Tech watch: Blockchain tech to rewire solar financing

From the newsletter

Africa needs around $100 billion each year to meet its energy ambitions, but funding remains a stumbling block. The absence of a transparent, scalable model has slowed capital inflows. Now, Electrify.solar is introducing a novel approach that seeks to convert future electricity sales into digital tokens to unlock financing for solar projects across the continent.

• African energy projects often rely on foreign capital, typically in US dollars or euros, while generating revenue in volatile local currencies. This mismatch exposes investors to exchange rate risks, adding 5–6 percentage points to the cost of capital.

• Although capital exists, concessional finance for small-scale projects is limited. Most of it is directed toward utility-scale developments, leaving the distributed mini-grid sector struggling to secure affordable funding.

More details

• Africa accounts for more than two-thirds of the world’s population without electricity, most of them in sub-Saharan Africa. Nigeria, the Democratic Republic of Congo, and Ethiopia alone are home to over 200 million people living without power. The challenge is particularly acute in remote areas, where extending the national grid is costly and household revenues are too low to justify the investment.

• In Kenya, for example, rural households connected to the grid consume an average of just 11.44 kilowatt-hours (kWh) per month, worth about Sh217 ($1.7). Most of this electricity is used for basic needs such as phone charging and lighting. With such low demand, utilities struggle to recover the high costs of rural grid connections.

• Mini-grids emerged as a cost-effective solution to this problem. Yet despite the hype, the sector has struggled to raise enough capital to meet demand. Investors cite high risks, while traditional debt financing is often unaffordable. Securing such loans can cost hundreds of thousands, even millions of dollars in documentation and legal fees, a prohibitive burden for small-scale developers.

• Electrify.solar’s blockchain-based approach aims to break this financing deadlock. Instead of relying on conventional debt or equity, the company issues digital tokens tied to future electricity sales. Each token represents one kWh of power to be produced by a mini-grid project. Investors buy these tokens upfront, providing the capital required to build the infrastructure.

• For investors, the attraction lies in the combination of financial returns and measurable social impact. Tokens are programmed with an internal rate of return. This makes them appealing to retail and institutional investors, while philanthropic organisations can take concessional terms that help lower risk for commercial participants.

• The model also addresses currency risk, one of the biggest barriers to financing African energy projects. Tokens are sold to consumers in local currency, while tariffs are typically adjusted in line with utility prices. This ensures that investor returns remain intact even when local currencies depreciate. By anchoring returns in token growth rather than fixed currency values, Electrify.solar reduces exposure to foreign exchange volatility.

• For more about the technology, please check our interview with the company founders.

Our take

• The idea behind Electrify.solar is compelling, but the real test will be in execution. If the company can prove its model with mini-grid pilots that deliver both fair returns for investors and affordable power for communities, it could provide a blueprint for continent-wide adoption.

• Still, financing alone won’t solve everything. Rural demand remains very low. Electrify.solar’s approach helps cut the cost of capital, but long-term success will also depend on stimulating demand through productive uses of energy like agro-processing, refrigeration, and small businesses.

• Perhaps the biggest strength of using blockchain lies in its transparency. If investors can clearly trace how their tokens translate into real electricity delivered to homes, schools, or clinics, trust will grow. That kind of accountability could make impact investing in Africa not just appealing, but mainstream.