Facebook and Microsoft have announced the launch of a "first-of-its-kind" energy financing vehicle that they say will bring renewable microgrids to several parts of the world that lack reliable access to clean energy.
The Microgrid Investment Accelerator, or MIA, aims to raise $50 million in private capital investments between 2018 and 2020 for parts of India, Indonesia and East Africa, which includes Ethiopia, Kenya and several other countries. The MIA was first introduced at the United Nations Sustainable Energy For All Forum on April 3 by the two companies and Allotrope Partners, a clean energy-focused investment firm that is also a founding partner in the project.
Access to modern energy services such as microgrids is one of the quickest ways to boost socioeconomic development and reduce poverty, the companies said. They noted that in many markets, access to electricity has fallen under the scope of government responsibility, but new opportunities for private sector investment and public private partnerships have resulted from increasing affordability of clean distributed generation technologies.
The companies maintained that renewable energy microgrids will "play a critical role in meeting the household and productive needs of the 1.1 billion people that currently lack affordable, reliable electricity across the globe."
MIA will test the commercial opportunity for microgrids and show how concessionary finance can unlock progressively larger proportions of private capital as risks are discovered, priced and mitigated, according to the companies.
International Renewable Energy Agency projections show that 50%-60% of the additional generation needed to reach universal electricity access by 2030 will be supplied by off-grid solutions, according to the companies, They added that to reach the U.N. sustainable development goal, the current pace of expansion will need to double.
MIA will issue its first solicitation to developers for pilot projects this summer, and will disburse funds at scale in 2018, the organizations said.
"Distributed renewable energy microgrids hold significant potential as a key driver to increase energy access for un-electrified populations," said Allotrope Partners CEO Marc Stuart. He noted that the MIA was designed to "address this need and to increase private sector investment flows into the microgrid market segment."
Kevin Connolly of Microsoft called the MIA a "powerful tool" in driving much-needed capital into projects, and said it will also help reduce costs, "build a stronger ecosystem, and catalyze innovation."