Data-Driven Energy Access for Africa

OVERVIEW

Data-Driven Energy Access for Africa expands access to capital for distributed renewable energy (DRE). The proponent, Nithio, is a machine-learning powered platform that better assesses end-users’ ability to pay for energy services, which triggers scalable financing of the DRE companies. This technology allows for segmented pooling of loans to better match lender risk appetite and replaces physical assets with cash flow as collateral. Nithio is launching the instrument in several African economies, with potential to scale the model in other regions and to other industries.

THE PROBLEM

The lack of data about energy users ability to pay creates a bottleneck for investors because they cannot fully understand their expected risk and returns. Pay-as-you-go (PAYG) creates additional challenges for investors because default is defined differently across DRE companies, and the repayment has an undefined horizon. Nithio’s model creates a standard assessment of repayment capacity and a clear projection of expected cash flows.

THE SOLUTION

Data-Driven Energy Access for Africa aggregates and leverages multiple data sources, including the customer repayment data and geospatial data layers, to understand portfolio and energy user risk at a more granular level. This allows Nithio to offer DRE companies financing directly and to support other investors and lenders interested in doing the same.

“To grow the funding for DRE to the required billions per year, we need to innovate in the way we finance it. Nithio’s data-driven receivable warehousing finance brings a standard to the valuation of end-users future cash flows, making it a commoditized asset class that can be funded at scale and attract all types of investors and lenders,” – Hela Cheikhrouhou, Nithio

TARGET IMPACT

Across sub-Saharan Africa, Nithio estimates by 2030 it will have facilitated 173.7 MW of clean energy, thus avoiding 5.42 million metric tons of CO2e emissions. As one of the largest markets, Nigeria will be a significant beneficiary of these impacts.

Photo credit: Anna Balm/CPI