TRINE, a crowdfunding investment platform which helps investors locate and fund profitable solar energy projects in developing countries is raising 3,500,000 EUROS ($3.7m) to scale its operations in East Africa, in a move expected to enable the spread of solar energy in the region and beyond.
Trine works with solar partners, who use the site to raise working capital from crowd-investors to be able to offer affordable and reliable solar energy to local communities. This helps to relieve the pressure of up-front costs, whilst encouraging people to abandon the traditional use of expensive and harmful fuels.
“We aim to bring solar energy to the 1.2 billion people in need of access to electricity and make it easy for people to make a social and environmental impact while also earning a return on their investment,” said Sam Manaberi, founder and CEO Trine. ”We had a seed round of 5 million SEK at the beginning of 2016. Our next major step, in terms of funding, is our A-round. We’re currently in the raising process, and we’re targeting around 3.5 million EUR to allow us to scale as planned.”
Sam added that Trine is fully focused on building its platform and scaling globally.
Backed by a significant advisory panel, including Palle Stenberg (Nudie Jeans), Lena Apler (Collector Bank), Niklas Adalberth (Klarna) and Lars Jacobsson (The Perfect World Foundation), the firm has funded eight projects and catalyzed €442 000 of crowd-investment in total.
“By 2021, the goal is to have funded 1000 projects and provided 66 million people with clean energy,” Manaberi added.
Launched in February 2016, Trine initially had an open mind about which regions to focus on, and rather let the most experienced entrepreneurs decide which markets were best for investment. However, as the year advanced, it turned out that East Africa, and in particular Kenya and Tanzania, were the thriving markets for solar energy in the off-grid space. These countries not only have positive regulation in place for solar energy, but also have the necessary mobile payment technology spread that is needed for PAYGO solar systems.
Safaricom, Kenya’s largest telco facilitated over $52 billion in value over its M-Pesa mobile money in the year through March 2015.
Trine adds that the market of energy access in general requires about EUR 21 billion annually until 2030 to eliminate energy poverty.
“Solar energy is already today one of the key solutions to rural off-grid electrification and is becoming more bankable each day. The price of solar shows this clearly, with a drop in cost of 60% over the last 5 years, which is projected to continue to drop,”Manaberi told TechMoran. “There is huge potential for off-grid solar to reach people who are not currently included in national plans for energy access. We are convinced that solving energy access requires a multifaceted approach, with different technical and financial solutions working towards dynamically towards the same goal.”
Solar partners pay a 5% arranger fee for successful funding of their project, and currently pays between 10-16% interest rate on a declining balance of the loan. Trine and the crowd-investors evenly split the expected returns. Trine says there are no hidden fees on using the platform.
And just super simple. Factors like the results from the due diligence process, risk level etc. all play a part in forming the loan agreement.
To reduce risks associated with solar access projects, TRINE performs extensive due diligence processes on all solar partners before deciding to sign a loan agreement with them. It has developed an in-house risk tool and assessment framework focusing on the areas of technology, market, organisation and – most importantly – financials. This framework includes checking third party references, analyzing interim and audited accounts, debt-sizing adjusted to future cash flow, and back-end system access.
During the project duration, Trine does quarterly follow-ups, bi-annual checks on interim financials and weekly follow-ups on sales and payment progress while on future potential risk reduction, Trine is working on getting guarantees from the likes of UK Aid or SIDA – and commercial hedging – to protect the crowd’s investments from potential project default.
Contrary to popular belief that solar energy is only for off-grid customers, Trine says some people actually have both a grid connection and a solar system, due to the grid being unreliable. Most times a grid connection is too expensive for the people living in energy poverty.
The rural and peri-urban communities ability to pay upfront for the more sophisticated systems are not high enough – and thus a PAYGO model is needed to bring down the threshold for them. Trine makes sure that what the end-users pay compares fairly with the alternative options (e.g. kerosene).
Disputing the notion that PAYGO firms end up overcharging their customers, Manaberi says a profit margin of 20-30% is normal in a distribution business and companies must have a margin that ensure they can handle defaults in their portfolio (normally 5-10%).
”Pay as you go solar in Africa is an immature, high risk market, therefore margins must be a minimum of 20% in order to build a sustainable business and have a long term impact on energy access. One of TRINE’s long term aims is to reduce the risk of this market by providing companies with working capital, and therefore allow our solar partners to make their products more affordable and attractive for the end consumer,” Manaberi told TechMoran.
For Trine to achieve true sustainability, for itself and for Africa, Manaberi says the firm needs to keep building momentum and awareness around energy access as a serious issue. Its biggest challenge is ensuring that its project pipeline grows in parallel with a steady inflow of crowd-investors to meet the annual need of around EUR 21 billion in financing to eliminate energy poverty. He believes crowdfunding could cover a notable chunk of that funding as some platforms in the US have raised over USD 10 billion to-date.
Instead of leaving energy and other strategic public needs to governments in Africa and emerging markets, Trine, as a private solution, aim to leverage its resources to support this vision of a world with no energy poverty. The people the team has met have all shown strong interest and the right attitude.
For the next six months, Trine’s focus will continue to be on East Africa but towards the end of 2017, it might potentially look more towards West Africa again.
To send your friends or family some sunshine this Christmas. Trine has launched a TRINE Christmas voucher, which can be used to invest in one of its solar energy project, by going to www.jointrine.com/christmas. You then just choose the amount (from €25 and up) and design your gift card to be sent digitally to the recipient or printed out. Once the recipient has activated the gift card through the unique voucher code (www.jointrine.com/activate), the person can choose any available project on the platform to invest in.
Trine has solar energy projects in Kenya, Uganda, Tanzania, Zambia and Senegal.