About

More than 80% of households in sub-Saharan Africa experience the negative impacts of relying on traditional sources of cooking fuel. African Clean Energy (ACE) has developed a sustainable alternative: a solution that combines the positive impact of a cookstove with the PAYG business model and the basic features of a solar home system.

The family-owned company is best known for the ACE One, a hybrid cookstove that runs on any type of biomass. The device symbiotically pairs thermal and electric generation, using a solar-charged battery to provide electricity access and power the ventilator needed for clean biomass combustion. Besides saving an average of 83% on energy expenses and minimising harmful indoor air pollution, the product enables users to power lights, charge appliances and stay connected. The smart system, including a mobile phone with an integrated app, can be purchased using a flexible micro-loan, allowing customers to pay via energy cost savings achieved and earn back their initial investment within six to nine months. ACE’s drive for impact is also reflected in operations. The company maintains a 50% gender split in their workforce, and a 20% ratio of jobs held by individuals with disabilities in their environmentally-neutral factory.

Our support

Despite its clear social and environmental benefits, the clean cooking sector receives comparatively little attention from commercial financiers. ACE was ready to tackle this challenge when they approached the GET.invest Finance Catalyst in early 2018. In the beginning, the Finance Catalyst advisor supported a detailed review of the business model and business planning documentation. This work, in turn, was the basis for advisory on reducing operating expenses, increasing gross margins, and improving the quality of the portfolio of clients under consumer credit arrangements. The Finance Catalyst recommended the hiring of a Global Financial Controller, with whom the advisor started working closely and intensively to improve the robustness of ACE’s financial model. This helped the company in approaching financing sources for initial discussions. To accompany ACE in a convertible debt raise with Oikocredit (€1m), the advisor drafted an independent opinion to the investment committee, pointing out the strengths, opportunities and risks of the investment. An application to grant financier EEP Africa (€0.5m) was also supported successfully.

Furthermore, the Finance Catalyst advised the company on the establishment of the ACE Foundation, a facility dedicated to providing client credit to low-income households, and connected ACE to further opportunities for grant and debt financing. When the time came to raise equity capital, ACE was accompanied by a team of advisors in developing an initial fundraising strategy and in restructuring its financial model. The Finance Catalyst continues to collaborate effectively with ACE and a specialised financial consultancy, leading the fund raise.

The outcome

With the support of the GET.invest Finance Catalyst, ACE has raised €1.5 million of debt and grant funding. A restructured financial model, an effective growth strategy and a strong network of supportive partners are helping the company leverage its expertise to scale up in Lesotho and Uganda. The company has started to set up a network of shops to sell their products and is looking to diversify to additional energy products and extend operations to other sub-Saharan African countries. This will contribute further to creating a comprehensive network of much needed energy services for rural and last mile customers.

Most importantly, ACE delivers tangible impacts to the communities in which it operates. With over 60,000 units sold, the company has served more than 300,000 people with clean energy. This has averted at least 150,000 tonnes of wood fuel as well as 250,000 tonnes of CO2 -equivalent emissions, according to the company. Rural women, who are mainly responsible for sourcing fuel and preparing meals are no longer exposed to toxic fumes, benefit from an increased disposable household income and have time freed up to follow other activities. The mobile phone that is part of the ACE solution has also enabled the digital inclusion of many customers, a new frontier of impact that ACE is working towards.

Disclaimer: Support to the company is ongoing as of 06-2021. Projected results are subject to change.