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In emerging markets, the upfront cost of a solar plant is anywhere between $500 – $800 per kilowatt of panels installed. This includes equipment including solar panels, inverters, cables, installation frames, etc and skilled labor.
For organizations who need sizeable solar plants, this cost can be unreachable. It means capital expenditure (cash) is redirected from other core operations of their organization.
We help organizations spread the cost of their solar plant between 5 to 20 years. So instead of paying for the solar plant upfront, they pay a per kWHr (unit of electricity) rate over time. We model the cost of maintenance and the interest rate in this repayment plan to make it attractive for investors. Our partners collect this money from the organization and pay us. This is how we generate a 6% return from these plants.
Auto-Lend means we allocate your money to the opportunity with the most impact today. This will be a loan for a solar plant in Asia or Africa. The loan may be for a new project or to enhance an existing project. The money is manually allocated and may take up to 48 hours to be visible in your dashboard. Your money will start generating 6% APY from the moment it is allocated. Repayments are made in equal monthly installments. So for a loan of $1,000, you will be repaid $19.33 per month for 60 months. This includes part principal and part interest amount. You can view our repayment schedule here.
We are backed by good samaritans – organizations that have the same goals as us – to speed up renewable energy deployment. As a result, the first $100 invested by the first 1,000 people is guaranteed.
A Power Purchase Agreement (PPA) is a contract between two parties: the Power Producer and the Energy Customer. The Power Producer generates electricity and the Energy Customer purchases electricity. PPAs are long-term electricity supply agreements that define conditions such as amount of electricity to be supplied, electricity price per kWHr (unit of electricity) and terms under which an agreement may be terminated. This is a widely accepted mechanism for selling power around the world.
Most of our funding arrangements are backed by PPAs and asset-backed by the installed solar panels and equipment.
The path to net-zero emissions involves access to clean energy for everyone. There are hundreds of thousands of organizations in Asia and Africa. These companies can do good for the environment and save money at the same time. Unfortunately, access to capital in emerging markets is not equal. And the cost of capital can be out of reach for these organizations.
renewables.org solves these problems by curating partners in Asia and Africa. Our partners sign Power Purchase Agreements (PPAs) with organizations that need clean energy. Then, renewables.org connects these partners with your funding.
Our goal is to make renewable energy access a reality for everyone, independent of where they are.
Data on the Internal Rates of Return (IRRs) of various projects are not easily found, as investors rarely disclose such information. But secondary data suggest that the IRR for renewable energy projects is about 8-9%, with an initial dividend yield of about 6% and positive real dividend growth (IEEFA, 2017; Edwardson, 2019; Tweed, 2016).
Returns depend on many factors, such as:
1) how the investment is made (via equity, debt, direct project investment, fund investments, etc.);
2) risks linked to the location and size of the project (political, economic, currency, regulatory);
3) the cost of capital;
4) the quality of legal documentation; and
5) the credibility of the buyer and project size.
Projects in emerging markets usually bring higher returns than projects in developed markets owing to their higher risks and lower competition. Based on data from the Mercatus’ platform of more than 80 GW of renewable energy projects, the average return (expressed as unleveraged IRR) on solar projects is 10.4% in the Middle East, 10.3% in Africa and 8.4% in Asia.
Separately, Moody’s 2021 and 2018 reports state that the project finance bank loans identifies ten-year cumulative default rates as the lowest for green use-of-proceeds projects in the power industry sector (5.7%). Non-OECD non-high income countries (our target market) have a default rate of 5-7% on average in these sectors.
 Data from International Renewable Agency Report 2020 here
At this stage, there is a minimum of $25 to invest and no minimum to withdraw. You can withdraw or redeploy your repaid (returns) amount anytime.
The length of a loan is indicated for each project. Currently, the average loan length is 5 years.
We manage risks the following ways:
1. We work with partners who are on the ground in our focus markets, with a track record of installing and managing solar plants;
2. We carry out extensive due diligence on the opportunities that our partners bring. We evaluate the viability of the agreements as well as the customer;
3. We oversee the project execution to ensure high quality design and usage of industry-approved materials; and
4. We require our partners to insure all the assets against calamities, theft, fire, etc. This is in addition to pre-existing warranties on solar panels and inverters.
As a business, solar power is a tried and tested source of electricity that has seen tremendous growth over the last decade, not only from a technological innovation standpoint, but also from an investment standpoint. With solar panel prices being at an all-time low, the cost of solar energy spread over time (also known as levelized cost of energy) is now lower than grid tariff in most markets.
Also, solar plants, compared to other renewable energy sources of electricity, have higher viability in smaller sizes (in dollar terms). This allows us to offer loans against solar plants that can be repaid in a sustainable manner.
We currently focus on projects ranging from 100 kW to 10 MW for organizations in emerging markets.
All our partners and their end customers undergo detailed due diligence. We carefully evaluate all technical and financial details. Each customer must provide guarantee or a cash deposit for at least 3 months of their electricity bill. In addition, the Power Purchase Agreement with the end customer has suitable clauses aimed at mitigating defaults.
Despite all of this, if the customer defaults or becomes insolvent, our partner can move the solar plant to a new customer at 10-15% of the project value.
We also aggregate our projects at a partner level to spread the risk of default across multiple projects. Our aim is to return your money even after a default. However, your loan amount cannot be guaranteed from a customer or a partner defaulting.
Our $100 guarantee for the first 1,000 investors is independent of these defaults. That will guarantee your money, regardless of customer or partner defaults.
Our primary mandate is to deploy capital in emerging markets, such as Africa and Asia. Each region has its unique set of challenges and opportunities. These regions have ambitious renewable energy targets and policies aimed at fast-tracking the deployment of solar power. We have a range of mechanisms backed by a financial team with decades of experience working across emerging markets. Furthermore, we partner with local vendors (that meet our pre-qualification criteria) that have a detailed understanding of the on-the-ground reality.
We take a number of steps to mitigate as many risks as possible to protect your loan amount.
All transactions carry a currency risk. Given the lower interest rates we offer our partners for loans, they confidently sign agreements with us to undertake the currency risk. That means when we offer a loan to a partner, we do so in USD and expect the repayments in USD. We also guide them in hedging the currency risk through banks where possible.
We began this business in September 2019. Our first solar plant was commissioned (as a proof of concept before the business began) in early 2019. All the plants we have invested in up until now continue to supply clean power to our customers and generate returns for our investors.
Our leadership team has 75+ years of combined experience running businesses in emerging markets. We also have experience in building large energy, microfinance, marketing and technology businesses before launching renewables.org.
On a few occasions in the past, solar vendors and investors have reached out to organizations listed on our site. To avoid this unsolicited contact and protect the privacy of our customers, we no longer publicize this information.
Rest assured, we are in direct contact with these organizations and carry out a thorough technical and financial evaluation before listing their project. If you would like more information on any of our projects, you can email us using the contact form.
In general, there is a de minimis threshold of $10 per tax year. In other words, we have to complete/submit a form 1099-INT for/to each investor who lends to us and we pay more than $10 in interest to that investor per tax year.