Source/author : ACUMEN
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Despite the success of a number of private companies in the off-grid energy market, the profitability of this sector varies greatly, and its investment attractiveness is mixed. One major challenge is that it is not always commercially viable to extend off-grid energy solutions to the poorest, hardest-to-reach customers; therefore, addressing commercial attractiveness is critical to unlocking the potential of private sector clean energy initiatives for the poor.
We believe this challenge can be overcome by creating a direct economic incentive for reaching these markets with off-grid solutions and creating significant value for these communities. In this report, we outline a blueprint for an outcomes fund that incentivises positive impact for last-mile distribution and catalyses greater private investment in underserved energy markets.
The core premise of this outcomes fund is both simple and powerful: the fund tracks social outcomes for the customers these companies are trying to reach, using these outcomes as a basis for payments to the companies serving them. In this way, the fund ensures that organisations are rewarded for the quality of results they produce for their customers. This contrasts with current output-based models which focus on promoting the supply of products, instead of incentivisation for a range of enterprises.