The market is growing rapidly and is continuously attracting new stakeholders. Ecoligo has been implementing photovoltaic projects in emerging markets financed by private investors since 2016. Over 4600 investors have raised more than 34 million euros to finance 106 projects worldwide.
Saving CO2 emissions at a record level
2022 was a special year for impact investment provider Ecoligo. Two significant targets were met: The investment volume raised for the global solar projects exceeded the 20 million euro benchmark. Secondly, over their operational lifetime, the contractually secured solar projects will ensure that more than 1.6 million tons fewer CO2 emissions are entering our atmosphere.
How can clean energy for the Global South be financed?
Businesses in emerging markets are growing rapidly and need a secure supply of cheap, clean energy. This clean energy must not only be generated but, above all, financed. Impact investments aim to generate a measurable ecological impact. Therefore, the impact investment model is particularly well suited to support companies in emerging markets. And this is where ecoligo comes in:
As a solar-as-a-service company, Ecoligo builds and operates solar plants for commercial and industrial customers in Southeast Asia, Sub-Saharan Africa and Latin America. The company creates access to cheap and clean solar power via long-term power purchase agreements, enabling the businesses to save money from day one. The investment platform ecoligo.investments enables private investors to invest in these solar projects.
Depending on the project, the interest rates can be as high as eight percent with an average tenor of four to five years. Investments can be done with as little as 100 euros. Repayments are mostly done in annuities. For some larger solar projects with high financing volumes, the solar-as-a-service company involves institutional lenders.
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The financing model that the impact investment platform uses to bring solar projects and private investors together is similar to that of real estate. Whereas in real estate rent payments repay the loans taken out, with Ecoligo's projects it is the electricity price payments made by the companies. With these, the maintenance and operating costs of the plants are financed while covering the interest and repayments to the investors at the same time. When the loans from private investors expire, Ecoligo refinances the remaining amount - either through new investment rounds or other capital providers, similiar to follow-up financing for real estate. All payments to private investors to date have been made punctually and in full with no defaults.
But who owns the financed solar plants?
The solar-as-a-service company is responsible for the financing, construction, operation and maintenance of the solar plants. Thus, as the solar plant owner, Ecoligo is responsible for the electricity yield and the resulting savings. Each plant and its components also belong to ecoligo and are handed over to the client business after the end of the power purchase agreement. Since the revenue comes from the commercial customers who use the solar energy generated, it is in Ecoligos self-interest for the systems to operate smoothly and to be regularly maintained.
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In order to supervise the projects comprehensively, offices have been established in Ghana, Kenya, Costa Rica, Chile, Vietnam and the Philippines. Local staff build relationships with potential and signed customers and oversee the EPC (Engineering, Procurement and Construction) partners, with whom Ecoligo contracts the turnkey delivery of the solar projects.
Solar plants for the future
The year 2022 was a milestone for impact investing. According to the Global Impact Investing Network, impact assets under management crossed the $1 trillion threshold for the first time. And the market for impact investments will continue to grow in the future, also for solar plants. Fortunately – especially countries in the emerging markets need support to grow sustainably. Business models like Ecoligo´s can provide this support. (Martin Baart/hcn)
