Staff Writer | Palladium - Nov 02 2017
Palladium Impact Investments Provides Financing to Off-Grid Solar Company in West Africa

Source: PEG Africa

Palladium Impact Investments has invested in PEG Africa, a leading off-grid solar company that provides energy and access to financing in remote areas.

Over 150 million people in West Africa do not have access to electricity. Many have to travel miles to use main electricity points and spend up to 30% of their incomes on poor quality, inconsistent, and polluting fuels like kerosene, candles, or batteries as an alternative. PEG sells solar home systems that can power lighting, phone charging, radios, and TVs. It uses technology, local partners, and service centers to bring safer, more consistent, and cheaper electricity to their customers.

Investing for Growth

PEG will use Palladium’s financing to help accelerate its growth in Ghana and Cote d’Ivoire, reaching 500,000 more customers and growing its core operations to provide affordable energy for those who need it.

Tracey Austin, Global Head Palladium Impact Investments, is clear that this investment can generate economic and social value: “Palladium Impact Investments is proud to be a part of this syndicate, a pioneering transaction bespoke to the region and the industry. We believe that this deal will help to facilitate more renewable energy investments like it in West Africa.”

Innovative Financing: Pay-as-you-Go

Many of PEG’s customers are in poor, rural areas and, with no assets or credit history, are often considered too risky for banks or microfinance programs. Typically, they could not afford to buy PEG’s solar home systems.

Eighty-two percent of PEG’s customers have never had access to financing or credit before, and half of them live on less than $3 a day. PEG created an innovative business model that provides solar home systems on credit, allowing customers to pay as they go in small, affordable monthly increments.

Customers pay until they fully own their solar-energy products, so every payment they make is towards ownership of a new, productive asset that can increase their income in the future.

This model is cheaper for customers, allows them to grow their credit to gain access to the formal financial system, and provides a pathway to further financial security. PEG Africa expects its customers to save up to $1000 over the life of their home solar system, because they no longer need to buy kerosene, candles, or batteries.

An example of a PEG solar home system (top left) in rural Ghana.
An example of a PEG solar home system (top left) in rural Ghana.

Scaling the Model

For Palladium Impact Investments, the potential for scale is an essential feature of this transaction. Tracey says, “Based on the adapted technology underpinning the solar home systems, the combination of co-investors/partners and the active tracking of impact measurement, PEG Africa’s expansion is expected to deliver positive impact for the vast population in West Africa currently unable to access electricity.”

By scaling its growth, PEG Africa is also scaling the amount of jobs it can provide. It has already created 1000 jobs, most of them in rural areas where opportunities are limited. By scaling its business, its also scaling the economic growth in the communities where it works.

PEG’s model is profitable, has positive environmental and social impact, and is scalable, making it an exemplar investee for our vision of Positive Impact. Our partnership with the investee and other co-investors strongly supports Palladium Impact Investment’s plans to invest in more growing businesses in West Africa – particularly Ghana, Nigeria, and Cote d’Ivoire.

For more information, read about Palladium Impact Investments and visit the PEG Africa website.