REACT RBF
The REACT Sub-Saharan Africa Programme has a dedicated Results-Based Financing (RBF) window of US $ 4m targeting clean energy providers in Kenya to drive expansion of access to clean energy across the country.
Funding to companies in Kenya will be through results-based financing that provides financial incentives to increase access to clean energy for households across the country, with additional pro-poor incentives that reward companies reaching the poorest households.
The REACT Kenya Results-Based Financing program (REACT RBF) is part of the larger REACT Sub-Saharan Africa (REACT SSA); a US$ 61 million project funded by the Swedish International Development Authority (Sida) to support renewable energy in 8 countries in Sub-Saharan Africa (SSA).
AECF is a leader in supporting the scaling up of renewable energy companies in Kenya to reach off-grid communities and substantial increase clean energy access for poor households.
The REACT RBF is a US$ 4 million fund that aims to support:
- Transformational business models adapt to target markets in order to accelerate access to low cost, clean energy i.e. cleaner fuels, cook stoves, alternatives to grid power.
- Commercially viable companies and markets.
- Innovative ideas that stimulate next generation approaches in the renewable energy sector.
The two- and half-year program is expected to run from July 2021 to 2023 with a target to reach 87,000 beneficiary households.
Applications will be accepted between 8th December 2020 and 26th January 2021.
The REACT RBF awards are open to companies operating in Kenya that meet the following requirements:
- Must be privately owned, legally registered and have a physical presence in Kenya
- Must have been effectively marketing their products or services in Kenya for at least two years. Companies with less than two years of market experience but can demonstrate notable sales growth during their period of operation may be considered
- Propose a product or service that meets or exceeds the proposed energy access tiers
- Demonstrate the quality of proposed product or service and the effectiveness of their after-sales support service.
- Make a convincing additionality argument
- Have the capacity to implement the proposed business/project
- Demonstrate the ability to raise the upfront finance required to implement the proposed RBF project
- Demonstrate the ability to effectively track sales, and collect and store basic customer data
- Be compliant with fundamental in-country and international human rights, labor standards, and environmental management laws
- Must NOT be involved in any act of terrorism or support terrorists’ activities
- Must allow regular due diligence by AECF
The maximum award per company at the time of contracting is US$500,000. However, a flexible reallocation system will allow companies that exceed their milestone targets with a possibility of an increase up to US$1 million.
Disbursements will be made in tranches based on the achievement and verification of the sales milestones agreed upon in the contract.
Upon verification, 90% of the RBF sales incentive claim is disbursed. 10% of each RBF claim will be withheld and paid after end 2023 subject to spot check verification to establish that units sold over the contract duration are still functioning.
A 20% optional pro-poor bonus, in addition to the incentive per verified sale, will be paid to companies for whom ≥ 25% of verified RBF sales are to poor households.
Renewable energy products or services that provide access to electricity (for off-grid households and/or productive engagements) and access to clean and/or efficient cooking.
Electricity access products and/or services categorized as Tier 1[1] (with multiple lights) and Tier 2, or that enable existing Tier 1 and Tier 2[2] households continue to climb up the electricity access ladder.
Cook stoves that meet and/or exceed Tier 2 fuel use efficiency for wood and Tier 3 fuel use efficiency for charcoal.
Cook stoves and fuel solutions that meet the Tier 4 threshold for indoor emissions. This includes sustainable fuels e.g. pellets, briquettes, bioethanol and LPG.
Activities that help increase electricity consumption on existing mini-grids (e.g. increasing access to suitable appliances for mini-grid customers)
Q: What form of financing is available?
A: Results-based grant incentives disbursed upon delivery of measurable and verifiable outputs.
Q: Can a company that is in the process of registration in Kenya still apply for funding?
A: Financing is applicable for companies that are already legally registered and physically established in Kenya for at least 2 years. Companies with less than 2 years of market experience that can demonstrate notable sales growth during their period of operation may be considered.
Q: What is the award size?
A: Maximum award size is US$500,000 at contracting. There will however be a flexible reallocation system to allow companies that exceed their milestone targets to increase their cap to US$1 million
Q: What are pro-poor business models?
A: These are models that increase access to clean energy for poor households. Companies who apply with a pro-poor element are eligible for an additional 20% bonus on top of their incentive. For such models ≥ 25% of verified RBF sales should be to poor households. The Poverty Probability Index ((PPI) https://www.povertyindex.org/) will be used as the measurement tool to determine the percentage of households, for whom RBF sales have been reported, are most likely to be poor.
Q: How will disbursement be made? Will it be lump sum or milestone based?
A: Disbursements will be milestone based with 90% of the incentive disbursed upon verification of sales. The remaining 10% is withheld and paid after verification that units sold over the contract duration are still functioning.
Q: Are Solar Water Pumps (SWPs) eligible for funding?
A: Yes, these are classified under clean energy products or services that increase access to electricity for productive engagements.
Q: Which technologies are eligible?
A: Technologies funded included:
• Electricity access products and/or services in Tier 1, Tier 2 or a combination of the two that enable households continue climbing the electricity access ladder
• Cook stoves that meet and/or exceed Tier 2 fuel use efficiency for wood and Tier 3 fuel use efficiency for charcoal.
• Cook stoves and fuel solutions that meet the Tier 4 threshold for indoor emissions e.g. LPG
• Products that help increase electricity consumption on existing mini-grids (e.g. increasing access to suitable appliances or equipment for mini-grid customers)
Q: When are these milestones determined?
A: Milestones are agreed upon during contracting
Q: Are matching funds required to qualify?
A: The contribution from companies is expected to be a percentage of the product or service cost. Applicants are required to demonstrate their ability to raise the upfront finance required to implement the proposed RBF project.
Q: Can companies apply in hard copy, as opposed to using the Submittable platform?
A: Applications will only be accepted using the Submittable platform on the AECF website.