Chilling Prospects: Innovative financing at CLASP
Financing mechanisms for cooling in under-electrified settings hold significant potential to improve quality of life and economic productivity but have not yet been widely tested at scale. Announced in October 2022, the Productive Use Appliance Financing Facility delivered by CLASP and Nithio aims to catalyze the uptake of productive use appliances in Africa across six appliance types with the potential to drive development impact, including three that support cooling: walk-in cold rooms, refrigerators/freezers and fans.
The facility supports companies that operate in the Democratic Republic of the Congo (DRC), Ethiopia, Kenya, Nigeria, Sierra Leone and Uganda and will offer a range of support, including capacity-building grants, product testing and benchmarking, procurement subsidies, matchmaking and concessional debt. Chilling Prospects analysis indicates that almost 130 million people are at high risk due to lack of access to cooling in these countries, including almost 49 million rural poor people who lack access to electricity.
The facility's goal is to address one of the most challenging aspects of deploying highly efficient, sustainable cooling technologies: affordability and high first cost. For example, the cost of a quality-assured off-grid refrigerator is approximately 85 percent of the average Kenyan’s household income – making it prohibitively expensive despite the clear benefits of access. In a survey of 1,502 off-grid refrigeration customers conducted in Kenya, Tanzania and Uganda, 37 percent of respondents reported a ‘very much improved’ quality of life and 79 percent reported using their off-grid refrigerator for income-generating activity.
Innovative financing tools to support the uptake of cooling appliances, particularly in rural areas with a lower ability to pay for energy services, are particularly important to improve affordability. The Productive Use Appliance Financing Facility aims to improve affordability through direct unit cost reductions. It drives initial economies of scale on the supply side and makes it easier for appliance distributors to offer consumer financing.
In many cases, technological innovation in cooling is more immediately accessible for grid-connected and higher-income consumers. There is a pressing need to broaden the range of affordable solutions to rural and low-income consumers. In supporting the uptake of cooling appliances, the Productive Use Appliance Financing Facility is demonstrating progress, but more pro-rural innovation and finance are needed to deploy renewable energy-based cooling technologies and applications along food, health and building value chains in rural, remote and off-grid locations.
Photo credit: CLASP
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