Finance mechanisms for private sector-led energy access in urban informal settlements

This paper explores various finance mechanisms that would enable Energy Service Providers (ESPs) to deliver sustainable energy solutions to urban informal settlements in Sierra Leone. While focused on clean cooking solutions, most insights presented in this paper also apply to other energy solutions, such as decentralised renewable energy and productive use appliances in the context of urban informal settlements. Financing mechanisms such as equity, debt, output-/outcome-based grants, crowdfunding, and carbon credits are reviewed through a clean cooking ESP lens. Equity and grants appear to hold the highest share of financing into the clean cooking space, although there is considerable potential in other financing mechanisms, such as carbon credits and output-based grants, which could substantially de-risk capital costs for ESPs.