In a landmark move for energy inclusion and sustainable finance, Kenya is set to deliver clean, off-grid solar energy to over a million rural homes — backed not by public spending, but by a novel private sector financing mechanism.
A consortium of global and local financial institutions, including leading Kenyan banks and Citi, has committed $156 million (approx. Ksh20 billion) to scale up off-grid solar access across the country. The initiative, facilitated by a prominent off-grid solar energy company, aims to deploy around 1.4 million home solar systems using a pay-as-you-go (PAYG) model.
But beyond the headline figure, it’s the structure of the financing that’s drawing international attention.
Turning Solar Payments into Bankable Assets
At the heart of this innovation is a securitisation model rarely used at this scale in emerging markets. Future payments from solar customers — small, recurring instalments over 12 to 18 months — have been bundled into an asset-backed security and sold to investors.
For end-users, the system is simple: a small upfront deposit (around $7), followed by weekly micro-payments until full ownership is achieved. But on the back end, it’s a complex financial structure that blends development goals with risk-adjusted investor returns.
De-Risking Climate Investment
To make the model bankable, the investment was split into two tranches. The senior, lower-risk tranche — offering modest returns slightly above Kenya’s 6-month government bond yield of 8.4% — was bought by commercial lenders, including Kenyan banks and Citi.
Meanwhile, the junior tranche, which bears more risk in the event of default, was underwritten by Development Finance Institutions (DFIs) such as British International Investment and Dutch bank FMO. These DFIs act as a buffer, taking first-loss positions to give private capital the confidence to participate.
“This is a template for how blended finance can unlock private capital at scale,” noted Citi’s Global Head of Social Finance. “DFIs play a catalytic role by sitting in the mezzanine layer and absorbing the early risk.”
A Scalable Model for Emerging Markets?
As global interest in climate-smart infrastructure grows, this deal offers a replicable model for other developing nations looking to scale access to clean energy without over-relying on public funding.
For Kenya, it’s a win on multiple fronts — expanding rural electrification, boosting domestic solar manufacturing, and showcasing financial innovation rooted in inclusivity and sustainability.
With over a billion people globally still lacking reliable access to electricity, this $156M deal represents more than just lights in homes — it signals a maturing model for how private finance, development institutions, and technology companies can work together to solve one of the world’s biggest challenges.
Partner With Us
Want to feature your brand, business, or service on 365247 — Whether you’re looking to sponsor, collaborate, or build presence within our ecosystem, we’d love to explore it with you.
Submit Your Interest Here
