Virtual donor summit highlights ongoing COVID-19 finance challenge for energy access enterprises
As COVID-19 continues to challenge recent universal energy access progress, the enterprises that are so critical for providing energy access solutions are at real risk of collapsing from not being able to access the financial relief they need to survive the pandemic.
To help address this urgent issue, Sustainable Energy for All (SEforALL), the World Bank’s ESMAP program and Ashden co-hosted a virtual summit to bring together government and philanthropic donors to hear the latest data and insights from energy access enterprises, the challenges they are facing on the ground as a result of this crisis, and the impact this is having on consumers.
A new EnDev survey of over 600 companies from 44 countries presented during the event showed that 70 percent of small enterprises have experienced significant disruption from the COVID-19 pandemic, with 30 percent of enterprises having to either pause all activity or cease operations entirely. Companies EnDev spoke to said that receiving grant funding without major delays was their highest priority in navigating the pandemic. Close to a third of the companies EnDev surveyed would need only USD 10,000 to help survive the pandemic; USD 2 million could potentially save 200 companies.
During her opening remarks, Damilola Ogunbiyi, CEO and Special Representative of the UN Secretary-General for Sustainable Energy for All and Co-Chair of UN-Energy, reinforced the urgency and importance of protecting local companies and enterprises on the ground that are delivering critical clean cooking or electricity access.
“The off-grid market has never been more important and any risk to its future could have devastating impacts on universal energy access progress. Yet for smaller enterprises that serve some of the most vulnerable populations, it will become impossible for them to survive the ongoing impacts we’re seeing from this pandemic without financial support”, Ogunbiyi said. “Now is not the time to lose momentum – we must continue to mobilize and work together to make sure no-one is left behind in our pursuit of achieving sustainable energy for all.”
When the COVID-19 pandemic began, public, private and civil society stakeholders in the energy access sector quickly came together to set up an Energy Access Relief effort to identify funding needs and commit resources to protect energy access for the most vulnerable. One such initiative, the Energy Access Relief Fund, is fund-raising, with a first close expected in November. The Fund is expected to offer bridge loans in the range of USD 100,000 to USD 2,500,000 for more than 70 companies. Critical technical assistance and business continuation support are also being provided through numerous channels. However, significant gaps remain in the grants and services that small, local enterprises require to sustain their operations through the crisis.
Speakers representing enterprises from India, Kenya and Nigeria joined the Summit to underscore the urgent financial needs they face – for example, paying their staff, keeping customers connected, and running basic business operations, while also supporting local healthcare efforts during the pandemic in many cases.
Neja Juneja, CEO and Founder of Greenway Appliances, a clean cooking provider in India, said that with the right support, the sector can continue to be resilient and agile. “We’ve had lots of ups and downs and survived in a sector that is largely underfunded – but since COVID we’ve seen things that we’ve not experienced before. We’ve updated our business model to take some of the clean cooking supply chain to the communities, so we can have people make parts of the stove in their own villages to help protect our business and also create new jobs.”
This call for urgent, flexible financial support is recognized by many in the sector, with existing and new support efforts highlighted during the event. This includes the Swiss Agency for Development and Cooperation (SDC) announcing a new commitment to ESMAP to support the electrification of health clinics and a catalytic first-loss contribution to the Energy Access Relief Fund. SIDA, Iceland and The Rockefeller Foundation also highlighted the various support they’re providing.
Harriet Lamb, CEO of Ashden, said: “If banks were too big to fail in the financial crisis, these enterprises are too vital to fail in this COVID crisis. The small, indigenous energy access companies under the international radar are the unsung heroines on whom the whole sector depends – and who have provided food and medicines to vulnerable people during the COVID crisis. They need small, flexible grants fast. Donors have mobilized support but so far that is reaching only 20 percent of companies – now we need to support the other 80 percent."
Research from 60 Decibels indicated consumers using off-grid solutions are struggling but mostly keeping payments up to date. The vast majority of off-grid solar customers – 85 percent - say their financial situation has worsened since the start of the COVID-19, with many now considering paying for energy access a "heavy burden." This underscores the need to close the affordability gap of energy access solutions.
As the COVID-19 pandemic continues to disrupt the world, governments remain under significant and competing strain to respond to the crisis and protect citizens. Rohit Khanna, Practice Manager for the World Bank’s Energy Climate Finance & Energy Sector Management Assistance Program (ESMAP) and moderator of the event, said: “The capacity of our partner governments is clearly limited, and their focus is on pandemic control. Many developing countries will struggle to put in place energy safety nets or relief in the short or medium term for these companies. Decentralized, renewable energy access must be a priority for every government as they build back better. It’s hard to think we can support business or economic growth as we recover better without this sector being fully functional again.”
The enterprises providing off-grid electricity connections and clean cooking solutions are critical for achieving Sustainable Development Goal 7 (SDG7) and affordable, reliable, sustainable and modern energy for all by 2030. SEforALL, Ashden and ESMAP continue to track existing and evolving relief efforts for these enterprises and can link interested parties to those efforts. This is the time for collaboration and coordination among donors to provide the support needed to ensure these enterprises are able to survive and continue providing the energy access solutions that are vital to lives and livelihoods.