Off-Grid Solar: Investment at a Crossroads

[Guest blog] What the Data Tells Us About the Future of Off-Grid Solar

By Laura Fortes, Senior Project Manager, Access to Finance @ GOGLA

In 2024, the off-grid solar market continued to attract significant capital with $299 million invested across 158 deals globally. But beyond the numbers, the past year marked a period of adjustment and a strategic shift: operational discipline, refinement of models, and in some cases, consolidation. 

Looking at overall numbers first,

• Scale-up companies continued to raise the largest share of funding with $229m in total, with the majority coming through securitizations (77%), reflecting a growing reliance on structured, risk-aligned financing. Notably, Engie Energy Access was acquired by Ignite Power in Africa, an important example of strategic realignment at the top end of the market.

• In the middle bracket, 16 start-up companies attracted $48m, which represented a 69% drop from the three-year average. While some were acquired, others exited due to operational and strategic missteps — including misaligned assumptions about consumer demand and rapid scaling. The start-up space has learned tough lessons, but these experiences have brought more realism to growth expectations and sharpened the path to sustainability.

• Finally, 67 seed-stage companies received a combined $19m, maintaining relative stability compared to previous periods. This segment continues to buzz with innovation, especially among locally-owned African companies working on the ground. For investors seeking early-stage opportunities with high impact potential, this is a particularly rich area to watch.

• Across all categories, ‘PURE’ (Productive Use Renewable Energy) investments fell following a standout 2023, but the fundamentals remain strong and the space continues to attract entrepreneurial energy and innovation, especially from African-led ventures developing new models for productive use in rural contexts (think Keep IT Cool or Oorja for instance).

Overall, we remain optimistic that the sector can continue to deliver value to investors and communities alike, in light of four key factors:

• Political Will Is Converging - The M300 coalition is aligning governments, donors, and DFIs around shared goals; but more importantly, it is unlocking significant subsidy commitments. These efforts should dramatically increase affordability and expand the addressable market for off-grid solar, opening up real scale potential for commercial investment.

• Off-Grid Solar Is Core Infrastructure - Off-grid solar is now seen as a central solution for delivering universal energy access. Nearly 50% of unnelectrified populations are expected to be reached through off-grid approaches, and policy frameworks are adjusting to reflect that.

• New Equity Funds Are Entering the Market - Instruments like the IFC’s Zafiri Fund are helping to rebuild equity flows, offering tailored, flexible capital for companies navigating early- and growth-stage transitions.

• A Climate Investment with Strategic Value - Off-grid solar is now recognized as part of the global climate adaptation and resilience strategy, with institutions such as the Green Climate Fund backing off-grid solutions as critical enablers of low-carbon inclusive development.

All in all, the off-grid solar sector is experiencing momentum and maturity, and generating meaningful opportunities for investment. Business models are tested, innovation is accelerating, and the enabling environment is improving. While early-stage funding is tightening, scale-ups are proving resilient with new financing tools like securitization gaining traction. Demand signals from governments and consumers are intensifying. For investors looking to enter or re-engage, 2025 offers a strategic entry point. The time to act is now.

For more, check out GOGLA’s latest investment data and analysis here.