The U.S. International Development Finance Corporation (DFC) and Shell Foundation (the UK-registered charity) announced a new collaboration to bring affordable renewable energy to more than 5 million people in low-income areas of Africa and Asia by 2025.
The organizations recently signed a Memorandum of Understanding (MOU) that enhances their ability to support the growth of social enterprises that deliver essential renewable energy services to people living on $2 to $10 a day in off-grid areas, with the aim to enhance income, education, health, and women’s economic empowerment.
More than 800 million people worldwide currently lack electricity, and 2.8 billion more people have unreliable access, constraining recovery from the COVID-19 pandemic and long-term economic growth. This collaboration seeks to address the lack of investment into innovative small and medium-sized enterprises, particularly those owned by, led, or supporting women, that can address this challenge.
As part of the MOU, Shell Foundation intends to deploy more than $45 million grant funding by 2025 to build a pipeline of fast-growing, high-impact businesses that deliver distributed renewable energy (DRE) to households, farmers, and businesses in off-grid areas. DFC hopes to approve up to $100 million early-stage debt and equity to support the growth of these businesses and leverage capital for further scale subject to these projects meeting DFC’s eligibility criteria.
This collaboration has the potential to widen the pool of investment opportunities that DFC can make by providing deeper connections with a portfolio of energy investments that Shell Foundation has built in tandem with the UK’s Foreign, Commonwealth, and Development Office (FCDO), Power Africa and the U.S. Agency for International Development over the last five years—and by providing insight, co-funding and guarantees that reduce the risk of supporting new types of businesses in nascent sectors. This collaboration with Shell Foundation builds on DFC’s recently announced cooperation with the Rockefeller Foundation to de-risk investments in the DRE sector.
“This new collaboration leverages DFC’s effective financing tools and Shell Foundation’s experience and portfolio to support companies that connect people living at the last mile to productive electricity, which will dramatically improve their lives,” said Acting DFC Chief Executive Officer Dev Jagadesan. “We’re excited to work with the Shell Foundation to help companies scale with commercial financing—a sign of long term, sustainable development—while prioritizing women’s economic empowerment and supporting economic growth as countries continue to respond to the COVID-19 pandemic.”
In 2020, DFC launched its inaugural development strategy, the Roadmap for Impact, with the goals of bringing energy access to at least 10 million people and deploying $2 billion towards the DRE sector by 2025. Additionally, the Roadmap sets a goal for providing investment support to 12 million women in support of DFC’s 2X Women’s Initiative. To date, DFC’s 2X Women’s Initiative has catalyzed over $7 billion in projects that economically empower women globally.
