Summary

The BRILHO initiative is a seven-year program (2019-2026) aimed at transforming Mozambique's off-grid energy market. Funded by the UKAID and the Swedish International Development Cooperation Agency (SIDA), and implemented by SNV Netherlands Development Organisation, BRILHO seeks to stimulate private sector delivery of quality and affordable off-grid energy solutions in Mozambique. Enterprises, especially micro, small, and medium ones, face challenges in accessing clean and affordable energy. This initiative underscores the importance of providing robust financing options to prevent delays in the transition and to mitigate worsening inequality gaps.

Challenge

Mozambique faces significant challenges in energy access and economic inequities. Over 20 million people (~60% of the population) rely on inefficient lighting and cooking solutions (SNV), with 90% of households using solid biomass for cooking, leading to health and environmental issues (Energy Nexus). Additionally, around 20 million people (~60% of the population) live in extreme poverty, earning less than $2.15 per day. The lack of reliable energy hampers education, health, and economic opportunities, necessitating urgent intervention (SNV).The lack of reliable and clean electricity also affects entrepreneurs in Mozambique, particularly for small-to-medium entrepreneurs (SMEs) who compose 98.6% of all enterprises in the country (Journal of Innovation and Entrepreneurship). According to a global survey (WEF), many SMEs identify insufficient funding as a major obstacle to implementing climate action measures.

Programme Goal + Expected Outcomes

One of the United Nations Sustainable Development Goals is to “Ensure access to affordable, reliable, sustainable and modern energy for all” (United Nations Environment programme). To contribute towards achieving this goal, Mozambique, in collaboration with the UK and other international partners, entered into the Energy Africa Mozambique Compact (ALER). As part of this framework, BRILHO was formed in July 2019 and will run for seven years until 2026 (SNV). The initiative is funded by UKAID and SIDA, showcasing the British and Swedish commitment to achieving the Sustainable Energy for All target by 2030. SNV is leading the implementation of the projects in collaboration with Mozambique Ministry of Mineral Resources and Energy, Energy Regulatory Authority, and Funae Energy Fund.

BRILHO targets three identified interconnected areas of energy need in Mozambique: improved cooking solutions, solar home systems, and green mini-grids. The key objectives of the initiative are to (BRILHO):

1. Increase energy access through innovative private sector provision of, and investment in, off-grid clean energy.
2. Build a market of off-grid energy businesses able to operate on a sustainable basis.
3. Build the supporting environment for successful off-grid energy businesses.
4. Support the Government of Mozambique to develop an off-grid strategy, policy and regulatory environment that embeds the market approach into government systems.

Key Strategies

BRILHO offers a distinctive blend of non-reimbursable funding and technical assistance to companies screened through an application process, helping bridge the lack of access to commercial finance. This helps to both generate competitive commercial returns, while also delivering off-grid energy solutions to low-income markets. This is in the form of two grants-based mechanisms (BRILHO):

1. Catalytic grants. Designed to offset the initial costs and risks of starting or expanding a business, these grants cover setup expenses and working capital, and are disbursed either in advance or based on milestones.
2. Results-based financing. These incentives target businesses that provide energy services to vulnerable communities or underserved markets, and seek productive use applications of their products and services. . The RBF grant is constructed as a competitive mechanism to accelerate sales growth, and awarded after sales results are verified.

In addition to financial support, companies who are part of the scheme receive technical and business support from BRILHO to develop business plans, models and operational strategies to enter or scale activities in Mozambique. 

To further enable increased access, BRIHLO has deployed the following strategies (SNV):

1. Research and dissemination. Improving access to information by conducting research and providing high-quality benchmarks
2. Demand activation. Raising awareness among Mozambicans in off-grid areas about the available options and advantages of current renewable energy solutions
3. Policy reform & institutional strengthening. Assisting in the reform of off-grid energy policies and the establishment of a support regulatory environment 

Enabling Conditions

Several enabling conditions are critical for BRILHO's success:

• Government support. Strong backing from the Mozambican government, including the participation of the Minister for Mineral Resources and Energy, Carlos Zacarias, in official BRILHO engagements with British and Swedish counterparts. (BRILHO).
• International funding and partnerships. Financial and technical support from international donors such as UKAID and SIDA to share best practices on green tech solutions and social mobility initiatives (BRILHO).
• Broader coverage of funding structure​. Market development fund portfolio spans from more individual technologies (Improved Cooking Solutions) to household solutions (Solar Home Systems), and community initiatives (Green Mini Grids Developers). This comprehensive funding approach aligns with the 'leave no one behind' strategy, ensuring a more equitable transition by addressing the diverse energy needs of different segments of the population (BRILHO). 

Indicators of Success

BRILHO's off-grid energy solutions are empowering Mozambican communities by creating opportunities in education, healthcare, and employment. These solutions are facilitating access to the digital economy, promoting financial inclusion, and enabling innovative business models that will significantly improve the lives of many people.

Key indicators of BRILHO’s success include (BRILHO Energy Access, SNV):

• Nearly 300,000 connections made to improve access to electrification, of which nearly 10% established for productive and commercial use
• Nearly 200,000 Improved Cooking Solutions units deployed to enhance access to improved cooking solutions.
• More than 1 million Mozambican households reached with demand activation campaigns through radio, TV, and social media.
• 97% of people reported an improved quality of life due to BRILHO's initiatives.
• 91% of people experienced first-time access to energy.
• 1,971 full-time equivalent jobs created through BRILHO's programs.
• 35.3% of technical and management positions are held by women, promoting gender equality.
• Lastly, supported the government in the development of the first regulation on access to off-grid energy in Mozambique. 

Key Takeaways

• Innovative financing instruments tailored to local context can better suit the financing requirements of the private sector.
• Incentives for private sector to address energy service needs in vulnerable communities and underserved areas can help bridge the energy access gap.
• Adopting a differentiated funding structure (e.g., catalytic grants or results-based financing) is also necessary to de-risk and address the diverse needs of various stakeholder groups.
• Coordinating a wide range of stakeholders (e.g., private sector partners, bilateral organizations, national ministries, local communities) helps to create a cohesive market and an inclusive incentive framework.