Katharina Cavano | Palladium - Nov 16 2020
Bamboo Capital Partners Announced as Fund Manager for $40 Million Energy Access Fund

Photo Credit: Andreas Gucklhorn

Bamboo Capital Partners has been named by the Government of Madagascar and the World Bank as the international fund manager for the Off-Grid Market Development Fund (OMDF), a USD 40 million renewable energy access fund.
Launched in April 2020, OMDF’s goal is to increase access to sustainable electricity in Madagascar using off-grid solar solutions. The fund will provide debt financing to solar distributors and financial institutions.

Alongside this announcement, OMDF has also opened a call for grant proposals for results-based financing to help off-grid solar distributors expand their operations.

Ensuring Reliable Energy in Madagascar

“Energy access remains a critical global challenge, with 800 million people without access to a reliable source of electricity,” says Jean-Philippe de Schrevel, Founder and Managing Partner of Bamboo. “This problem is particularly acute in Madagascar, where access to electricity is a challenge for the large majority of households, especially those in rural areas of the country.”

Less than a quarter of the Malagasy population has access to reliable electricity and rural areas of the country are disproportionately affected, with electrification rates hovering around five per cent. Access to clean, sustainable energy is central to tackling nearly every major challenge the world is facing today. In Madagascar, where 75 per cent of the population lives under the poverty line, developing and investing in improved infrastructure can help lift much of the country up and away from hardship.

According to Palladium CEO Christopher Hirst, tapping into private capital to tackle these issues is key to success, and to Palladium’s partnership with Bamboo.

“In the last 6 months, COVID-19 has exacerbated the global challenges we already faced; challenges that haven’t gone away while the world’s attention has been focused on the pandemic,” he says. “Never before has our mission felt more urgent or in need of investment.”

This urgency to achieve the UN’s Sustainable Development Goals is shared by both Palladium and Bamboo, including SDG 7 to “ensure access to affordable, reliable, sustainable and modern energy for all”.

The answer lies in harnessing renewable energy (energy sources that are naturally replenished and inexhaustible), and one of the most abundant renewable energy sources is solar. Proven to be a versatile and inexhaustible fuel source that is both pollution and virtually noise-free, global solar energy use has surged at about 20 per cent a year over the past 15 years, primarily due to decreases in costs and gains in efficiency.

According to the International Energy Agency’s World Energy Outlook 2020, solar projects now offer some of the lowest-cost electricity ever seen.

OMDF sees Madagascar as a prime market for solar energy, with a potential customer base of up to five million households for solar lamps and market entry solar home systems. Through the results-based financing facility and grant program, OMDF plans to increase access to electricity across Madagascar by providing access to at least 300,000 households and small and medium-sized enterprises by 2024.

Supporting Solar Expansion

The grants will subsidise companies that provide quality products and service, with additional incentives for consumer finance, and help for new market participants to overcome entry barriers with a start-up grant. OMDF will target companies that provide Malagasy households with quality products that are Lighting Global/VeraSol Certified. By engaging the private sector, OMDF hopes to create a more prosperous and sustainable energy market in Madagascar, giving companies the capacity to operate and grow after the project is completed.

For de Schrevel, managing the fund is a natural next step for Bamboo.

“OMDF builds on our decade of experience investing in the renewable energy sector,” he explains. “We are looking forward to collaborating with the Government of Madagascar, the World Bank and Société Générale Madagascar to provide clean, reliable, and decentralised sources of energy to the underserved Malagasy population.”

Bamboo Capital Partners is the Asset Management arm of Palladium’s Impact Investing Business. Bamboo is managing the Off-Grid Market Development Fund (OMDF) in partnership with Société Générale Madagascar.

OMDF will accept grant proposal from 28 October to 8 December 2020 and again from early 2021. To apply for a grant, visit the OMDF website.