[Amanda] This is Amanda Valenta. I am an energy specialist, in USAID's Office of Energy and Infrastructure and I will be moderating today's session on, Private Sector Investment for Mini-Grids, in the developing world. So today's webinar is the fourth dialogue of a four-part private sector dialogue series. And the idea behind these webinars, was to provide a platform for private sector experts to help USAID better understand the barriers, to private sector investment in the countries where we work. So far we've held three of these. We started with Utility – Scale Wind and Solar, Energy Efficiency and then Smart Grids. And again, today, we'll be focusing in on Mini-Grids. So I'll just take a moment to preview our panelists, before I dive in. We have Alexia Kelly here who is the managing partner of the Microgrid Investment Accelerator and CEO of Electric Capital Management. We also have Manoj Sinha who is the co-founder and CEO of Husk Power Systems. Andrew Varrow is here. He's the program director of Development Ventures and the Comonsol program. And then we have John Kidenda, the director of PowerGen Renewable Energy. So to make sure that these panelists have, plenty of time to speak and answer everybody's questions, I'm just going to give a very brief overview of the mini-grid state of play globally and then I'll turn it over to the panelists to introduce themselves and then we'll dive into the meat of the discussion. Before we really get started, I'll just get us all on the same page with a couple of quick definitions. Since there's no real global set definition, for mini-grids versus microgrids versus pico-grids and everything else that everyone agrees on. And country context can play a defining role as well, we'll go with the EU Energy Initiative definition and the IEA definitions to define these. Mini-grid systems involve, small-scale electricity generation, typically from about kilowatts to 10 megawatts. And the distribution of electricity to a limited number of customers via a distribution grid that can operate in isolation, from national electricity transmission networks and supply relatively concentrated settlements with electricity at grid-quality level. Microgrids are quite similar to mini-grids but they operate at a smaller size and generation capacity. Typically about one to 10 kilowatts. So for the purposes of today's presentation, we'll use mini-grids as a relative catchall. And then, I'll touch very briefly in one of my slides, on off-grid solutions and here, we're just referring to standalone systems, like individual rooftop solar installations. Why is global investment in mini-grid systems so critical right now? I think as we all know the demand for electricity, is growing globally. It's expected to rise by about 64 percent by and in non-OECD countries which really make up the bulk of our USAID partners, electricity demand is expected to double by 2030. So this means we're obviously going to have to find a way to meet that demand and inevitably that's, an ask that the public sector can't fill alone and we'll really need to rely, on our private sector counterparts. So mini-grids are actually really well-placed to meet a large portion of that demand because they can serve vast communities that, won't likely receive grid connections otherwise and they can do it at a more cost-effective rate, than on-grid connections in a lot of cases or pico and off-grid solutions in other cases. And in more complex systems, mini-grids can connect to the grid and allow the main grid to function more reliably by reducing load strain and they can also provide more reliable power to their mini-grid end users to mitigate possible service issues on the main grid. So in this sense, mini-grids can really help, increase disaster preparedness and ensure critical services, while also helping to meet rural electricity needs, cost-effectively in the non-connected scenarios. So I should note that most of my stats and images, for this presentation are coming from, the International Energy Association's Energy Outlook. This one is no different. So from 2000 to 2016, nearly all of the people that gained access to electricity worldwide did so through new grid connections mostly from, power generation from fossil fuels. But over the past five years that trend has shifted to focus on renewables and mini-grids as they gain traction. So by 2030, it's projected that renewable energy sources, will power over 60 percent of new access. And off-grid and mini-grid solutions, will comprise almost half of that access, primarily as you can see here to communities in sub-Saharan Africa. And that's where we're really pointing to the fact that decentralized systems, will provide the most cost-effective solutions because of the rural communities that will still really be relying on, additional electricity access. So just to put a finer point on the, cost-effectiveness piece, this image portrays the basic economics behind mini-grids. So as you can see mini-grids, are most likely to be cost-effective, in those mid-density communities, right in the middle of this graph. That are still too far away from the national grid. And then you've got the super-dense, high-electricity needs all the way on the left where the national grid would be the most, cost-effective solution. And all the way on the right where the homes are super dispersed and have very low electricity needs that's where your standalone home solar systems, will come in handy. So that puts us in our current scenario where we find we have multiple technologies and paths forward to decrease the energy access gap but the investment gap is still quite real. So the IEA projected that an additional, 391 billion dollars was still needed and that was on top of their initial projection of 341 billion. So this basically means that from now until 2030, we need about 52 billion dollars a year in investment to close the energy access gap and that is more or less double what is currently being invested, into decentralized energy solutions. And again, this points to the critical role of our private sector partners. So to help shed some light, on what barriers still exist for private sector investment USAID partnered with the National, Renewable Energy Laboratory and conducted a private sector survey. We talked to project developers, investors, debt providers, manufacturers, ESCOs and we asked them what the key barriers to scaling up investment were, in these key areas of utility – scale wind and solar, energy efficiency, distributed generation, off-grid and microgrids and smart grid technology. For the purposes of this presentation, I'll focus on their answers to the mini-grid scenario. So when we asked, "What are your company's barriers "to market entry in developing and emerging markets?" The top two answers that we got, were access to finance, local or otherwise or a lack of renewable energy policy and incentives. We also heard that offtaker or customer ability to pay, political instability and power grid access and interconnection were among the top five, most significant barriers. And our private sector panelists, will expand on their barriers as they, encounter them in their work. We also asked, "What would help improve competitiveness or entry into emerging markets?" and there we heard that renewable energy and energy efficiency supportive policies, along with local bank awareness and lending were the top two things that would help improve competitiveness. We also heard establish grid interconnection, access to market and business information, along with PPAs and long-term contracts, would be among the top five most useful actions. So with that, I will turn it over to our panelists to introduce themselves briefly, and tell us a little bit about their companies and their work and then we'll get into, some more detailed questions to help get at the meat at the question of the barriers to private sector investment in this space. We'll start with Manoj Sinha. [Manoj] Great, thank you very much Hello, everyone, I am Manoj Sinha, co-founder and CEO of Husk Power Systems. I grew up in a state called Bihar in India. And it had a population of 110 million people and 70 million of that, do not have access to electricity at all. So growing up in that situation it was a, problem that I was very close to. And I was trained as an electrical engineer and therefore, it was obvious that I find, solutions to that problem. And that problem, of course, is not limited to Bihar. It is worldwide, with 2. billion people who either, do not have access to power at all or have unreliable access to power. So that's why we founded this company in 2008. And we call ourselves pioneers in the mini-grid sector that designs, builds and operates what we call hybrid mini-grids that powers the households and other customers 24/7. We have a footprint in India and Tanzania. We have been operational in India for 10 years, I guess way too long, and in Tanzania for a few years now. We are the world's lowest-cost provider, both in terms of CapEx as well as delivered cost of energy. Fortunately, recently we have been funded by some major investors from Europe, the likes of Shell, ENGIE, and Swedfund. That capitalized our balance sheet very well and that makes us really, or that puts us in a position to scale very rapidly with our goal to expand in India and Tanzania. And add about 400 more mini-grid sites, over the next four to five years. And therefore our vision is to become the world's largest rural utility company that provides 24/7 power. And we relentlessly focus on two key things, One is being the lowest-cost affordable power provider and we do that also to promote socioeconomic development by promoting productive uses of energy. We don't call ourselves a mini-grid company any longer as we have sort of shifted the paradigm to, call ourselves more a rural utility company. And what makes us unique I guess, vis-a-vis other companies in this space is, we have been able to combine, two renewable sources of generation. That includes solar PV for daytime and a biomass gasification system that uses, crop waste like rice husks for evening-time supply and we use a battery as a backup to make sure that we deliver 24/7 with, 95 percent or more reliability. We do provide only AC power, which is grid compatible, so we can connect with the grid at any given time and buy and sell power, we don't do that but we are capable of doing that. We also call ourselves a very customer-centric company. And we serve households, shops and small businesses and very importantly, factories that need three-phase power to run machinery, like welding machines or wheat-grinding machines and things of that nature. Meet one of our customers who joined one of our hybrid mini-grids back in 2015. He was using actually both, grid in India as well as a diesel genset that he used to run for four to five hours per day. And he was actually very close to closing the shop because he was losing money as he spent quite a bit of money on diesel and he could not sell a lot of products that he wanted to. After he connected to Husk, his energy consumption actually doubled, within the first 12 months. And his sales increased by four times in roughly one year. The reason behind that was because, he actually purchased quite a better refrigeration system. He bought an ice cream-making machine and believe it or not that village never had ice cream before we came with 24/7 power. And he was selling 2, sticks of ice cream, in the summer months after he connected to us. So those are the reasons why people are able to use electricity in a productive fashion and increase their sales and net profit. Our survey across multiple sites that we run indicates that our commercial customers increased, their net profit, not sales, net profit by more than 30 percent. So let me conclude by posing, some of the challenges that we face as we try to grow in India and other countries. These are, access to financing and government regulation. These are our two top most problems that we face as we try to scale and I guess we will talk about this more in detail. So thank you very much. [John] Hi, everyone my name is John Kidenda. I am director of software platforms at PowerGen Renewable Energy. PowerGen is an Africa-focused private utility firm. And what we do, we have two major parts of our business. One is building, owning and operating, our own primarily rural mini-grids. And the other is an EPC business where we build for a number of different actors, across Africa, mini-grids that they are looking to deploy. We have built over mini-grids on the continent, primarily in East Africa. Of those, the ones that we own are, primarily in Kenya and Tanzania but we have operational mini-grids that we have built in over seven countries on the continent and growing. We have connected over 4,000 homes and are in the process of completing installations that will see us having connected over 10,000 homes to our owned and managed grids, not those that we have built, but those that we actually own and manage, by the end of this year. And are growing rapidly with an intention to spread across the continent and become the leading private utility player, on the continent serving the 600 million people that do not have access to electricity. The mini-grids that we build are, anywhere between six kilowatt peak to over 50 kilowatt peak, depending on the size of the village that we are serving. And they provide 24/7 power at two levels of reliability that are significantly higher than, the levels of reliability of those connected to national grids. Our systems are solar-powered with battery storage and in some cases a diesel backup generator to ensure there is a 24/7 power experience. And we invest quite heavily in addition, in ensuring that we put the customer first, in our business model. Providing unparalleled levels of customer service with direct call-in lines that are supported by our smart grid infrastructure. So my particular division within PowerGen, is responsible for maintaining and developing the software tools and platforms that plug into basically the large mesh of Internet of things devices that are our smart meters. And ensuring that these devices both enable us to, push on the key levers of reducing both CapEx and OpEx cost and dramatically improving customer experience, for the powering of households that we serve. We are a founding member of the African Mini-Grid Developers Association where I am the director of the board of the Kenya charter. And within that association, helping to drive key initiatives to address some of the things that Manoj mentioned around, access to financing, enabling regulatory environment, standardization of service delivery through mini-grids and even arriving at a definition for what mini-grids are, at least for members of, the African Mini-Grid Developers Association. [Amanda] Thanks so much, John. Alexia, we'll pass it to you. Alexia Kelly, from Microgrid Investment Accelerator. [Alexia] Great, thanks, Amanda and good morning everyone or good afternoon as the case may be. I am representing not a microgrid developer but rather a blended capital financial intermediary that is seeking to address some of the capital markets gaps that have been referenced to help accelerate, the pace and flow of capital into key markets, particularly Africa and India. In order to really prove out and help scale the mini-grid sector. So I think Amanda did a great job of kind of laying out the case, for why we think microgrids, are a critically important part of the low-carbon energy revolution that's occurring globally. And we are at very early days for this market segment as a general matter. And one of the challenges that we see, is that because the market is still so early stage and there are many developers who are really working on transitioning away, from what has predominantly been philanthropic and grant-funded development of their businesses. There's a need to help bridge into larger, more commercial sources of private capital but you don't just go from being predominantly sourced, from grants and support from government, directly into venture capital or some of the other capital sources that are out there. So most developers that we see in our market, have developed somewhere between one and 10 grids, to date, with a combination of grants and kind of early angel investors, friends and family or the proprietors' own resources. And are starting to have figured out business models that are financially-sustainable and viable. So PowerGen and Husk are two of the companies that are certainly, significantly ahead of the pack, I think, both in terms of driving down, capital expenditure costs, as well as, really figuring out a path to profitability. And while most microgrid developers are revenue-positive, very few of them are profitable yet. And so there's a real need to get capital into this space, in the form and at terms that the developers can really absorb and leverage in order to scale into, the next sources of capital that are available to them. So what we've done, the Microgrid Investment Accelerator's first fund, the Microgrid Catalytic Investment Fund, is a target 20-million dollar blended capital fund that is focusing on leveraging public and philanthropic grant capital in order to, attract and de-risk private sector capital to accelerate investment and bring private sector investors, into this nascent market segment, much earlier than they otherwise would come. So we have a blended capital stack where we are leveraging, essentially, three tranches of capital. We have grant support, actually, from Power Africa, for operational expenditures and management costs of the fund that plays an incredibly important role, in reducing fund load. So for those of you who have worked in private capital or know how most private equity funds are structured, they're typically organized, around what's called a "two and 20 model", which means that you get two percent of assets under management, for operations on an annual basis. And then 20 percent of that new profit above an agreed amount. And on very small funds, which tends to be the size of most of the catalytic funds that have been started in this space, begin with somewhere between, I would say two and seven, kind of million dollars under management. Those numbers don't work, right? That doesn't actually give you enough money to pay a high-quality staff and cover operational and legal expenses and still offer financial products to your investees that are what they need and can afford. So what we've done is created a waterfall structure that enables us to layer in pure grant capital as well as reimbursable grants, which are really soft loans, alongside more senior equity in order to help, enable private sector equity providers who are interested in getting a toehold, in the microgrid market but not know necessarily how to do it yet. Or are interested in kind of getting a bird's-eye view, across what's happening in the entire market. Investing in a catalytic vehicle like this, is particularly useful. One of the innovations that we have employed, in order to make this work efficiently and to work for our public and nonprofit partners, is we've teamed up with the California, Clean Energy Fund in California to serve as our nonprofit partner. So this is one of, I think, the world's first, truly hybrid nonprofit/for-profit investment vehicles that enables us to leverage the efficiencies of working with a 501 C- and the comfort that that provides, in terms of mission alignment and impact orientation, for our philanthropic and government partners. As well as brings them in to ensure continued mission alignment. So they actually have a stake in the general partner of the fund, which we think is quite exciting. So I'm happy to talk more in detail about how and why we've structured this. I think the other quick thing to note is that what we've done is developed a fairly, sophisticated set of financial products that are really designed to meet the needs of developers today. So we have a set of hybrid and debt-equity, instruments that include venture debt, preferred equity with warrants and business loans with warrants, for longer-term asset finance. That enable us to take equity like, higher-stage or earlier-stage risk at more concessionary return rates which enables us to really help developers, grow and scale their businesses, without significant dilution at the corporate level which as an early-stage company, is always something that folks are thinking about. So here's just a quick summary of the fund. I'm happy to provide additional detail and we look forward to the conversation. [Amanda] Great thanks so much Alexia. And last but not least, Andrew Varrow, would you go ahead and introduce yourself? Andrew is from the Development Ventures Group. [Andrew] Hi, so my name's Andrew Varrow. I'm the Comonsol program director from Development Ventures. We're a relatively new startup so this should be a quicker introduction. Basically, we are a start-up social enterprise with a mission to make affordable renewable energy, available to those that don't have affordable energy. So that's just off-grid but it's also looking at targeting, certain communities that have power but expensive power. Our approach to doing this really comes from our background. Our background, with some partners is split between, impact investment in infrastructure development, in emerging markets and a lot of, commercial renewable energy development, in the developed world. The way we've looked at doing our approach and targeting is we are basically trying to, focus on how we develop projects in the developed world and making it cost-effective to do that in the, emerging and frontier markets that we're working in. So what we're really looking at doing in this, is targeting the more profitable sites that are able to be bankable. And that's really looking at 100 kilowatt peak and upwards, up to about one megawatt maybe a little bit more depending. And how we do that is we are using, systems that aren't ours. The tech is provided by a global engineering company that allows us to cut costs at every step of the way so we can deliver our bankable sites through one structure that therefore makes it, investable for investing partners. Very quickly, one of the reasons I've put up this map, is to show you where we're targeting. And I think the clearest thing to show on that map that is, slightly missing from everywhere, is not focused so much on East Africa where a lot of the focus has been previously on mini-grids. And I can explain that later, when we discuss about the approach to projects. Just to give you an overview of how we work and how we structure, we look to identify a viable site, in a place that we are working. We build a close relationship with the community, then we develop investment proposals. Then we connect it with the investors, and then we install and operate the cellular power grids, on behalf of our customers. This way, we are essentially, operating and powering everything, very much the same way as, a cellular phone network would work. And that's where we work really to keep, the low-cost approach. That allows communities to get the utility – scale power, three-phased 24/7 power and then we can also look at payment terms. That's a very quick overview but seeing time is moving. I think we should move on to the questions. [Amanda] Perfect, thanks, Andrew. And while we have you, I will just shoot you the first question which I think was actually the step one, for your "how Comonsol works". But we've heard that things like regulatory environments, price points and market saturation, can really drive where you work as developers. So maybe you could just expand on, one or two key things that you look for to assess the mini-grid market opportunities, in the countries you work. [Andrew] Basically, the advantage we had, especially coming slightly later but also not using a technology, is we didn't have to develop technology. We had to do some tailoring but, we really were looking where we were gonna work. And originally we were gonna work in Afghanistan but we moved off for a particular reason which will become apparent, when I say there's three things that were really key on looking where we were gonna be working. The first and foremost factor that we were focused on was a price point. We needed to make this bankable, make this profitable and scalable. We needed to be working in those communities and I think the slide you put up earlier showed it. Where they're densely formed enough that there's actually a tolerance to pay, for power in the communities and the companies that we work with that matches what is actually affordable to, put in the system. So that was the key element. The second element that was also equally as, important really was regulations where we are gonna work And there was a whole lot of reasons, why we wanted to do that but that comes back down to the price point and further really focusing on the bankable. We didn't wanna work in anywhere that, particularly had an issue where you could start off working small, start to develop the sites, but you were essentially working in a black market. So there wasn't a government entity or a national power company that would be able to prevent you from scaling up or would have some claim to your, to your site. Plus, we also needed to be able to connect to grids at a later point as we scaled and run as an operator. So very early on, why we didn't look at Afghanistan, even though it had a really effective kind of power need, great for solar which is the, technology we were using first was two things that, kind of tie into this price point and regulation. In Afghanistan the DABS is good but the government power company, essentially an arm of the government and very political, has the right to all power. Which means that they can adopt and take any, infrastructure that is put in at any time which obviously does not make it bankable for investors. Even more importantly, was, they also insisted that, you would have to spend about five, the price of power per kilowatt-hour is five Afghani which is roughly, was a while ago, I don't know now about three dollar cents per kilowatt which would kill any form of commercial site. So that's why we didn't move. So we looked at a lot of other countries, West Africa in particular. And Liberia is a very key one that we've got partners with that we're looking at moving in there. And that brings us on to, they have a very high price point, high demand. There's actually regulations there in Liberia that are testing very positive. But then it's brought us down to the third criterion we had which is the enabling environment in which we work. And this is where, as we're a startup and we're piloting with new technology, we actually moved out of the West Africa place because we wanted an enabling environment that was gonna be very, very, shall we say, easy for us because obviously we've got a lot of other challenges and we wanted to work. So long story short, why we ended up working in Guatemala, was very much because it had everything we required. Guatemala came out with a peace deal in the late '90s at the end of the war has a really, really advanced and open electricity market. Any player can get involved. It's fully privatized. There is some regulations but any operator under five megawatts, can connect to the grid if they're a renewable operator. There's no tax there on for 10 years, on companies that are working there on renewable, under five megawatts, etcetera, etcetera. That made it a really good place for us so that's really why we tried those things. Also, Guatemala had a price point that was kind of good. It's not as best as West Africa but it also had then, with the regulations and the price point, had a perfect enabling environment. There's a lot of companies doing, large-scale solar in Guatemala and the makeup of the country is very, so separated between the core center of the country that's well-developed with a lot of companies and a lot of good engineers. And then you have the very rural, poorer communities that have the areas where we want to work. And it's an easy distance to take, engineers from one side to the other so that lowers costs on that side. That's really why we ended up looking at that place. Have to go another time into, some of the issues we had with the regulations and stuff like that but also more importantly on that side, we had a lot of support from the government. And where we're looking to make this bankable is, for the long-term future, we need to be sure that any long-term capital investment that's gonna go in isn't gonna be taken by government. So on that point, we're working on a partnership in Gambia where any infrastructure we put in, we've got an MOU with the Ministry of Petroleum and Energy that if they do build the much talked-about, central grid that they have, they will adopt any infrastructure we have and either we will service on their behalf or they will give us a private price point. So that allows us to be bankable, while keeping our costs down. So I hope that answered that question. [Amanda] That did thank you, Andrew. So it sounds like one of the things I picked up from you, is enabling environments being key which maybe we'll loop back on a bit later, when we talk about some of the ways that donors can help alleviate this space. So switching over a little bit to talk a bit more about the barriers, Alexia, I'll send this question your way. Obviously, we asked about barriers to market entry, in the survey I mentioned earlier and heard that access to finance and renewable energy policies and incentives, were among the top. So could you elaborate from your purview, maybe specifically from the financial perspective, about some of the barriers that you're experiencing in the places you're working? [Alexia] Yeah thanks, Amanda. So I think there are, we face a unique set of barriers as, a first-time kind of intermediary, fairly novelly-structured investment vehicle. That has certainly been a challenge. I think overall, challenges associated with investment into the microgrid space, really center on the fact that, we're asking folks to take venture-level risk, for infrastructure-level returns, essentially. And I think that's kind of the fundamental challenge that we face in the microgrid sector and so which means essentially that because of the early stage of the market. The high regulatory uncertainty, the difficult operating environments that these companies are working in, combined with still relatively higher capital, expenditure costs, high install costs and the need to invest heavily upfront to build these microgrids for long slow payback, over a 10 to 20-year period. And hoping that the customers will become steady and reliable customers and purchase sufficient power. All of those things, I would say, have combined to spook a lot of the investment community. So I think there's a lot of interest. I've had innumerable conversations with very large corporate, strategic, pension funds. Folks who really would like to get capital into this sector and are just waiting essentially, for the market to prove itself. Out a little bit more and to start to demonstrate, some commercial viability. So both, PowerGen and Husk have been, working diligently on driving down CapEx, improving operational efficiency, driving towards a profitable business model that enables us to provide clean reliable 24/7 power to rural consumers at rates that they can afford. But I think that there's still work to do in that space. And so getting that concessionary capital, into the hands like growth capital, into the hands of these developers is incredibly important. It's important to note, as well that there's been a number of larger, kind of off-grid funds announced by the multilateral development banks and development finance institutions, over the last few years. Many of them say that they invest in microgrids and when you actually sit down and talk with them, it becomes very clear that the microgrid companies that are in the market today, will have a very difficult time, getting through their risk committees. They're not able to absorb capital at ticket sizes that match what these guys actually need to be able to write and there's usually a product and kind of capital need mismatch. So as a general matter, I think there's been a lot of talk, about the amount of capital that's available in this space. But what we're seeing is that, very little of that is actually flowing to the developers who really need it on the ground. And intermediaries like, the Microgrid Investment Accelerator were intended to try and help bridge that divide a little bit and serve as a kind of connector, between the early-stage and the later-stage investors in the market. I don't know, Manoj and, you guys should also talk about, any contributions on the challenges in raising financing 'cause certainly you guys have lived it as well. [Amanda] Absolutely, thanks, Alexia. Manoj, would you like to weigh in, on the key barriers from the developer's perspective? [Manoj] Sure so I think two things that, have been repeated, I guess, a few times and I'm going to expand on that. We have been able to attract equity capital to scale. But that is not going to be sufficient to solve the capital structure problem that, any utility company needs to have, a balance sheet of a typical utility company, will look like 50 to 70 percent debt. If you look at their tier-one debt capital that will look like 15 to 20 years of term loans. We don't have that kind of facility available and that is absolutely needed in local currency to be able to expand successfully and for the long run, right? And utility return is, of course slower because you can leverage your balance sheet etcetera to give equity investors a slightly better return. But going back to lack of financing. Solar home systems have been able to attract, short-term debt capital because they can service that, loan and typically those are higher interest loans. The mini-grid sector has yet to get, even a 10-years term loan at a reasonable price point. There are some agencies like OPIC that does that, has taken a risk with Husk, but we need a lot more than that. We need hundreds of millions of dollars deployed on the balance sheet of, mini-grid developers in India, in Tanzania, in many other African countries. Another challenge that we face as a small company is, when you're taking debt especially from DFIs, it comes in different currencies, typically Euros or USD. As a small company, we don't have the wherewithal to do hedging. And that puts us at a lot of risk. For example, in India and I'm going to be exposing our weakness but we took an OPIC loan in 2012. We did not hedge. Fortunately, it was a small loan. And our currency devalued by more than 50 percent since then. So think about the cost of capital that just went through the roof for us. So I guess, long story short, we need access to 10 to 20 years' long-term debt, on our balance sheet, preferably in local currency because we generate revenue and cash in local currency. And if that is not available, we should be able to find agencies like USAID and others who can help us with a hedging mechanism. So that's one. Number two is, on government regulation or lack thereof. Most countries did not have, a properly defined regulatory framework for mini-grids. We have all been operating for many years almost under the radar. We are in the utility sector so we cannot avoid regulation. And therefore, it is of utmost importance to have a very well-defined regulatory framework. How does a mini-grid operate? What kind of licensing is required or not required? And if we connect to the main grid, how does that happen? If the main grid arrives, what are our exit mechanisms available? These are the things that I'm sure, investors like Alexia and others are thinking about, when they're exposing their capital at risk. So a properly defined regulatory framework, is absolutely needed for investors to get comfortable deploying their capital. In a very specific situation in Tanzania, I don't think you guys know, or probably you all know but, recently with [Inaudible] financing in Tanzania has this regulation. That if investors exceed a certain threshold and that threshold is less than half a million dollars of investment or whatever their balance sheet is of more than half a million dollars. They have to do a budget control filing which is typically required for large M&A. I mean think about how many investors are, going to get dissuaded because they have to file budget control. If an investee like Husk has a legal entity in Tanzania who will put capital in that kind of situation? So there are many processes of regulation but two that I have highlighted, are quite important for attracting investors. Thank you. [Andrew] Possible for me to jump in quickly to talk about the experience from the emerging markets, regarding the venture capital investment? Where we see the difference that comes from that, is very much in the active developing of renewable sites doing a lot of community solar, in New York state and New Jersey and Massachusetts is, the lot of the bigger funds, all want to take over the project NTP, Notice To Proceed, when essentially they're all ready to be built out and everything's guaranteed and they have a PPA in place. What really flows into that space, before to develop out those sites, is I should say I want to say more cowboy-ish but there's a lot of smaller entities that put in a certain amount of development funds and a few million that can actually, bear the risks of developing out the site to bring it to NTP. 'Cause they get that very big return, when they sell off to fund at NTP. And the difference you have, when you come to looking at this, kind of mini-grid market is, we don't have that exit point. That when you get to NTP that you're handing over a secure entity. And it's also smaller. So whereas if you do a portfolio of five megawatts, in New York, you can sell it at that point and then you can get that quick return that's high for the initial capital. And then the fund takes on the capital cost, in the long-term repayment. Where we've discovered we have a difficulty with mini-grids and what is missing is, there's no one there really as the end buyer that says or even if there's a debt guarantee that, "We would buy up to 10 megawatts of small projects in Guatemala, if they're packaged together at this rate." and without having that kind of end exit, we don't have the more entrepreneurial, funds wanting to jump in with that quick, "Okay, we'll put that in there and move out." And I think that's one of the key differences, between the private sector and this market that needs to be thought out. You mentioned earlier, very much Alexia, these big funds. We spoke to a lot of them and, they don't want to put out on that because, the due diligence costs, the costs of capital of them trying to get it together, like you mentioned, to set terms. They wanna do big deals. So really, where we need to have, when it comes into the public sector, is to have an entity, a bank out there that is trying to buy up distributed assets at that point when the capital costs come out so they can reduce the development risk. Let developers get an exit, share some risk and get their payoff then and then allow bigger funds to say, "Okay, I want a piece of this big, slightly a lot more liquid, slightly de-risked portfolio of all these different mini-grid assets." and until that comes around at that size, you're not gonna see a very, kind of wildcat market that poured into renewables in the developing world. 'Cause in the developed world, you can get a PPA, you can sell them on and it's bankable. So that's what I think is really missing on that side. And again, that also ties into the regulations. If you have a big, government... Especially in emerging markets, if you have a big government utility company, looking behind the background, that's a very risky kind of approach because if they change the regulations, the regulations are changed. You need to make it pay over 20 years, you need to be sure that, those entities aren't just gonna be nationalized or taken away. That would just scare off all investors. And again, that's where public, finance institutions is gonna need to come in to take that kind of risk. [Amanda] Thanks, Andrew, for adding to that complex set of answers regarding the barriers. Just to shift gears a little bit, we've heard about some of the barriers. I'd love to turn it over to John to talk a little bit more about the opportunities that are emerging and specifically I think, you all touched on the regulatory barriers. So I'm curious, John have you experienced, regulatory or policy measures that have helped or been effective in promoting, mini-grid investment in your work? [John] Yeah, sure, I think a lot of the, emerging opportunities actually relate quite closely to, the barriers that have been mentioned by my colleagues. We've been in the business for going on seven years now so we've seen a fairly dramatic evolution of the environment. And I guess I could speak to this, across four different areas. One is financing. Two, is supported cost reduction, then specifically around policy and regulation. For financing, I'll echo what Alexia said. There's a lot of work being done on the debt, and equity and concessional financing to get more financing into the sector but one thing that she picked out that I wanna make sure people pay attention to, is that there's a lot of capital that's been committed to the sector that's not being deployed to developers. For a variety of reasons, one of the major ones being, the onerous requirements on small developers as Manoj has mentioned to just prove that they've done what they've done, in order to get disbursements, in order to build more grids. And so on that front, something that AMDA has been pushing on the regulatory and policy front is more support for, results-based financing programs that are low touch for developers in the sense that, developers can put their capital at risk to build these sites. And you have a very clearly defined, automated, mostly technology-supported mechanism to verify that the connections that were supposed to be built, are actually there on the ground. And then you have a quick payout of the, connection subsidy or the capex subsidy to the developer to go on and grow that capital out. Another thing that we've been working on, on the finance front touches on what Andrew mentioned about, funders looking to, portfolios. They're looking for portfolios of sites that can, meet their needs because of the economics of funding, small individual sites. And this I guess also speaks to the fact that, a lot of these solutions have had to come, from the developers as opposed to, innovation from the funders' side of things. And then be supported by innovative, funding support mechanisms such as, the Microgrid Investment Accelerator. And so one of the things that we've been working on, is specifically in the Tanzania context is, setting up an SPV that is essentially an asset code that, our assets are sold into. We retain an equity stake in the SPV so that we have skin in the game and are incentivized to continue to drive down costs and for both opex and capex but are able to hand over and draw back some of that, capital expenditure, create an investable, entity for people who are interested in, owning mini-grid assets. And then offer to the market a new, mechanism for getting money into the sector. On the cost reduction side there's been a lot that's happened with regards to, business model optimization, capex reduction through the support of, using smarter technologies to monitor your grids and reducing the amount of work that your O&M teams, need to do to get verified information on the ground. On the policy side of things, I think Manoj mentioned that clear frameworks on, things such as grid interconnection or when the grid arrives, asset transfers, are starting to emerge. You're starting to see draft regulations that actually look quite compelling. And starting to see countries, especially across Africa, identify policy regimes that work for developers and emulate them. You're seeing this with the policy regime in Tanzania, acting as a template, for countries such as Nigeria and Benin. That's encouraging, because not only are you getting good regulation, in a specific country, and having it spread, but you're having a more unified and more standardized regulatory environment, across the continent enabling developers to see the, continent as a market as opposed to, a series of discrete markets, some of which may not be viable to stand alone. And then, I guess the last thing just, an increasing push to incorporate mini-grids, into countries' national electrification strategies as a complement to the public electrification strategies, as opposed to seeing it as a threat or seeing it as a technology that doesn't have the capacity to really make impacts, on the level of national electrification. [Amanda] Thanks, John. I think your last two points kind of segue, into my next question for you. You touched on grid connection policies and national electrification strategies. What I'm curious about, in terms of additional opportunities and maybe I'll direct this to Manoj first, have you partnered with large donors or donors like USAID in the past? And what was helpful about that partnership? Or perhaps more importantly, what could we be doing better as, donor partners in this space? [Manoj] Yeah, sure. We are a recipient of grants from, USAID's Powering Ag. Program. And we have been able to, utilize this grant to enter new markets and use that funding for finessing the business model. So typically, what we have done, is we work on new technology or evolve the business model in India, test it. That's how we take that and bring it in Tanzania and say, in other countries such as Nigeria, if we enter that market. So USAID grant has been tremendously helpful for us. Again, we are a small balance sheet company so it is very hard to take new country risk, without the infusion of grant capital that USAID provided. So I think that has been tremendously helpful, and in the case of Husk to take our business model that has been working to certain extent in India and deploy it in Tanzania. Of course, it will not work as is. So we have to do a lot of tweaking to make it work for Tanzania. And grant capital is really helpful. What is really important and I think John was alluding to that is, the grant capital should not be market-distorting. The access to these kind of capital, should be market-forming and not market-distorting. And that is very key. That is key for any grant provider to make sure it happens. Deploying 100 mini-grids will cost, say whatever, 10-plus million dollars and lot of agencies have that kind of capital to donate but that will completely distort the market. And we should not be doing that. So we have been fortunate to get capital to help us enter new markets and I think that is also based on actual results or the milestones that we have to report to USAID for example. And it is, in my opinion, not market-distorting. And I think that kind of capital is, absolutely essential for rapid expansion of mini-grid around the world and especially in the Africa context. [John] I think that yes, the answer to your question is yes we have, in a variety of different contexts. Some of which I mentioned with regards to RBF, Results-Based Financing for instance. But I think what Manoj was mentioning about, not being market-distorting, is something that I think is a competition that's happening in a more encouraging way of late with large funders engaging, deeply with developers around how, we can create incentivized funding mechanisms so that we as developers are incentivized to do the things that we need to do. Reduce costs, both on opex and capex and improve customer service, while at the same time recognizing that we are competing, in a market that is still being proven out and therefore will need support, for a decent amount of time to get to those goals. And that those goals cannot be achieved, without a significant amount of concessionary and grant funding at the onset. [Amanda] Great, thanks, John. Alexia, did you wanna add anything to that? I think you might have a unique perspective, given you've worked on both the private and public sectors. [Alexia] I just can't underscore enough, the importance of the support that USAID has been providing to the sector overall and the importance and the role that government concessionary capital, grant capital in particular plays in helping to de-risk and prove out innovative new models. So I would say that the philanthropic sector with a couple of notable exceptions is, significantly behind the eight ball, on mobilizing capital into these types of innovative, blended capital structures and having USAID's support early, has been really essential to bringing in other investors to what is a relatively new model for a new sector. So anything that USAID can do to continue to build out and push the envelope, on working in partnership with the private sector really, really makes a huge difference. [Andrew] Even when the regulations are put in place, we had a problem implementing them and pushing through. There's actually a really good, the Commercial Law Development Program which is a Department of Commerce program. They're actually working in Central America and a few of the other places. They've been really helpful. And they're working on pushing the laws through, for the microgrid space. So they're worth reaching out to, especially in that area 'cause they've been very helpful. [Amanda] Thanks for timing in, Andrew. And thank you for all the kind words towards USAID's, work in this space everybody but mostly thank you to the panelists for joining us. Thanks to all of the participants and all of the great questions. So, thanks, everybody.