GOGLA, the global association for the off-grid solar industry, supported by GET.invest, has released the results from its 2023 Investment Database, showing that the total investment into the off-grid solar sector was $425 million, a 43% drop versus the previous year.
The most significant decrease took place in the scale-ups segment, raising concerns that macroeconomic conditions are pushing the sector further off-track for contributing to universal energy access by 2030. An annual investment of $3 billion is needed for the sector to fulfil its contribution to SDG7, a number which would be 7x the investment seen in 2023.
Key highlights
- 85 companies received an investment of $425 million: $281 million in debt, $128 million in equity, and $15.5 million in grants.
- Productive Use of Renewable Energy (PURE) deals are spearheading the industry’s funding increase, reaching $65 million, double the amount from 2022.
- Compared to 2022, locally-owned companies received 2X financing and female-owned and managed companies saw a 400% increase.
- Start-up and seed companies are on a positive trend, reaching respectively $148 million and $24 million in 2023. Those focusing on PURE are receiving substantial support, constituting 34% of the total investment in startups, and reflecting a growing confidence in this segment, with solar irrigation and cold chain technologies having benefited the most.
- Equity investments in household solar start-up and seed companies have recovered from the unusually low levels of 2022, but they have yet to reach the heights witnessed in 2021 ($46 million), 2020 ($62 million), and 2019 ($51.7 million). The downward trend of equity investment in household solar signals a concerning failure to nurture new companies focused on electricity access that will be crucial for achieving electrification goals.
- Off-balance sheet financing offers significant promise as a viable financing mechanism for the sector. It accounts for 75% of the total committed debt amounts although it remains predominantly accessible to industry leaders. Wider adoption could catalyze further growth and innovation.
“2023 investment data shows that without more de-risking instruments and concessional financing, off-grid solar will not reach the scale needed to achieve global development goals. While many examples of successful blended finance structures that are catalytic already exist, we need more of them to multiply industry funding by seven,” commented Laura Fortes, Senior Access to Finance Manager.
For more information or to review the report, visit GOGLA here.