Global Off-Grid Lighting Association (GOGLA) counts global investment in off-grid solar in 2022 to have grown by 63% annually with $746 million, yet the world remains far from the $23.3 billion it needs to achieve the goal of clean, modern electricity for all under the Sustainable Development Goal (SDG) 7.
According to GOGLA's latest investment data for this segment, 149 deals were signed last year with 53 lead investors/funds and there were a total 58 recipients. It was raised as $395 million equity, $340 million debt and $11 million in grants.
While this was the 1st time the sector attracted more equity than debt since 2016 when these were reported as $394 million and $339 million, respectively, equity investments are coming down. GOGLA reports it as a 40% annual drop which it claims limits the ability of companies to scale up and expand thus hampering global climate, development and electrification goals at risk.
Seed and start-up funding has remained stable as start-ups received $101 million with an annual increase of 9%, but funding levels haven't yet reached pre-pandemic levels. Maximum investment in 2022 was claimed by Sun King with $330 million under its series D round. Funds raised by start-ups reflected an annual growth of 9%.
All-time high was mainly driven by some scale-ups, according to the analysts, as the total investment amount raised by this segment has more than doubled with a total of $606 million attracted. Total seed investment reported for 2022 was $12 million.
Average transaction size has gone up to $5 million from $4 million a year back.
Overall, $746 million contributed to cumulative investment amount raised for this segment globally to reach $3.12 billion at the end of December 2022.
GOGLA points out that several off-grid solar companies are now expanding their product range that help boost sustainability and create more opportunities for investors leading to profitability. Investment in the emerging productive use segment went up by 29% to $32 million.
"Financial instruments that blend equity, grant and debt capital, along with a patient approach to returns, are key to de-risking and incentivizing companies to reach hundreds of millions more people with clean-tech solar solutions.
In an October 2022 report launched with the World Bank, GOGLA said the off-grid solar sector is projected to raise $7.8 billion between now and 2030, but it needs game changing solutions as PAYG financing, investor engagement to achieve SDG7 goals (see 'Game Changers' Must To Meet SDG7 Electrification Goals).