Beyond the Grid Fund for Zambia – Evaluation finds it was highly impactful in developing the clean energy market

The Beyond the Grid Fund for Zambia (BGFZ) was a pioneering programme that took an innovative approach to providing clean and modern energy access to underserved communities across the country.

In 2016, REEEP was contracted by the Embassy of Sweden in Lusaka to design and manage BGFZ, in order to catalyse the development of the nascent clean energy market through holistic support for the various stakeholder groups.

It integrated the three pillars of:

1) market based results-based financing (RBF) to energy service providers (ESPs) to deliver access to the population

2) establishing a platform for market change to improve the regulatory environment (which was actualised as the Off-Grid Energy Task Force embedded at the Zambian Ministry of Energy)

3) capturing market data and information and leverage it to market stakeholders at large (through the bespoke Energy Data and Intelligence System for Off-Grid Networks (EDISON) data platform to monitor and evaluate the companies progress on energy access and PAYG portfolio health as well as active monitoring of company performance in the market overall.

Our view on the results

The ex-post evaluation showed that BGFZ has had deep-reaching impact on over one million Zambian lives and paved the way for regional scale through the scale-up programmes the Beyond the Grid Fund for Africa (BGFA) and Modern Cooking for Africa (MCFA), together aiming to reach 12.6 million people in 10 countries.

In addition to REEEP’s work on the design of BGFA, we are applying this holistic approach and developing it further with our newest programme focused on productive use of renewable energy – PURE Growth.

True to our role as pathfinders, REEEP designed BGFZ to kick-start Zambia’s early-stage clean energy market with a whole-of-system perspective and employing a modified RBF approach fit for early stage markets, taking an approach similar to private equity portfolio – linked to impact outcomes.

Quoting from the evaluation, BGFZ was ‘’an intentionally risky approach which became a turning point for how Sida works with energy access and their approach to private sector funding in poverty contexts.’’  While at the time it was a standalone programme, it has since become a major contributor to Sida’s wider work in the off-grid sector across sub-Saharan Africa.

Key findings of the evaluation:

• Overall BGFZ achieved its objectives
• BGFZ has been highly impactful through the increased market reach of the four ESPs
• Success was driven by one of the four ESPs
• BGFZ was highly determinant in the realisation of these outcomes
• The outcomes achieved remain fragile and will need continued grant support.
• The design of BGFZ was gender-sensitive and has contributed to positive trends towards greater gender equality

BGFZ was a critical component in seeding the Zambian off-grid clean energy market and putting it on a path as an example for other countries in the region – Zambia has seen one of the longest and most sustained growth in sales since BGFZ came into force. Average year-on-year growth across 2019 to 2022 was over 100% – i.e. the market has doubled in size each year and in 2022 reached over 500,000 recorded sales. This, with a lower average public incentive per achieved energy access (USD 52) than for comparable programmes in sub-Saharan Africa (USD 98 – 289) and a good cost-efficiency of programme management and other programme components.

However, the market and the companies themselves will require further support. Through BGFZ we have helped to accelerate the growth of this completely new sector in the country, but it still needs time to consolidate, become self-sustaining and be able to drive growth on its own. The BGFZ contracted companies’ performances varied significantly. However, this was to be expected when employing a market-based mechanism – it is inherently exposed to market risks. BGFZ’s flexible and reactive monitoring and management was concluded to be fit well for the needs of early-stage markets. BGFZ, BGFA and now PURE Growth’s portfolio approach to achieving impact aims to safeguard against these risks. Taking on more companies and providing the tools for them to succeed, but also accepting when they don’t – the cornerstone of our approach is to look at the market as a whole, embrace failure and be responsive to market changes.

In addition, the evaluation highlights that Technical Assistance (TA) and advisory to companies was essential to support agile programme management and sought to respond to a clear need for the companies. We delivered this in BGFZ and it remains a major pillar of REEEP’s work on BGFA – interacting directly with the companies during deployment of funding to help refine their business models, address operational gaps, improve compliance and facilitate access to third part financing, thereby enhancing sustainability and commercial viability and supporting the transition to scale.

The platform for market change was just that – a gamechanger. The evaluation calls the OGTF ‘’a highly appropriate solution to a clearly identified barrier. Lack of coordination among development partners, and lack of engagement with government agencies were identified consistently as a major challenge prior to BGFZ, which the OGTF effectively sought to address.’’ This platform is going strong in Zambia and is now being replicated in all countries of BGFA implementation.

We are proud of the outcomes of BGFZ and what it has developed into, the Beyond the Grid Fund for Africa which we are implementing together with the Nordic Environment Finance Corporation (Nefco) and Niras, a development and engineering consultancy company. The takeaways contained in the Ex-post Evaluation of the Beyond the Grid Fund for Zambia will inform not only our future programmes, but the findings are accessible to all to help deliver our shared goals of a low-carbon future.