing affordable clean energy to the mass market in poor countries. From leveraging technology such as mobile money, to helping farmers increase their yield, to working towards making tragic indoor air pollution deaths a thing of the past, or demonstrating that a global company with a vision can dramatically cut its energy costs and greenhouse gas emissions with some effort and investment, these companies are true pioneers. Arc Finance is proud to know them, and looks forward to continued partnerships with trailblazers in the sector.

If Product is King, Distribution is God