Situation
Open Capital was engaged by the World Bank on a (3) phase project working in close collaboration with Kenya’s Ministry of Energy and Petroleum to design a blended financing approach to increase solar access to 14 underserved Kenyan counties.
Our Process
OCA supported the project by:
- Sizing the solar home system market in the target counties using household expenditure distribution, and compared the expenditure data to solar home system pricing across household spending thresholds
- Consulting key solar home system market stakeholders such as distributors, financiers, regulators and customers, to inform the development of financial products that the new fund could offer
- Evaluating and comparing several financial products that would be most effective for the Kenyan Government to incentivize existing solar businesses to expand to underserved counties
- Designing a fund structure to offer and house the agreed-upon financial products
- Analyzing and comparing several fund structure models to understand the economics of both a ‘market-led’ model to a ‘regulated service’ model and comparing costs across consumer tariffs and subsidies required to achieve universal energy access
- Creating a fund manager selection process and terms for negotiations between the multinational DFI and the Kenyan government
Our design work led to an approved funding mechanism, planned over 6-years, with an initial funds allocation of US$ 48M fund targeting solar home systems and cookstoves to 250,000 households (1.5M people) in the underserved Kenyan counties. The fund has recently been launched.
