Odyssey Energy Solutions, a Colorado-based renewable energy investment platform, is seeking $500 million for a pipeline of 550 mini-grids across Africa, Asia and Latin America.
If funded, the projects could add up to 150 megawatts of solar capacity and 275,000 connections across 21 countries, including Cameroon, Cape Verde, the Democratic Republic of Congo, Ethiopia, Ghana, Haiti, India and Kenya, said Odyssey in a press release.
Around 50 developers have listed projects on the Odyssey platform, with individual project values ranging from $40,000 to $3 million.
To speed up the funding of these projects, Odyssey is looking to roll them into portfolio offerings and at the same time provide mini-grid structured financing facilities, said CEO and co-founder Emily McAteer.
Odyssey will be announcing “a major financing facility” in Nigeria within the next month, she said. “Our goal is to make it very easy for project developers to get the donor money that’s available, participate in these financing facilities and get money moving in the sector.”
McAteer started Odyssey along with co-founder Cathy Zoi, the current CEO of EVgo and former Assistant Secretary for Energy Efficiency and Renewable Energy at the U.S. Department of Energy, after running SunEdison’s Frontier Power mini-grid business.
Odyssey said mini-grids are the least-cost option for bringing electricity to more than 70 percent of the 1 billion people worldwide living without access to power.
Up to 200,000 mini-grids will be needed to lift these people, most of whom live in rural areas in sub-Saharan Africa and Asia, out of energy poverty, according to Odyssey. New projects are being added to the Odyssey platform every day, McAteer said.
Funding them is hard, though, because of their size and risk profile. Most investors are looking to fund $3 million to $5 million on single projects that have a clearly defined risk profile, said McAteer. This makes it easy to strike deals without spending too much on due diligence.
Mini-grid deals, on the other hand, involve a lot of research for a relatively small investment, which puts off traditional investors.
Odyssey aims to overcome this problem by providing all the due diligence data that investors need and making it easy to combine individual projects into larger investment portfolios. “That’s something that’s been really hard to do without software,” said McAteer.
The data on projects includes how much concessionary money is required, versus commercial capital. Some of Odyssey’s projects are commercially viable, but others require grant money for investors to reach a reasonable internal rate of return (IRR).
For each project, investors can see how much grant money, debt and developer and investor equity might be required. In addition to investors, Odyssey works with donors and development finance institutions.
“We are seeing, particularly in West Africa, projects that are really promising and have high projected IRRs and decent paybacks," said McAteer. Such projects would make sense for investors wanting to expand energy access but also make returns, she said.
Odyssey’s big mini-grid selloff comes amid growing interest in the off-grid energy sector. In sub-Saharan Africa, mini-grids have received more than $250 million in committed public debt, as part of more than $4 billion in total investment.
Most of this money has come from the Green Climate Fund and the African Development Bank, according to GTM Research.
In September 2016, Deutsche Bank launched its Universal Green Energy Access Program through the Green Climate Fund, which seeks to mobilize $3.5 billion in debt finance by 2030, including building over 10,000 solar mini-grids across the region.
In subsequent months, the African Development Bank led funding rounds and partnerships totaling over $160 million committed to mini-grid focused energy access efforts. The ADB’s New Deal on Energy for Africa is targeting billions more toward 75 million new off-grid connections by 2025.
Odyssey itself has attracted a range of big-name investors, including the Shell Foundation, Factor[e] Ventures, the Dutch DOEN Foundation, the United States Agency for International Development’s Power Africa program, and the U.K. Department for International Development.
If its plan for easy-to-invest mini-grids takes off, there could be a lot more money going around in the future.