This week, Acumen launched its new Pioneer Energy Investment Initiative: Powering Livelihoods Using Solar (PEII+). PEII+ is a 5-year, $25 million dollar initiative that will invest early-stage capital in companies that provide renewable energy-powered appliances–from mills and irrigation pumps to electric motorbikes and refrigerators–to microentrepreneurs and smallholder farmers in India and East and West Africa. The goal is to leverage these technologies to boost incomes and climate resilience in vulnerable communities.
PEII+ is supported by the IKEA Foundation, Charles and Lynn Schusterman Family Philanthropies, Autodesk Foundation, and Distributed Power Fund, and has been awarded follow-on funding with UK Aid from the UK government via the Transforming Energy Access (TEA) platform. PEII+ is also strategically aligned with the Global Energy Alliance for People and Planet (GEAPP) commitments in India and East and West Africa.
“The United Nations has urged countries to eliminate energy poverty by 2030 as energy access influences many factors people need to live a decent quality of life. That’s why we’re championing our long-term partner Acumen’s PEII+ programme that will invest in expanding the market for renewable energy solutions. These solutions will support families living in poverty to increase their incomes by sustaining their farms and businesses or by providing entrepreneurship opportunities in mobility, food processing and food storage businesses,” said Biswarup Banerjee, programme manager (renewable energy) at IKEA Foundation.
The majority of the world’s poor people are rural and young, and living without access to affordable and sustainable electricity is a major impediment to rising out of poverty. Renewable energy-powered appliances have the potential to more than double incomes by saving time, improving yields, and enhancing resiliency. A solar-powered water pump can be game-changing for a smallholder farmer who depends on costly diesel generators to irrigate their land. Likewise, a solar-powered refrigerator can augment business income for a small shop owner who can keep fish, poultry, dairy, and beverages cool for their customers while avoiding food waste. With climate change creating more uncertainty in vulnerable communities, self-sustaining income is more important than ever.
“To tackle poverty and climate change in this decade, we need to reimagine how low-income communities access and use power. Productive use appliance companies have the potential to transform livelihoods, but lack access to investment capital to support their growth. Alongside our partners, we will continue to invest high-risk, early-stage capital in this next generation of innovations at the intersection of energy access, livelihoods, and climate resilience,” said Sarah Bieber, Head of Energy Partnerships at Acumen.
Acumen launched its first Pioneer Energy Investing Initiative (PEII) in 2017 to support the new wave of energy access entrepreneurs serving communities living in poverty. With its patient capital, Acumen aimed to narrow the off-grid solar industry’s Pioneer Gap, where companies experience the greatest challenge in attracting Seed and Series A equity financing. By 2021, Acumen had invested early-stage equity into 12 energy access companies that went on to attract an additional $128 million from other investors and reach 1.25 million people with energy–40% of whom lived under the $3.20 per day poverty line.
While the pioneer gap remains for early-stage off-grid energy companies, the market has experienced incredible growth in recent years. In fact, capital flows reached an all-time high of $475 million in 2021, up from just $16 million in 2012. At the same time, the sub-sector focused on productive use appliances has emerged as the next frontier of critical, clean energy solutions serving low-income communities. Despite the potential for boosting the livelihoods of communities living in poverty and an estimated addressable market of $11 billion, these clean energy-powered appliance businesses do not receive enough investment to grow and commercialize. With greater access to capital, these companies can scale their operations, streamline the distribution of their products and services and eventually increase the consumer financing that is critical for low-income customers.
“A challenge we have encountered at Koolboks is how to create the balance between selling high-quality products to our customers–mostly low-income small business owners–at an affordable price. This is where investment capital becomes critical to ensure we can continue to serve our customer base with clean cold storage. I celebrate the launch of PEII+ and hope it will catalyze many other investors to start betting on these types of business models,” said Ayoola Dominic, Co-Founder, and CEO of Koolboks, a Nigeria-based pioneer in cold storage with a focus on low-income communities. Koolboks uses pay-as-you-go technology to make solar-powered refrigerators more affordable. In 2020, Acumen joined Nigerian Aruwa Capital Management to close Koolboks’ Seed round.
From 2022 to 2026, Acumen will utilize innovative financial instruments to make early-stage investments in 10 new businesses. It will also run accelerators to cultivate emerging locally-led energy and agricultural businesses, organize convenings, and share insights with the energy access sector and beyond to crowd in more capital and help grow this ecosystem.
One of Acumen’s six productive use of energy investees, S4S Technologies, is an India-based business that created a portable, solar dehydrator that dries vegetables and spices while retaining their nutrients, and works with smallholder farmers and microentrepreneurs, mainly women, to improve their livelihoods. Two years after Acumen’s investment, seven in 10 farmers and nine in 10 entrepreneurs said that their incomes increased because of working with S4S. “Our vision at S4S is to empower every woman smallholder farmer to become a processor so that she can earn additional income and move herself and her family out of poverty. Our business model is proven to benefit communities and the planet. To expand our impact, we need investment capital. Acumen’s PEII+ is providing game-changing support to early-stage businesses like ours that are improving livelihoods while mitigating climate change through the use of clean energy”, said Nidhi Pant, Co-Founder of S4S Technologies.
PEII+ leverages Acumen’s track record of more than 16 years of investing in the energy access sector. Alongside KawiSafi Ventures–Acumen’s for-profit fund focused on energy access in Africa–it has invested in a portfolio of 40 companies that have impacted over 223 million lives and averted 58.5 million tons of greenhouse gas emissions. As we look to the future, in addition to PEII+, Acumen will continue to drive universal energy access by incentivizing and de-risking off-grid solar expansion into hard-to-reach markets and investing growth capital in low-carbon solutions in Africa.