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The bottleneck in distributed renewable energy is not capital. Rather, it is the structure in which capital is placed.
Across emerging markets, the lifeblood of the DRE sector are the local EPCs and installers building projects.
These small businesses are underbanked and thinly capitalized, limiting how fast they can grow and respond to new customer demands and the urgency of many communities and businesses to gain energy independence in a time of volatile oil (and hence, grid) prices. The capital constraint is most felt at the construction stage, where both capital outlay and perceived risk are high. Institutional financiers looking to deploy large tickets into high-impact projects often find the opportunity too fragmented or too early in the project lifecycle to access directly.
The result is a tremendous gap in financing to procure the equipment necessary to meet growth targets for installed capacity. In India alone, we expect at least 10GW of build-out in C&I solar per year over the coming years, equating to $2.0-2.5 billion of equipment costs to finance on an annual rolling basis.
That is the problem Odyssey's procurement solution is designed to solve.
The Structure
Odyssey deploys capital through non-recourse special purpose vehicles that achieve three objectives:
- aligns interests between Odyssey and our lending partners, carving out specific geographic and project type mandates that are being served by Odyssey and are high priority for specific financiers;
- allows us to multiply our ability to respond to market demand by leveraging our corporate balance sheet; and
- is replicable across geographies and project types.
That last point matters most — replication is what turns a transaction into a market-building approach.
What It Looks Like in Practice
On the ground, the model supports small-scale EPCs that install distributed solar projects but lack the working capital to grow. Through financing partnerships with BII, Triple Jump, and Cygnum Capital for Sub-Saharan Africa DRE, we offer these installers support in procuring quality equipment at competitive pricing, paired with a working capital benefit through deferred, milestone-based payments. More projects get built. More customers get connected.
Odyssey is applying this same structure in India with a European DFI — demonstrating that the model is portable across markets.
For capital providers, the value is different but complementary. Odyssey offers institutional financiers exposure to a segment of the renewable energy value chain that, due to small ticket sizes and limited counterparty balance sheets, is not accessible through conventional approaches.
Odyssey has shifted the paradigm to make this sector a bankable asset class through a process-driven aggregation approach which features: robust supply chain due diligence, compliance with international E&S standards, and visibility on shipment and construction progress through the platform. Moreover, Odyssey’s systematic underwriting framework focuses on local market and regulatory framework, EPC track record, project fundamentals, takeout counterparty, and repayment mechanism at construction milestones.
The impact that commercial financiers can make far exceeds that of a single asset project financing due to the revolving nature of the facility. Capital is recycled up to 15 times over the loan life, so a $20 million financing can support up to $300 million of equipment costs and around $450 million of total project costs, a 22x multiplier on initial capital outlay.
The Opportunity
There is no shortage of interest in financing small-scale clean energy in emerging markets. What has been missing is a portfolio approach to deliver capital at the point in the project lifecycle when it is most needed.
For financiers thinking about how to move capital into this space, we look forward to engaging further and showcasing opportunities to deploy in India, Sub-Saharan Africa, and Mexico as our keystone examples.
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