evolving business models in emerging markets · evolving business models in emerging markets...

DECEMBER 2017

EVOLVING BUSINESS MODELSIN EMERGING MARKETS

Editor: Marco Dorothal Solarplaza

EVOLVING BUSINESS MODELS IN EMERGING MARKETS

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Table of Contents

Evolving Business Models in Emerging MarketsIntroduction: purpose of the report & introduction of MSB – Akuo Energy Agrinergie®

– ALCB Fund Local Currency Bonds - Bayport Botswana

– Crossboundary Energy Garden City Mall Nairobi

– Kingo Energy Off-grid in Guatemala

– OMC Telecommunication Towers

– Scatec Solar Islamic Green Bond

– Sigora International Inc. Sigora Haiti – The First Sigora Utility

– The Sun Exchange Blockchain Marketplace

AfterwordSources

P. 1P. 3 - 4P. 5 - 9

P. 10 - 13

P. 14 - 17

P. 18 - 22

P. 23 - 26

P. 27 - 30

P. 31 - 34

P. 35 - 38

P. 39 - 40P. 41 - 42

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offer a unique format of network facilitation, as well as focused sessions per segment in order to accelerate the sustainable energy transition around the globe.

On the first day, there will be a plenary session including different outlooks on key developments in the regions Asia, Africa and Latin America. Afterwards, the session will be split into three tracks addressing the gap between projects and capital divided into utility scale, commercial & industrial and off-grid tracks. The day will end with a Solar Shark Tank pitch competition, during which a selection of solar entrepreneurs will pitch their solar project proposals to a panel of experienced investors and financiers. The second day will commence with a plenary session on innovative financing models, highlighting innovative financing and business models in the solar PV landscape.

Later on, a closing plenary will take place, examining disruptive global trends with an impact on PV and building the business models of tomorrow. The conference will close with a matchmaking session aimed at connecting projects with capital, followed by an optional leisure activity in Amsterdam.

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Introduction: purpose of the report & introduction of MSB

Where will solar PV applications go next? What are the benefits of the various different models for solar PV development in emerging markets? How can innovation play a role in accelerating the adoption of the technology and the evolution of business models?

These are all questions that stakeholders in emerging markets are constantly asking themselves. Whatever solar PV does or wherever it’s planning on going, one thing is for sure: the future of solar PV looks as bright as ever, with solar power even outshining other forms of renewables over this past year.

The purpose of this paper is to give an overview of the evolution of business models in emerging markets. To provide a clear picture, we have highlighted and analyzed eight innovative companies and business cases set in developing solar markets. We have compiled a list of company profiles, describing the focus of their businesses, their future outlooks and the different ways that innovative business models can be combined with solar energy.

This report was prepared in preparation of the Making Solar Bankable conference and networking platform, which will take place on the 15th and 16th of February 2018 in Amsterdam, The Netherlands. This second edition of Making Solar Bankable, once again co-organized by Solarplaza and FMO, will gather more than 500 project development & finance executives from 40+ different countries. The conference will



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overview of all solar developments and evolving business models in emerging markets. Fortunately, those developments are progressing much faster than any report can capture and will drive these markets forward in advancing energy access and creating business opportunities for both local and international businesses. We’re excited to be able to contribute to that in the ways we can!

We feel that this report embodies the spirit of entrepreneurship, innovation, progress and opportunity that we strive to promote and reflect in the program of this landmark event. We’re proud that several of the companies showcased in this document will also be present at Making Solar Bankable and will present their findings on stage. Of course I’ll add that this report is very far from comprehensive, and serves more as a demonstration, rather than a true

Marco Dorothal , Editor

15-16 February 2018Amsterdam, NL

MAKING SOLAR BANKABLEEVOLVING BUSINESS MODELSIN EMERGING MARKETS

500+ project developers, investors, financiers and other key stakeholders in one room

Effective matchmaking and networking solutions, guaranteeing time well-spent on valuable meetings

A balanced program: from inspiring keynotes addressing the trends that will shape the industry, to in-depth expert discussions and Q&A’s

Taking place in an historic venue in the world’s capital of innovation: Amsterdam

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Akuo Energy

Business Background

Akuo Energy is a highly integrated company that has chosen to internalize all the expertise necessary to both a developer and operator role, related to renewable energy projects. The company facilitates all stages of a renewable energy project, from the development stage, to contracts and financial engineering, to ultimately construction and operation. The reason we included Akuo Energy in this report is because Akuo has taken an innovative approach in combining solar energy with agriculture, namely, Agrinergie®, which will be discussed in the following sections.

Akuo Energy was founded in France in 2007 by the founders of Perfect Wind, who a year earlier had sold their entire French wind portfolio. The company has grown to develop projects in North and South America, as well as in the Indian and Pacific Ocean regions, Africa and Europe. By the end of 2016, Akuo Energy operated subsidiaries in fourteen different countries around the world, following an approach that is both opportunistic and focused on niche markets.

Company Aim

Having a pure focus on the renewable energy field, Akuo Energy has diversified both in terms of technologies and geographies, developing diverse projects across the globe. As a company that is still two third -owned by its co-founders, Akuo Energy is the product of the combination of two founding goals: leaving the world a better place for the next generation and realizing the incredible growth potential of renewable energy in France and around the globe. The company has been committed to developing and operating projects that go beyond simply producing renewable power and aim to create additional social benefits for the inhabitants of the areas in which they are located. This strategy has allowed Akuo Energy to establish itself as France’s leading independent producer of renewable energy in just a few short years.



238 MWof solar power capacity in operation, under construction or with financing underway.

182,5 MWof Agrinergie® projects in operations, under construction or with financing underway

34solar plants around the world

27Agrinergie® projects around the world in regions such as the Caribbean, Indian Ocean, Pacific Ocean, France and Corsica

Key Facts

21%of Akuo Energy active and pipeline portfolio is made up of solar plants

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Agrinergie®

The concept of Agrinergie® was born on La Reunion Island (French island near Madagascar) in 2007. Witnessing the land-use conflict between electrical and agricultural production on islands, Akuo Energy decided to seek a solution towards combining the two activities on the same land, to maximize their productive potential, with regards to natural resources. Akuo Energy started cultivating farmland in between solar arrays, and developed photovoltaic anticyclonic greenhouses. For the realization of such projects, Akuo Energy developed two models: partnerships with either local farmers orAgriterra, a agricultural subsidiary of Akuo Energy that exploits the agricultural sides of the projects. In both cases, Akuo Energy supports the full initial investment.

One of the first Agrinergie® farms to include a power storage system was the Bardzour project. It fosters sustainability and autonomy on La Reunion, by creating local and green streams for power production,

energy storage and agricultural production, in line with Agrinergie® principles. Located near a prison, it also holds a social purpose, by promoting reintegration of convicts through professional training.

Bardzour solar farm includes a lithium-ion battery storage system with a capacity of 9 MW, a world first for this level of power when it began operations in 2014. This storage facility helps support the grid, resulting in a stable and continuous supply of electricity, thus cancelling out the effects of intermittence caused by weather conditions and nighttime. With a total power capacity of 9MW, the project incorporates 8.4MW of ground-mounted panels located in the “no-man’s-land” of the Detention Center in the village of Port, in the west of the island, and 600kW installed on 6,000m₂ of Agrinergie® greenhouses. Bardzour has been involved in an ambitious prisoner rehabilitation program: during the construction phase,



more than 15,000 hours were dedicated to training, giving prisoners nearing the end of their sentences skills in the construction of photovoltaic units.

Agrinergie® has led the company to rethink its business model when it comes to solar projects and the place they occupy, both in the literal sense of land, but also in a societal sense. When including the agricultural component, they strive for an outcome where the power production and agricultural production should each be profitable, with profitability being the key for replicability of a virtuous project. If the hybrid combination would reduce the immediate benefits of Akuo Energy projects, then it would need to ensure a better overall performance and enhanced local benefits in the long run, economically, environmentally and socially.

Future Outlook

Based on a model combining tradition and respect for social and environmental balance, the Agrinergie® model was bound to find a partner in ‘permaculture’. The concept of permaculture proposes to create agricultural operations that are resilient and energy- and labor-efficient, by drawing on the use of complementary plant species and thus creating permanent planting that also enhances soil quality. This challenge is now being addressed by Akuo Energy through several Agrinergie® projects, drawing on the expertise of pioneers in this revolutionary agricultural approach.

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We are extremely proud of these achievements. Akuo Energy, now one of the world leader in photovoltaic electric power plants with storage solutions, has accomplished so much more. Today, we have provided concrete evidence that the limit to the proportion of renewable energy sources no longer applies in ensuring network stability in the energy mix of non-interconnected environments, while perfectly complying with the specifications and timetable defined by the CRE (French Regulatory Commission of Energy); convinced top-notch lenders of the soundness and reliability of existing technology, therefore requiring no major Innovation; again proved that these projects have all the intrinsic qualities needed to blend perfectly into their environment while supporting the local economy and job market.

Eric Scotto, Chairman and Co-Founder of Akuo Energy




ALCB Fund ALCB FUNDBusiness Background

The African Local Currency Bond (“ALCB”) Fund is primarily focused on investing in first-time corporate issuers in Africa, in the sectors of financial inclusion, housing, renewable energy, agriculture, education and healthcare. Its unique and impactful investment strategy in Botswana motivated us to profile the initiative in this report, as the success of its investments in local currency ultimately led to a second and third investment round in the following years. The details on the motive and results of the investment will be explained further on.

ALCB was established in December 2012 by KFW (German Reconstruction Credit Institute) and the German government in order to promote corporate local currency bond markets as a viable source of funding in Africa. Since 2015, The Fund is managed by Lion’s Head Global Partners (LHGP) Asset Management, which has its headquarters in London, England. So far, ALCB has invested over USD 50 million in 17 companies across nine different African countries and currencies.

Company Aim

ALCB has a mandate to develop local capital markets in Africa by promoting primary bond issuance from financial institutions and companies in high impact sectors. It does this in three ways: (1) assisting first-time issuers in understanding local funding options and working with local intermediaries to facilitate bond issuance; (2) providing technical assistance to mitigate costs, such as legal expenses and ratings; and (3) acting as anchor investor, such that issuers gain the confidence to come to the market, and in a way that investors feel comfort in the credit quality of the issuer. What is particularly innovative is that ALCB is mandated to co-invest along-side local institutions such as pension funds, insurance companies, banks and asset managers, in which the local market sets the price in local currency. This strategy is exceptionally unique among debt funds and DFIs.

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All African countries are part of ALCB’s targetregion.

The typical investment for ALCB is the equivalent of USD 2-5 million, with the scope to consider smaller or larger amounts depending on the transaction.

It will invest in the principal currency of any African country. This includes currencies used in regional monetary union areas.

Proceeds of bond issuance must be used in highly developmental sectors (renewable energy, financial inclusion, housing, etc.).

ALCB co-invests along-side local investors and does not bilaterally negotiate pricing.

Key Facts

The organization has been around for 5 years, founded in 2012.




Local Currency Bonds - Bayport Botswana

The ALCB Fund has invested in three of Bayport’s subsidiaries – in Botswana, Ghana and Zambia. Bayport is a microfinance operator with offices in nine countries around the world, seven of which are located in African countries. In 2013, Bayport Botswana had been growing at a rapid pace since commencing operations in 2010. The proposed investment ranked highly in terms of the ALCB Fund’s objectives of supporting issuers in the early stages of development to access capital markets, and enabling Bayport Botswana to increase local currency funding in order to reduce its foreign exchange exposure.

Furthermore, Botswanan capital markets for private sector issuers are limited, and a Pula (local currency) issue by the company represented one of only a handful of non-government issuances ever completed. The Fund opted to invest BWP 30 million (USD 3.5 million) in a three-year bullet issuance totalling BWP 75 million (USD 8.7 million). While the Fund was initially coming in above its 30% threshold, the anchor investment helped to bring new investors, including local institutions, into the note program over time. The success of the first investment, and Bayport’s adoption of constructive processes including SMART certification, new Base-of-Pyramid (BOP) products and an ambition to lengthen the tenor of its notes, led the Fund to agree to a second and third investment in 2015 and 2016.

Future Outlook

Main objectives of the Fund are to improve access to long term funding in local currency, strengthen the capacity of local markets and create opportunities for local investors. ALCB Fund does this by acting as an anchor investor and provides technical assistance for local currency bond issuances by financial service providers and companies operating in developmental sectors, including the financial inclusion, agriculture, housing, education and renewable energy sectors. The mission of the ALCB Fund follows the G20 Action Plan to support the development of Local Currency Bond Markets, adopted by the Fund under the French Presidency in 2011.

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ALCB Fund has so far built its portfolio in financial services and housing. It is actively working on transactions in renewable energy, as well as green bonds, including: (i) solar project bonds in South Africa; (ii) corporate bonds for mini-hydro; (iii)

commercial rooftop solar in West Africa; (iv) solar home systems in East Africa; and (v) mini-grids in East Africa. ALCB hopes to lead the Fund’s first domestic market Green Bond in 2018.

We are helping to marry local currency markets with renewable energy investing by providing anchor investments and technical assistance to issuers. This will be beneficial for issues and end energy users alike as currency risk will be eliminated.

Karl von Klitzing, Member of the Board of Directors of the ALCB Fund



Crossboundary Energy

Business Background

CrossBoundary Energy (“CBE”) is Africa’s first dedicated fund for commercial and industrial (C&I) solar energy and owner of the largest portfolio of financed C&I solar assets on the continent. It is one of the CrossBoundary Group’s first direct investment platforms. The fund was launched in 2015 as a separate vehicle to invest in C&I solar projects. Investors in the fund include Ceniarth, Blue Haven Initiative, Treehouse Investments and other private investors. The CrossBoundary Group was founded in 2011, by Jack Cusack and Matt Tilleard. It is focused on unlocking capital to make a positive difference in developing economies. The CrossBoundary Group has 40 professional staff and offices in Bamako, Johannesburg, New York City, Washington DC and is headquartered in Nairobi, Kenya. CBE was included in this report because of its dominant position in the African C&I solar energy market and its innovative corporate PPAs. This innovative perspective will be explained further in the following paragraphs.In 2015, CBE was able to raise over USD 10 million in committed capital to deploy in the form of solar power purchase agreements and leases with C&I customers, with a project pipeline that includes commitments from leading Fortune 500 multinationals operating in Africa. Another accomplishment

for CBE was being able to include in its portfolio the first commercial power purchase agreements in Kenya, Rwanda and Ghana.

Company Aim

Adoption of solar remains low due to two barriers. First, solar has a substantial upfront cost. Without financing, solar installers are typically only able to offer upfront purchase of the solar system. This means that the customer has to pay the full equipment cost of 25 years’ worth of electricity production on the first day. Second, many customers are unfamiliar with solar and reluctant to take responsibility for the technical and operational details of the system. CrossBoundary Energy is addressing these barriers and making solar power more affordable and accessible for African enterprises. It also provides financing for distributed solar projects between 100kW and 10MW that serve C&I clients across Africa. By moving to solar with CBE, African businesses can generate monthly power savings of 10 – 20%, without incurring the huge upfront capital expenditure. This generates substantial positive economic and environmental impact. In order to do so, CBE’s has partnered up with organizations with the same aim, including SolarAfrica, the USAID Power Africa Initiative, the Shell Foundation, the Overseas Private Investment Corporation (OPIC), the Blue Haven Initiative, Treehouse Investments, Ceniarth and multiple other private investors.

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Named by White House in 2015 as Official Partner of Power Africa “Beyond the Grid”

Winner of Financial Times/IFC overall Award for Climate Excellence at the 2017 Transformational Business Awards

Raised over $10M in committed capital to deploy in the form of solar power purchase agreements and leases with C&I customers.

Largest portfolio of financed C&I solar assets on the continent

Key Facts

Awarded Africa Clean Energy Finance (ACEF) initiative grant by OPIC to establish fund for PPAs for African enterprise

First commercial power purchase agreements in Kenya, Rwanda, and Ghana

On track to deploy US$25M in project finance by end 2018.

First investment fund for commercial and industrial solar in sub-Saharan Africa




Garden City Mall Nairobi

In Africa, 70% of electricity demand is from businesses, making it a fundamental necessity for economic growth. The World Bank estimates that to maintain productivity, 48% of businesses are forced to rely on expensive (and dirty) diesel power to supplement their grid supply. According to the International Renewable Energy Agency, solar PV module prices have fallen by around 80% since the end of 2009. This makes solar power increasingly viable as an alternative source of cheaper and cleaner energy.

CBE currently owns and operates Africa’s largest portfolio of commercial solar projects delivering electricity under Power Purchase Agreements (PPAs). One of the biggest active projects is located in Kenya, namely, the Garden City Mall (858 kW) in Nairobi. Garden City is a 33,000 square meter mall that is backed by Actis Private Equity. It is the first mixed-use development in East Africa to gain LEED certification. The 858 kWp solar carport installation is integrated into the rooftop carpark and provides clean energy to the mall and surrounding mixed-use buildings. It is the largest solar carport in Africa and the largest rooftop solar project in East Africa. It produces sufficient electricity to power over 550 urban homes in Nairobi and will offset around 18,750 tonnes of carbon over the lifetime of the system.

Future Outlook

CBE has also been very active using different other innovative business models. It was able to sign the first commercial and industrial solar PPAs in Ghana, Kenya and Rwanda. The company now has over 6.5MW of projects currently in operation or under construction; the largest of such assets in Sub-Saharan Africa. CBE is also on track to deploy US$25 million in project finance by the end of 2018.

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We believe innovative energy finance and business models such as ours, can deliver smart, decentralised, clean power grids across Africa. With the increasing availability of finance for these assets, there is no reason why we can’t see businesses in Africa outpacing their global peers on the adoption of commercial solar.

Matt Tilleard, Co-Managing Partner in Nairobi of CrossBoundary



Kingo Energy

Business Background

Kingo Energy is one of the major players in the off-grid solar energy market in Latin America. It was chosen to be highlighted in this reports because of its innovative off-grid business model, particularly related to the success of Kingo Energy’s Kingo 15 and Kingo 100 products. The company was founded in 2013 by Juan Fermín Rodríguez, Peter Kasprowicz, Matías de Tezanos and Álvaro Rodríguez, who form the board of directors, with the aim to improve human capacity through the provision of clean, safe, off-the-grid electricity at a lower cost than existing alternatives. It was founded, and is headquartered, in Guatemala City, but currently also has operations in South Africa and Colombia.

Company Aim

Kingo Energy is a company dedicated to manufacturing solar energy producing systems for low income households and leasing them to customers using a prepaid energy service. Currently, Kingo manufactures 2 of these systems: Kingo 15, and Kingo 100. Each system is fitted with Kingo’s prepaid technology, enabling customers to pay for energy as they go, with complete flexibility. The Kingo 15 is aimed at customers looking for energy for relatively small tasks, such as cooking, studying, reading and spending time together at night safely. It offers customers the possibility to connect 3 light bulbs and 1 cell phone to the system at any moment. This system comes with one 15W solar panel which produces an average of 5 hours of light per day and enough energy to charge two cell phones.The other system, The Kingo 100, is aimed at customers with a bigger need for energy, such as powering televisions, computers and printers. offers more features and also comes with a bigger solar panel with a capacity of 100 W. It comes with 5 light bulbs, 2 USB ports and 2 AC plugs with a 500W inverter.

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Kingo Energy was founded by two young Guatemalans, making it a business 100% straight from Guatemala

The project has been around for 4 years, founded in 2013

It only takes 20 minutes to install a Kingo Kit, which is connected to a solar panel on the customer’s rooftop.

Key Facts

It only takes US$100,- to produce and install a Kingo Kit.

The base rate charged by Kingo is around €0.70 cents a day, enough to power 3 lamps, light up a house for 5 hours a day and top up one mobile phone.




Off-grid in Guatemala

In Guatemala, over 300.000 households are fully dependent on candles, kerosene lamps or diesel-powered generators for their power and lighting, which are costly, polluting, harmful and potentially dangerous sources of energy and light. In order to combat that problem, Kingo energy has developed an off-the-grid power solution, namely, Kingo 15 and Kingo 100. Both of these products include a battery box that only takes twenty minutes to install and connect to a solar panel with no connection to any power grid whatsoever. “It has taken us under two years to equip more than 15.000 Guatemalan households” states Kingo Energy’s CEO. Kingo has not only given families improved living conditions and greater home security, but it has also shortened the time households spend on chores, while giving them more time for children to work on their school work.

When Kingo started operations in Guatemala, many inhabitants have called their activities “a game-changer”, according to the 2016 annual report by Propaco ( insert link http://blog.private-sector-and-development.com/). An example of one of those inhabitants is Elena Laj Yuja de Gua, a mother of four children, who is one of the inhabitants that claims that the arrival of Kingo really changed her family’s lives. According to Elena, her children are able to study longer and with less dangerous equipment, enriching her children’s life and hers at the same time. Her home is one of the fifteen families with access to electricity in the small village called Caserio El Limon. She decided to take the Kingo 15 plan, which provides her indoor lighting for over five hours a day. In this time period, she can organize her children’s school work and keep her home safe, while saving 25% on monthly expenses. With electric light, animals no longer approach her home and her children can play or do school work whenever they need to.

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This was the case with one family in Guatemala. However, only massive investment can make a difference in Guatemala. In 2014, the GDP amounted to US$30 bn, with 57% of this controlled by only 260 citizens. This is a sign that there will be no progress without private capital. Financial institutions cannot be solely expected to step in, if the country wants to keep their government debt under control. Therefore, Kingo argues that private investment has to work together with financial institutions to reduce the gap in both energy supply and economic opportunities between rural communities and the urban population.

Future Outlook

Kingo Energy believes that access to electricity is a basic human right that is strongly correlated with human development. It also understands that the high upfront costs and low expected rates of return involved in supplying conventional electricity to low income rural families and communities, mean that national grids fail to reach a high percentage of the population in many countries across the world. Its prepaid solar energy service overcomes these barriers and provides electricity that is sustainable for the company, the customer and the environment. Kingo’s long-term vision is to provide clean, safe and affordable solar energy, eliminating the need for expensive and unsustainable alternatives. It envisions a world where clean and affordable electricity is readily available to all, and made it its mission to light up 1,000,000 homes by 2021.



The most important thing in our eyes is to have increasingly high-quality offerings, software and raw materials in our equipment so that we can deliver better service to our users. With new components coming out in the market, we should be able to develop smaller, longer-lasting batteries, which means that we can reach even more remote regions and offer an accessible alternative to more and more people. Due to our knowledge of the market and our adaptability, we can profitably invest while narrowing the poverty gap. But with the financing requirements we face, it’s essential to enlist support from financial partners like Proparco and FMO who are willing to take on risks that may seem like too much for local banks.

Juan Fermín Rodríguez, CEO of Kingo


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OMC

Business Background

OMC Power Private Limited (“OMC”) is one of the largest mini-grid operators in the world, but is not a typical power producer. The reason why OMC is included in this report is because it is a new type of power company that builds small-scale power plants, applying renewable sources in places where there is no reliable power grid today, which we will discuss later on.

The company was established in 2011 in India and has its headquarters in the city of Gurgaon. When it comes to expertise, the OMC team has extensive experience working and adding value to telecommunications and consumers markets focused on building, owning and operating solar power plants with mini-grid distribution in rural India.

Company Aim

OMC mainly focuses on solar power generation and supplies energy to rural areas via its mini-grids to anchor loads in areas with limited or no electricity access, providing power to telecom towers, local small & medium enterprises and rural households. The source of energy in these areas is currently fossil fuel based, which means that they mostly use diesel and kerosene to generate power. OMC provides electricity to such areas with high reliability, affordable cost and with positive impact on the environment. This further contributes to reduction of CO2 emissions and increased productivity, along with overall economic development of rural communities.



OMC finances, builds, owns and operate micropower plants through mini-grids

“Our sector is transitioning to a phase of commercialization and scale.”

Anil Raj, CEO

Also in 2013, OMC Power was the winner of the “Operational Excellence – Tower Development” category at the annual awards of The Economic Times, India’s leading business newspaper.

At The Global Telecoms Business Innovation Awards in 2013, OMC Power was awarded the “Best Consumer Service Innovation Award”

Key Facts

Micropower from OMC starts for loads from 1.2 kW and goes up to 3.6 kW and beyond.

The World Economic Forum named it as the Technology Pioneer of 2014

In December 2014 it was named as the Rising Star at the 2014 Platts Global Energy Awards

In May 2013, OMC won the Climate Group’s off-grid energy competition


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Telecommunication Towers

The company is a pioneer of the unique and innovative “ABC Model”, whereunder it provides reliable and affordable energy to Anchor customers such as telecom towers, small and medium Business enterprise and rural Communities, contributing to economic development of rural india. OMC builds mini-grids ranging from 10kW up to 1 MW of solar power generating capacity that can provide power to a whole village.

To power a mobile network in emerging markets is very costly. Telecommunication network providers need to power their telecom towers 24 hours per day in order to offer reliable coverage to the network users. For that reason, OMC situates their power plants very close to the telecom towers. The company does not want to lose any of the valuable energy that is produced in transmission losses, which is what happens with a grid.

To solve that problem, OMC places distributed micro power plants next to the loads that one would want to power, whether it is the telecom tower, the village or the entire community. The OMC Micropower Plants extract clean energy from the sun, wind and biogas. The Micropower plants also have a battery bank, generators for backup and a power management system for optimal energy efficiency and remote access. When it comes to operations & maintenance, OMC takes care of the power site management and also manages O&M for the telecom sites.

Future Outlook

A switch to renewable energy sources is not just an option, it’s a prerequisite for both profitability and sustainable development. During the last few years, India has been a fertile ground for rapid economic growth, thereby causing a massive increase in electricity demand. In order to combat the rising electricity demand, OMC aims to operate in the near future around 1.000 mini grid based power plants, with a total generating capacity of 50 MW. These mini grid based power plants would be able to deliver power to more than 1 million people.



Our Renewable Energy Services Company model is a proven and commercially viable approach which provides an immediate and substantial improvement in the quality of life in energy-deprived areas, while stimulating economic growth and prosperity.

Anil Raj and Rohit Chandra, Co-founders of OMC Power

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Scatec Solar

Business Background

Scatec Solar is a Norwegian company which specializes in integration of photovoltaics systems. It focuses on incorporating all aspects required for bringing large scale solar power to the market with the use of an integrated business model; business and project development, financing, construction, ownership and operations of solar power plants. The company’s full-scope business model also renders it independent from equipment suppliers, giving it more freedom when it comes to developing and commissioning projects. Scatec Solar was included in this report due to its pioneering market entries and innovative ability to move beyond expectations, exemplified by the issuing of the world’s largest Islamic Green (Sukuk) Bond, which will be examined subsequently in the company profile.Founded in 2007, Scatec Solar targets rapidly growing solar markets and has developed solar plants in Europe, the Americas, Africa, the Middle East and Asia. The company has been very successful in uniting all disciplines required to complete large-scale solar projects. With almost equally sized teams operating from its headquarters in Oslo and its branch in Cape Town, Scatec Solar constantly interacts across continents to ensure that projects can be lifted off the ground with high speed and efficiency.

Company Aim

The approach to project financing adopted by Scatec Solar differs from others through uniquely designed solutions, appropriate for the specific local conditions in each country. Moreover, obtaining strong financial partners, and thus cost-efficient capital, is essential to deploy renewable energy to meet climate goals. Scatec Solar has developed strong partnerships with DFIs and multilateral financial institutions over the years, which has enabled it to successfully raise capital.A cornerstone to its financing has been the Norwegian Investment Fund in Developing Countries (NORFUND), which has operated as an anchor equity investor in all projects that operate within their mandate regions, allowing Scatec Solar to scale more quickly. In addition, Norway’s export credit agency, GIEK, which is mandated by the Norwegian Government to facilitate export financing to mitigate host country political and economic risks, has provided support through guarantees across Scatec Solar’s project portfolio. These are repeat partnerships, having efficiently implemented projects together earlier in different countries by harnessing their core competencies. All of the company’s efforts paid off in 2014 when Scatec Solar was stock-listed on the Oslo Stock Exchange, allowing the organization to raise more equity if needed.



Company efforts help to avoid approximately 600.000 tons of carbon emissions a year

Project track record of nearly

600 MW

A project pipeline of

745 MW

Additional projects in early development of more than

2,500 MW

Key Facts

Installed capacity of

322 MW

A target to reach 1,300-1,500 MW in operation and under construction by year end 2018


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Islamic Green Bond

A good case that illustrates the innovative and financial capabilities of Scatec Solar is the recent financial closing of three solar projects totalling 197 MW in Malaysia. To do so, the company was part of the issuance of the world’s largest Islamic Green (Sukuk) Bond of USD 237 million, which provided 80% of the capital expenditure. To date, the three projects constitute the largest renewable energy portfolio in Southeast Asia.

This Islamic Green Bond is an innovative financial instrument in Malaysia that has established frameworks for issuing Islamic bonds for infrastructure projects, as well as the ambition to strengthen its position as a global hub for Islamic financing. “We want to explore and utilize financial structures that are optimal for each situation”, explains Terje Pilskog EVP of Project Development & Project Finance. The Islamic Bond was given an AA rating by the Malaysian Rating Corporation Berhard and a ‘’Dark Green’’ rating by the Oslo-based Cicero (Center for International Climate and Environmental Research). Scatec Solar expects to invest about USD 60 million through preference shares partly convertible to a 49% equity ownership in the projects. The agreement with the Malaysian consortium includes Scatec Solar acting in its well-known integrated role, including undertaking the turnkey EPC for the projects.

Future Outlook

Scatec Solar is continuously exploring partnerships and new and innovative business models for additional growth. This year the company established a new business area focused on opportunities and projects outside the core scope of Scatec Solar (utility-scale pure PV projects with long-term defined price PPAs with utilities). This includes various shapes of private PPAs, distributed models and off-grid solutions, integrating solar with other technologies, including conventional generation and hydro and more. The fast pace of cost reductions and technology innovations in renewable energies is opening up a broad set of new business opportunities.Scatec Solar currently has 322 MW of solar power plants in operation (in Czech Republic, South Africa, Rwanda, Honduras and Jordan), 394 MW under construction (Malaysia, Brazil and Honduras (phase I)), 400 MW with construction start scheduled in Q1 2018 (Egypt) and a project track record of close to 600 MW. Scatec is ambitiously targeting 1,300-1,500 MW in operation or under construction by the end of 2018. The company is growing briskly with a project backlog and pipeline of close to 1.5 GW



under development in the Americas, Africa, Asia and the Middle East.

Ultimately, Scatec Solar’s ambition is to continue being a pioneer in the years to come and look forward to developing and financing new business models. In addition to exploring innovative ways of

financing and quickly scaling large-scale solar projects (such as issuing Islamic bonds in Malaysia and obtaining climate finance from UN’s Green Climate Fund in Egypt), the company wishes to co-develop and finance new solar energy generating models in emerging markets.

We have made significant progress over the last few months reaching financial close for almost 800 MW of solar projects. With these projects, we are set to strengthen our position as a leading emerging market focused Independent Power Producer (IPP). With technology Innovation and cost reductions in the industry, we are exploring additional partnerships and new business models that will allow us to add to our growth opportunities.

Raymond Carlsen, CEO of Scatec Solar

31



Sigora International Inc.

Business Background

Sigora International Inc. is a specialty provider of utility-management systems designed to bring power to some of the most challenging places on the planet. With over 1,750 units currently deployed across three micro-grids in Haiti, Sigora micro-grids have been able to prove economic sustainability and commercial viability, leading to investment to scale operations and expand the grid to service even more users.Sigora Haiti, the first Sigora micro-utility company, was founded in 2015 as a technology venture that applies smart-grid technology underserved communities to create a long-term, sustainable solution to the problem of energy access. The company was chosen to be highlighted due to its successful micro-utility approach that is powering the homes and businesses of more than eight thousand people in Haiti and aims to power more than two million Haitians by 2025. In the following sections, we look at Sigora’s business model innovation in order to find out why it has had so much success in Haiti.What started with a dream of electrifying a single clinic in Haiti has grown into a template for a scalable private-sector solution to help power the more than one billion people in the world still living without access to modern electricity. Sigora’s proprietary utility management platform and smart meter – developed by Sigora International – is a key element of its approach to rural electrification, which enables the

commercially viable deployment of clean energy micro-grids in frontier markets. Sigora International is headquarted in San Leandro, U.S.A., while Sigora Haiti has its headquarters in Port-au-Prince, Haiti.

Company Aim

Sigora International is offering the first vertically-integrated energy payment, content, and control platform which it states will help transform energy access for underserved markets into bankable business. At the heart of the energy-access challenge is the financial viability and long-term sustainability of solutions to address it. In short, the last mile is not (yet) bankable. Frontier market utilities, whether established urban grid utilities or rural micro-grid developers, face common challenges: poor revenue collection, energy theft, high capital and operational expenditures, and restriction to a single regulated revenue stream. Leveraging specialized hardware, web-managed software, and simple payment solutions, the Sigora platform streamlines bill collection, reduces revenue losses, identifies and helps prevents energy theft, and increases operational efficiency for energy providers operating in emerging markets. Its technology offerings include proprietary smart meter hardware and a complete utility-management system backend. It’s easy to oversimplify the capabilities of a simple electric meter, but in reality Sigora’s platform is offering the “operating system” for financeable micro-utility business models.



1,750 meters deployed in Haiti; 24/7 electricity; 8,750 lives empowered

100% bill collection is achievable with Sigora’s seamless, secure, PAYG platform

When installed, Sigora meters create a town-level mesh wi-fi, enabling customers to access the internet

Key Facts

Mobile-enabled pre-pay system enables customers to pay by text message, mobile app, or web app

Active and passive proprietary anti-theft capabilities drastically reduces energy theft from the grid


33



Sigora Haiti – The First Sigora Utility

Sigora Haiti is a triple-bottom-line company at the forefront of new energy business models that incorporate cutting edge technology, smart metering, prepaid electricity, and renewable generation. What started as a dream of electrifying a clinic on the island nation and has grown into a full-scale green utility-scale project with a mission to power and empower underserved communities in Haiti with clean, reliable, and fairly priced electricity. Serving 8,500 customers in Môle-St-Nicolas, Jean Rabel, and Bombardopolis, Phase 1 of Sigora’s Northwest Electrification Project that’s currently underway will expand the company’s existing grid network, and - when complete - will reach 136,000 people (27,000 accounts) and have a renewable energy capacity of 3.5MW. The project deploys Sigora Internationals’s (insert link www.sigora.co) proprietary prepaid metering and revenue management technology designed to address the primary pain points of frontier market utilities. Sigora Utility-Management Platform

Sigora’s hardware architecture includes base stations and meters which can be configured to support any type of user class, from residential to industrial. Meters are engineered to be highly versatile and rugged, while at the same time being extremely affordable and easy to install. Sigora also offers a robust payment and billing platform for streamlined revenue collection which helps to reduce billing errors, fraud and non-payment. Efficiently collecting revenue presents a monumental challenge to utilities operating in frontier

markets. According to Sigora, near 100% bill collection is achievable with its seamless, secure, PAYG platform.Real-time grid analytics combined with remote control & automated grid functions reduce labor intensive O&M. Meters automatically update consumption and power quality, providing real-time visibility into consumption and congestion on the grid. Distributed computing power for unparalleled situational awareness allows the utility fast and accurate detection of any abnormal consumption due to tampering or by-passing of a meter and enables the company to take corrective action more quickly. Future Outlook

Achieving universal energy access is one of the defining challenges of the 21st century. The most important factor to reaching this ambitious goal is financing. Sigora’s ambition is to help de-risk frontier energy markets by providing a technology that can make the last mile bankable. In other words, Sigora wants to make micro-grids eligible for the type of traditional financing that has transformed infrastructure landscapes globally. Ultimately, its mission is to power and empower underserved communities all over the world.



The status quo is not good enough – there are over a billion people who remain without electricity. By taking a new approach to electrification in frontier markets, incorporating the latest advances in smart metering technology, prepaid electricity, and renewable generation, we are proving that bringing electricity to underserved, low- and lower-middle-income populations is not only highly impactful but attractive from a business perspective. We are building the grid of the future, today.

Andy Bindea, CEO of Sigora


35



The Sun Exchange

Business Background

The Sun Exchange is a company that uses blockchain technology to power and enable a marketplace where members can purchase and then lease solar cells to be installed into solar energy projects in developing markets. The solar cell owners then earn Bitcoin per kWh automatically paid by the end electricity through an internet-of-things pre-paid smart meter. The company was selected because of its innovative perspective and approach in combining cryptocurrency and solar energy to power different projects in emerging markets. The case of the Knysna Elephant Park in South Africa will be discussed here to illustrate their model.The company was founded in South Africa in 2015 and has primarily been active in Africa and the Middle-East, having >4000 members in over 70 countries. The Sun Exchange team consist of specialists in solar equipment leasing and revenue collection management, as well as blockchain engineers experienced in smart-contracts for managing distribution systems for their members, offering them the possibility to earn a stream of rental income from sunshine.

Company Aim

The Sun Exchange is a marketplace where anyone can purchase solar cells and have them power businesses and communities in the sunniest locations on earth. People can lease their solar cells purchased through The Sun Exchange to hospitals, factories, schools and other end-users, earning decades of solar powered rental income wherever the person is in the world. Assets are recorded on the blockchain, and income is paid in cryptocurrency - allowing people to stream monetized solar energy around the world.Through The Sun Exchange’s platform, almost anyone with (at least) USD 10 to spend on solar assets and an internet connection can buy the actual solar cells within the solar modules and rent them out, to be installed on the empty roofs of schools, hospitals, factories, rural communities in Africa, the Middle East or other developing countries, earning them decades of rental income as a result of their efforts at solar powering the developing world. This system also makes solar power more affordable for the community or organization where the projects are installed. In essence, it’s fueled by the same ‘sharing economy’ idea as popular apps that allow people to earn income by sharing their homes or cars, but for solar.



The Sun Exchange has raised USD 1.6 million to help scale and fund a planned ICO

Currently has

30,000 active solar cells

Won the Best Bitcoin and Blockchain Business in Africa in 2016 and 2017.

Key Facts

Has a 500 MW pipeline of solar projects across Africa, Middle East and Asia

Won the Global Blockchain Challenge Award in Dubai

First company to enable ownership of solar energy assets using digital currency

Has 4000 members in more

than 70 countries


37



Blockchain Marketplace

The Sun Exchange was the first - and remains the only - business in the world to enable ownership of solar energy assets using digital currency. The company won the Global Blockchain Challenge in Dubai and won the Best Bitcoin and Blockchain Business in Africa 2016 award. When it comes to ground-breaking projects, one of the most innovative cases under development through The Sun Exchange is the 60 kW solar power plant in Knysna Elephant Park, South Africa.Since 1994, The Knysna Elephant Park has housed and cared for over 40 orphaned African elephants, including relocated animals, orphaned calves, elephants rescued from culls and former circus animals. Looking after the largest land mammals on Earth does takes a lot of energy, which The Sun Exchange wants to make solar energy .The solar modules contain a total of 13248 solar cells, each rated at 4.5W. The cells were purchased for around EUR 5.50 each, by 140 people from 30 countries around the world. Each cell is leased to the park under what is essentially a ‘micro-ppa’, meaning that the end consumer is paying for the electricity consumed at a price per kWh and this is earned by the solar cell owners according to the estimated output per cell. The solar production is estimated to generate what equates to a 10% IRR to the solar cell owners, as the solar conditions are very favorable at >1500 kWh/kWp and the cost of the electricity is around EUR 0.08c, which is projected to escalate at 7% per year (inflation + 1%). The rental payments for this system will be distributed in Bitcoin to the owners of the cells. This way The Sun

Exchange only needs to use this one virtual currency to transact with the whole planet.

Future Outlook

The fusion of solar energy with digital currency is the basis for the shift to a whole new silicon based economy, one that is solid state, abundant, clean and totally decentralised. It is also clear that Africa has the potential to become the world’s power station, not just because it’s the sunniest continent on earth, but because of a rapidly growing population that will requires energy, of which solar is now the least cost option. The Sun Exchange believes that Africa is bound to be solar powered, therefore it’s their objective to make it so that everyone on earth can benefit from possibly the biggest infrastructure-build of the 21st century. And they won’t just stop at Africa. The company aims to let their customers put their solar panels up on all corners of the globe, to be continually sourcing solar powered income 24/365.



Solar power is the most promising technology to achieve a zero-carbon future. It’s the fastest growing source of energy, but billions of people don’t own their own roof or have the capital to get it. By breaking down solar panel ownership to a single cell we reduce the cost of going solar by two orders of magnitude and we’re utilizing empty roof space in some of the sunniest cities on the planet, such as Dubai and Johannesburg. To super-charge the process, we’ve combined our solar leases with another breakthrough technology - blockchain, namely Bitcoin. Putting the two together empowers anyone to go solar and be part of the global solar energy transformation with just a few taps on a screen.

Abraham Cambridge, CEO of The Sun Exchange

39



Afterword

The aim of this report has been to give you a small impression of, and peek at, some of the innovative business models that we see developing in the solar PV field. It’s interesting to see that the challenging conditions of emerging markets are inspiring such creative and evolving models to rise to the challenge of providing clean and affordable energy to communities so hungry for power. Personally I think the absence of a grid in so many of these places is providing intelligent and entrepreneurial spirits with a blank canvas. If you give a kid a black-and-white stencil, it will just color the predefined shapes. However, if you give it an empty sheet of paper, it will come up with the most creative drawings. This is exactly what we see happening in emerging markets. Emerging markets are leapfrogging past a centralized grid, and are tapping into the endless applications of renewable energy sources like solar PV.

In this report we merely grabbed a handful of the innovative business models that we see that include solar PV applications. Other technological developments which can be used in combination with solar PV multiply the opportunities even further. The synergie apparent in projects like Agrinergie® and The Sun Exchange are perfect examples of this combination of solar PV with technologies like agricultural innovation, energy storage, blockchain technology and societal impact.

However, all these new business models do require flexibility from financiers. These business models can’t work with PPAs of 20+ years, and therefore financiers have some catching up to do. The highlighted examples of Scatec Solar and ALCB Fund are showing that there’s movement and that - with the right business model and financial case - larger institutions can be drawn into the arena of innovation.



However, there’s still a lot of work to do. Financiers in the solar PV space in emerging markets have a choice: they can either wait for bankable projects operating under conventional structures (that might simply not be as readily available in these markets), or they can adapt their financing models to the new business models to make projects bankable together.

We feel this is a vital dialogue to facilitate and stimulate. For exactly this reason we have partnered up with FMO, the Dutch development bank, to create a global platform for financiers, developers, solutions providers and industry players

to convene, share knowledge, make valuable connections and help advance solar applications in emerging markets. This platform is the Making Solar Bankable conference, which had a highly successful first edition in 2016, and will once again be hosted in Amsterdam on the 15th and 16th of February 2018. I cordially invite you to join us there to contribute to the dialogue, share your own perspective and strengthen your business with the insights and network available at this high-level event For more information, please visit the website, or feel free to reach out to me personally.

Adriaan van Loon, Project Manager at

Solarplaza+31 10 302 7915

[email protected]

REGISTER NOW : www.makingsolarbankable.com

41



Akuo Energy• http://www.akuofoundation.com/fileadmin/media/images/Agrinergie®_1/gallery/• http://www.akuoenergy.com/en/plants• http://www.akuoenergy.com/en/Agrinergie®• http://www.akuoenergy.com/en/documents/getPdf/1479832536-5.pdf• + Info provided

Scatec Solar• http://www.scatecsolar.com/About• http://www.scatecsolar.com/Portfolio• + Info provided

Crossboundary Energy• https://assets.contentful.com/bbfdx7vx8x8r/5Sc73Z3QHumYe6UUQEI8eE/fbdbb3b3b8d3efd938652ae-

6c2b1f9cc/Convergence__CrossBoundary_Energy_Case_Study__2016.pdf• https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=303850195• http://www.crossboundaryenergy.com/news/• http://www.crossboundaryenergy.com/portfolio/• + Info provided

Kingo Energy• https://issuu.com/objectif-developpement/docs/proparco_annual_report_2016_uk• https://kingoenergy.com/about/• https://kingoenergy.com/service-technology/• https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=421881321

Image:• © Christelle Thomas for Proparco - Page 19

Sigora• Info provided• https://sigora.co/about/

Sources



OMC• https://medium.com/energy-access-india/with-backing-of-japanese-giant-leading-india-mini-grid-dev-

eloper-heads-to-africa-bb60ee76d235• http://www.omcpower.com/downloads/omc_company_profile_0512.pdf• http://www.omcpower.com/about/team• https://www.pv-tech.org/guest-blog/with-backing-of-japanese-giant-leading-india-mini-grid-developer-

heads-to-a• http://www.omcpower.com/telecom/power-solutions• http://phx.corporate-ir.net/phoenix.zhtml?c=106680&p=irol-newsArticle&ID=2006684

Images: • http://www.omcpower.com/blog/p/omc-micropower-plant-illustration#breadcrumbs• http://www.omcpower.com/downloads/omc_market_0512.pdf• http://www.omcpower.com/communities/ecosystem• http://energyaccess.org/wp-content/uploads/2015/12/OMCPower3.jpg

The Sun Exchange• https://thesunexchange.com/faq• https://thesunexchange.com/about-us• https://thesunexchange.com/knysna-elephant-park-60kw-solar-garden-knysna-south-africa• + Info provided

ALCB Fund• https://www.fmo.nl/project-detail/52286• http://lhgp.com.s175347.gridserver.com/projects/• http://www.alcbfund.com/wp-content/uploads/2017/07/Quarterly-Factsheet_June-17.pdf• http://www.there4i.org/conference/page/marketinfo• http://www.alcbfund.com/for-issuers/• + Info provided

Images• © Sarah Caroline Müller for Proparco - Pages 5 to 18 and 20 to 38

Disclaimer: This overview is provided by Solarplaza International BV ("Solarplaza") as a service to its customers on an "as-is, as-available" basis for informational purposes only. Solarplaza assumes no responsibility for any errors or omissions in these materials. Solarplaza makes no commitment to update the information contained herein. This overview is protected by copyright laws, and may only be reproduced, republished, distributed, transmitted, displayed, broadcast or otherwise exploited in any manner only by accrediting Solarplaza as the source of it and providing a full hyperlink to www.makingsolarbankable.com where it was originally published.

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