Imagine a world where electricity isn’t simply a product, but a transformative force — a gateway to education, healthcare, commerce, industry and comfort. In this world, energy access companies don’t just provide solar home systems or mini-grids; they orchestrate a seamless symphony of interconnected systems that evolve with the needs of their customers. When a family’s small solar home system no longer meets their growing demand, the solution isn’t to start over by getting a larger system, but to integrate and expand — scaling from a standalone system to a robust mini-grid, and eventually to a fully interconnected network.
This isn’t just a vision of the future; it’s a call for a revolution in how we think about energy infrastructure and delivery. The answer lies in reimagining energy access companies as fully integrated energy transition utilities, capable of providing Bundled Energy Services that transcend conventional boundaries between off-grid and on-grid systems. These companies would act as architects of energy ecosystems, designing solutions not around fixed technologies, but around the lives and aspirations of the people they serve.
What if the key to solving energy poverty was not a matter of choosing between solar kits, mini-grids, or industrial or utility-scale systems, but embracing them all, within one firm? What if the true innovation lies in breaking down the silos between these solutions and creating a unified framework that leverages their unique strengths? What if energy could evolve with communities, growing more accessible, reliable, and affordable over time?
This is the promise of the Fully Integrated Energy Transition Infrastructure company or Energy Transition Utility — an entity that does not simply deliver power but empowers. It is a bold rethinking of how energy systems operate, guided by the principle that every watt-hour of energy should be a steppingstone toward a brighter, more sustainable future.
A Paradigm Shift in Energy Access
During COP29 in Baku Azerbaijan, significant progress was made towards addressing climate finance for developing countries, with developed nations agreeing to mobilize $300 billion annually in public funds by 2035 to support climate mitigation and adaptation efforts. While this figure is lower than the earlier target of $1.3 trillion annually by 2030, it represents a critical step forward, reflecting the complexities of securing funding commitments from a broader donor pool, including relatively wealthy developing nations like China and Saudi Arabia. This agreement also builds on the challenges developed countries faced in delivering the $100 billion annually pledged in 2009, which expired in 2020.
In addition to the public finance commitments, COP29 finalized global carbon market rules under Article 6 of the Paris Agreement, creating new opportunities for developing countries to generate climate finance through carbon trading. This is particularly significant for countries in Africa, where such mechanisms could help fund sustainable energy infrastructure projects. Moreover, organizations like the Global Energy Alliance for People and Planet (GEAPP), the Rockefeller Foundation, the Climate Investment Fund (CIF), and some major oil companies pledged additional funding for energy access initiatives, with a focus on Africa. These pledges, amounting to over $5 billion, underscore the importance of bridging energy poverty without exacerbating climate change.
Energy access companies have traditionally focused on specific asset classes or configurations to deliver electricity. Some identify as mini-grid developers and operators, others as manufacturers and sellers of solar home systems, and yet others as providers of energy services exclusively for commercial and industrial customers. Most of these companies operate in silos, focusing on off-grid customers and delivering products or services in isolation. While these models have made significant strides in bridging the energy access gap, they often fall short in meeting the evolving needs of their customers and scaling to address the complexity of energy poverty comprehensively.
A fully integrated energy transition utility would dismantle these boundaries. Such a firm would deploy and operate a variety of asset configurations, both off-grid, on-grid, and even the grid itself, under a unified operational framework. It could even be the distribution utility within a given service territory. This approach allows for coordinated planning and execution, enabling the company to adapt to changing demand patterns and optimize resource allocation.
Bundled Energy Services: Meeting Customer Needs
For most end-users, electricity is not an end in itself, but a means to an end — enabling them to run welding machines, preserve food in freezers, or enjoy entertainment, among other things. The responsibility for determining the least-cost means of delivering this electricity lies with the energy transition utility. By providing Bundled Energy Services, such a utility can offer solutions tailored to the specific needs of individuals, businesses, and communities.
For example, agents managing sales for solar home systems in a community could monitor energy demand trends. When demand begins to outstrip supply, they could coordinate with the mini-grid development team within the same firm to deploy a community mini-grid in that community. As the community grows further, interconnecting the mini-grid to the main grid might become the optimal solution. This dynamic approach ensures that electricity provisioning evolves alongside the needs of the community, maximizing impact and minimizing costs.
Economies of Scale and Internal Coordination
The benefits of a fully integrated energy transition utility extend beyond flexibility and responsiveness. By breaking down silos between asset classes, the utility can achieve economies of scale in terms of both asset capacity and unit volume. For example, transitioning from small-capacity solar home systems to larger-scale generation assets can yield significant cost savings, but only if internal coordination eliminates inefficiencies.
Additionally, integrating diverse asset configurations such as, mini-grids, SHS, and commercial and industrial systems, reduces overhead costs and allows the utility to benefit from the diverse risk and geographic profiles of its assets. This diversity strengthens the financial stability of the utility, making it more resilient to macro-economic fluctuations and operational challenges.
Addressing Liquidity Risks with Bundled Energy Backed Securities (BEBS)
Managing liquidity risks is one of the primary challenges when deploying a wide variety of energy asset configurations. Bundled Energy Backed Securities (BEBS) address this issue effectively. BEBS empowers a fully integrated energy transition utility to establish Special Purpose Vehicles (SPVs), which consolidate a portfolio of projects diversified across regions, countries, and asset types.
The SPV’s financial structure typically includes a mix of senior, mezzanine, and subordinate debt, alongside equity investments. Debt financiers tailor their instruments to align with the SPV’s geographic and asset configuration diversity, as well as its projected cash flows. For example, an SPV could incorporate 100 mini-grids across eight Sub-Saharan African nations, 20,000 solar home system (SHS) customers in five countries, and 500 commercial and industrial energy assets in thirteen countries. It could also focus on configurations within a single high-demand country, such as Nigeria, leveraging its geographical diversity. As the sponsor, the integrated energy transition utility securitizes the SPV by issuing BEBS, which are sold to investors. These investors then hold claims on cash flows from the SPV’s portfolio, while the utility oversees and operates the projects, earning performance-based fees for its management. This mechanism provides immediate capital for project financiers, enabling them to reinvest in other energy access projects.
Unlocking Scalable, Sustainable Solutions
Realizing the potential of BEBS and fully integrated energy transition utilities will require collaboration among energy access companies, investment professionals, Development Finance Institutions (DFIs), multilateral banks, governments, and other stakeholders. By leveraging innovative financing mechanisms like BEBS, the $5 billion pledged by various entities for energy access in Africa, and future climate finance commitments, can be utilized more efficiently.
This model represents a critical tool in bridging the gap between off-grid and on-grid systems. It ensures that diverse energy needs are met sustainably and at scale, transforming energy access from a fragmented endeavor into a coordinated, impactful movement.
The Way Forward
At Entric, we are committed to leading the charge toward a fully integrated energy transition utility model. We believe that by breaking down silos and embracing innovative financing mechanisms like BEBS, we can unlock the full potential of energy access initiatives and ensure a brighter future for energy-poor communities. This is not just about providing electricity — it’s about empowering people, driving economic development, and building a sustainable world.
Let’s work together to turn this vision into action. The future of energy access is integrated, sustainable, and transformational. It’s time to make it a reality.
Source: Medium