Trine invests in companies and projects that create an impact on local communities and the planet by giving people in emerging markets access to affordable and clean energy, people who may not have had reliable access to electricity at all before. One of these is Distributed Energy, a company that develops solar power in communities where the energy infrastructure has historically been lacking. To learn more about what it’s like to work in this market, we sat down with Ruchir Punjabi, CEO and co-founder of Distributed Energy.
Distributed Energy makes solar energy affordable and accessible for small and medium enterprises (SMEs) in emerging markets. Founded in 2019, the company has the majority of its live plants in India but also operates in the United Arab Emirates, Rwanda, Botswana, Burkina Faso, Kenya, and Tanzania. “In terms of making solar affordable,” said Ruchir, “the primary focus is financing through power purchase agreements where we sell electricity, or some form of loan/lease.” The goal is to spread out the cost of the plant over time, making the transition more affordable.
Distributed Energy is a company that develops affordable solar energy in emerging markets in Asia and Africa, pioneering the renewable energy transition in these markets.
Distributed Energy started working with Trine in June of 2023, in an agreement for a $5 million debt sheet from Trine towards solar assets in India. “As any debt lender, they presented certain requirements, and as long as we meet them they list our projects on their website and provide us with debt,” said Ruchir, emphasizing Trine’s role as a catalyst in financing renewable energy. “There is a lot of capital available for large-scale utility solar, and some money available for energy access small-scale solar, used for communities, mini-grids, and so on. But if you want to fund solar for what is considered the engine of the economy – 90% of the economy is from SMEs – there is almost no money available.”
Trine as a catalyst for solar investments
Ruchir went on to describe the difficulty for smaller companies to borrow money in countries like Burkina Faso, where banks require 100% cash collateral for loans to SMEs. Early investors who are willing to take a risk are of supreme importance in these markets. “Trine plays a catalytic role because as a crowd funder, they are willing to take risks that traditional lenders are not willing to.” After Distributed Energy got Trine on board, other lenders noted that Trine rates them highly, which paves the way for other capital to be more comfortable in making investments. “I hope they continue to play that strong role because people like us are able to jump from being a nobody to being somebody because there are people like Trine in the middle,” said Ruchir.
“The day banks start lending for solar without needing additional collateral is the day we’ve won,” said Ruchir Punjabi, CEO and co-founder of Distributed Energy
The impact requirements from Trine were not a problem for Distributed Energy to comply with. “We have been measuring four factors of impact from the beginning: coal displacement, emission avoidance, air quality, and SME savings,” said Ruchir, continuing to explain that Trine’s other requirements were more beneficial. “Trine needed a structure to appropriately lend to us for solar plants in India, so we needed to find a structure that was both compliant with laws in India and worked for Trine.” This requirement pushed Distributed Energy to create a legal node on structuring in their company, which skips about a month of work when approaching other lenders outside of India.
What we need to expand solar energy projects in Africa and Asia
In their work of kickstarting solar projects in emerging markets, Distributed Energy has found three major challenges: A lack of trust from investors in projects in emerging markets; managing and underwriting risk in these markets; and ensuring that the operations are of the appropriate quality while staying within budget.
Lack of trust: Some of the capital that has gone into the solar space in emerging markets before was not used very well, which means that investors are unwilling to invest in these projects again. This puts Distributed Energy in a classic startup no man's land, where they have some track record, but it’s not big enough for big lenders to get excited yet, while some of the smaller investors have been burned once by the market. “Finding equity capital that is excited to back us is a lot of hard work.”
Managing and underwriting risk: In some of the markets there are no standards for these types of lending, and there can even be cases where people take the equipment provided but do not pay, meaning that for pioneers like Distributed Energy, a lot of work needs to go into checking the loan takers and the measures the company can take if they don’t follow their agreement. “If we do badly, we will set a bad example for the others who follow us, and that responsibility we take really seriously.”
Operations: When building and managing plants, Distributed Energy has to make sure that the partners they work with are of high quality, otherwise the projects run a serious risk of going over budget. “You really have to do a lot of diligence on the partners you work with, and have the ability to execute in these markets with your own people.”
A Distributed Energy project in India, financed by Trine
More investors need to join the fray
Solving these challenges requires new ways of doing things, and Distributed Energy acts as a pioneer in these markets, putting the systems in place that allow more capital to flow into energy projects, which Ruchir believes will happen quickly once they reach a certain tipping point. “As we build a track record, we will get more people interested.”
Looking into the future, Ruchir explains what lies ahead for Distributed Energy if they get more investments through Trine and other actors. “We want to continue to mainly do small and medium solar until we reach 50 million in assets under management,” he explains, “After that, we want to enable other aspects and go deeper in our relationships with businesses, to do things like energy efficiency, energy trading, energy storage projects and so on.” A lot of businesses have complex energy requirements, and by being able to provide systemic solutions Distributed Energy can help them bring their business ideas forward in a sustainable way. In the end, preparing businesses in emerging markets for further investment is the goal. “The day banks start lending for solar without needing additional collateral is the day we’ve won.”
Invest in solar energy in emerging markets with Trine:
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Trine's investment focus on providing affordable and clean energy to underserved communities is truly impactful.
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@johnte_ndeto Thank you so much 🙌
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Big thanks to Trine #FinancingRenewables for being a catalyst & supporting these impactful projects. Let's keep spreading solar power & clean energy access around the world!
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@george_kariuki Thank you so much! It's fantastic to work with such impactful borrowers like Distributed Energy!
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Good investment needs to have more in investment on green energy
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@rotich_kim We 100% agree! Climate finance needs to be a priority!
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Super interesting to see Ruchir Punjabi working tirelessly to ensure no one is left behind in this journey of diversifying green energy across the globe. Applause Punjabi.
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@chris_ndungu He's truly making an impact on a massive scale!
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To ensure that green energy diversifies across everywhere in the world,making it cheap must be a top priority.Good job Ruchir Punjabi for making solar affordable and accessible.
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@rukia_ahmed_abdi I am inclined to agree. The costs of these products in green energy have to go hand in hand with the economic capability of the people native to these regions otherwise we would only be out pricing them out of renewable power.
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This is a huge step in ensuring that we all go green in the near future
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@jane_wangui The work of Distributed Energy is incredibly impactful!
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Very interesting to hear about the challenges of financing solar projects in emerging markets, I didn't know about that! Another reason to support Trine in your work to introduce funds in those regions, thank you for your work!
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@Adam_Wallin Thank you! It was great for Ruchir to give an insight into the challenges faced by companies trying to make solar accessible. He gave the readers a lot to think about!