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CrossBoundary Energy Fund I reaches first close

Africa Global Funds
Dec. 7, 2015, midnight
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CrossBoundary Energy has raised $8m in equity at the first close of CrossBoundary Energy Fund I, Africa’s first dedicated fund for commercial and industrial solar.

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CrossBoundary Energy has raised $8m in equity at the first close of CrossBoundary Energy Fund I, Africa’s first dedicated fund for commercial and industrial solar.

Jake Cusack, co-Managing Partner at CrossBoundary, said: “The fund is a unique and innovative financing platform that will pioneer an entire new asset class in Africa.”

“It is backed by a prestigious group of investors from the USA and Australia attracted both by the commercial returns and the opportunity for positive environmental and economic impact,” he said.

Investors in the fund include Blue Haven Initiative, TreeHouse Investments and Ceniarth.

In addition, Power Africa has been a crucial supporter of CrossBoundary Energy.

Through Power Africa, the US government’s development finance institution, the Overseas Private Investment Corporation (OPIC), provided an early-stage grant to support establishment costs and the United States Agency for International Development (USAID) provided a $1.3m first-loss contribution to the fund.

Moreover, the Shell Foundation, an independent charity, has also provided grant funding and business support to accelerate CrossBoundary's expansion into markets outside of Kenya and lay the groundwork for follow-on funds.

Across Africa, economic growth is stifled by expensive and unreliable electricity.

According to CrossBoundary, this challenge represents an immense opportunity for investment.

Matt Tilleard, co-Managing Partner of CrossBoundary, said: “Africa is undergoing an energy revolution and has become a laboratory for pioneering new methods of energy delivery. A key driver of this has been the dramatic fall in cost of solar power – down by over 80% since 2008. Solar is now often cheaper than the grid in a majority of African countries.”

After leverage, CrossBoundary Energy Fund I intends to invest a total of over $25m of solar assets over the next 18 months to power African enterprises.

The fund’s first major investment is a 858 kWp solar installation at the newly opened Garden City Mall in Nairobi.

Tilleard said that it is the largest rooftop solar system in East Africa and the largest solar carport system in Africa.

“It is also the largest solar PPA that we are aware of with a private consumer in Sub-Saharan Africa. This is an exciting first step on CrossBoundary Energy and SolarAfrica’s mission to introduce solar-as-service to African enterprises,” he said.

Cusack noted that for many of the businesses that drive Africa’s growth, solar power is now an alternative source of cheaper and cleaner energy, however adoption remains low due to two barriers.

“First, solar has a substantial upfront cost. Without financing, solar installers are typically only able to offer upfront purchase of the solar system. This means that the customer has to pay the full cost of 25 years of electricity on the first day. Second, many customers are unfamiliar with solar and reluctant to take responsibility for the technical and operational details of the system,” he said.

Tilleard added that in markets such as the US, both these barriers were removed through the introduction of financed solar solutions.

“Instead of paying upfront, the financier builds the solar asset and the customer enters into a long term Power Purchase Agreement (PPA). With today’s announcement, we are bringing the same financed solar solutions to Africa. Financing is now available to make cheaper, cleaner energy a reality for African enterprise,” he said.

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