While vast numbers of people in developing countries expect to remain off-grid for the coming decades, innovative financing mechanisms are needed to accelerate and scale the dissemination of solutions that bring access to energy to those who need it most, while contributing to climate change mitigation.

Accelerating private sector driven delivery of low carbon energy access in developing countries

SNV is among the first organizations world-wide successfully implementing Results Based Financing (RBF) facilities in the energy sector, aimed at overcoming market barriers constraining private sector delivery of modern energy services to isolated communities. The key feature of RBF is payment upon delivery, with the private sector expected to take the full risk until the delivery of the contracted results.

Private sector involvement in the sector is essential, if we are to reach the Sustainable Development Goal 7 of affordable and clean energy for all. However, companies often face increased risks and challenges while attempting to successfully operate their business in developing countries, and particularly while scaling their operations into new off-grid markets. By providing a temporary financial incentive to companies to deliver certain energy products and services in off-grid communities, the RBF leverages investments from the private sector to increase access to clean energy in remote areas.

As the market develops and economies of scale are achieved, the level of incentive is reduced. RBF provides flexibility for the private sector to work with different business models, supporting the development of sustainable markets which will continue to grow once the incentives have come to an end.

Supported by different donors and partners including the Energising Development (EnDev) programme, The Department for International Development (DFID), Agence Francaise de Developpement (AFD), European Commission (EU), World Bank and IFC Lighting Africa, SNV is involved in the implementation of RBF facilities in different renewable energy sub-sectors and markets across Africa and Asia.

(Thank you to Livelyhoods for the project picture)

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