Adapting Fund Allocation & Distribution for COVID-19 Relief
Appliances are playing an important role in keeping off- and weak-grid communities healthy, safe and connected through the COVID-19 pandemic. New data from 60 Decibels found that since the start of the pandemic, one third of off-grid appliance consumers are using their products more. But the companies behind these critical services are struggling.
Clean Energy Access Companies Face COVID-19 Impacts
Under the Efficiency for Access Coalition, CLASP is adapting and reallocating program funding to support clean energy access companies impacted by COVID-19. Through conversations with 40 companies selling efficient appliances for off- and weak-grid communities, we found that lockdowns and resulting economic turmoil is impacting all aspects of business—from inventory management to sales and distribution to customer service. Nearly a third of companies lack the capacity to sustain business without immediate relief, and 75 percent are considering layoffs. One third of companies said that less than $25,000 in relief funding would keep them from closing shop.
“The greatest impact of the coronavirus outbreak on ColdHubs is loss of projected revenue indefinitely. Across Nigeria, outdoor markets and produce aggregation centers are closed and we do not know when they will reopen. Our business model is based on vendors renting daily space in our cold units to store their produce, but all of our ColdHubs are closed.”
–Nnaemeka Ikegwuonu, ColdHubs CEO
Providing Small Grants for Relief
Through the Coalition, CLASP and the Energy Saving Trust are coordinating with the IKEA Foundation to provide small relief grants to SMEs that are R&D grantees or that are winners or finalists in recent Global LEAP Awards competitions. The funds will be reallocated from Coalition activities delayed due to the pandemic and instead delivered as small grants of $5,000-$10,000. Small grants can provide essential financial support to help companies continue to deliver critical services and avoid layoffs until a larger relief fund is established.
Restructuring Global LEAP Awards Results-Based Financing
CLASP has also converted over $340,000 of total financial incentives for Global LEAP Awards Results-Based Financing (Global LEAP+RBF), provided by USAID through the Powering Agriculture Energy Grand Challenge, from performance-based disbursements into upfront funding disbursements to support companies intending to sell energy-efficient solar water pumps. In acknowledgment that product sales have almost entirely come to a halt, this disbursement of funds will no longer be tied to verification of an eventual end consumer product sale. We expect to allocate this funding to companies from mid-July.
In addition, CLASP will be disbursing more than $1M in incentive funding provided by EnDev to solar water pump and off-grid refrigerator companies participating in Global LEAP+RBF to address some of their working capital constraints. The incentive structure has been adjusted to disburse higher per-unit incentive amounts for product inventory, now paying the bulk of the incentive funds pre-sale as opposed to post-sale, i.e. upon verification of a legitimate sale. We have pivoted the program structure in recognition that distributors have working capital tied up in inventory sitting in their local warehouses, which they are unable to sell due to restrictions in movement.
These two changes to the Global LEAP+RBF funding structure are aimed at helping companies maintain their liquidity and retain staff that are critical to jump-start operations.
CLASP Supports Additional Sector Support
CLASP has joined many of our partners and endorsed a letter calling on all donors, foundations and philanthropies to quickly mobilize to provide relief funding for the energy access sector—this is critical to safeguard the collective progress we have made towards sustainable, clean and reliable energy for all.
Read our initial note of support by CEO Christine Egan for additional relief fund financing.