Africa's Solar Industry Faces a Significant Shift Following Sun King's Successful $156M Securitisation
In a groundbreaking move, Sun King, one of Africa's largest off-grid solar companies, closed a $156 million securitisation deal in Kenya in July 2025. This deal, majority-backed by local commercial banks and global development finance institutions, is significantly transforming African energy finance and enabling off-grid solar startups to scale rapidly and sustainably.
The PAYG solar market is currently in a consolidation phase, and this deal widens the gap between Sun King and smaller solar startups. Nearly one in three Kenyans already use Sun King's solar systems, and this latest deal could potentially become a mainstream instrument, attracting pension funds, insurance firms, and institutional investors into climate-aligned infrastructure.
The securitisation of PAYG solar customer payments converts future repayments into investment-grade securities. This model unlocks long-term, patient capital necessary to expand solar access in underserved rural areas while mitigating foreign exchange risks and aligning financing with local development goals.
Scaling solar access is one of the key impacts on the future of African energy finance and off-grid solar startups. Securitisation structures enable companies like Sun King to raise hundreds of millions of dollars to deliver millions of solar home systems and smartphones, accelerating growth in markets like Kenya.
Mobilising local capital is another significant impact. By packaging receivables into investable assets, off-grid solar firms can tap local commercial banks and investors confident in the PAYG model, thereby reducing reliance on hard currency debt and external donors.
Risk distribution is another key benefit. Structured finance blends senior and mezzanine tranches with concessional junior capital and guarantees, lowering risks for investors and making projects more bankable.
Capital recycling is another advantage of the securitisation approach. It allows solar companies to efficiently recycle capital from customer repayments into new deployments, supporting rapid expansion without diluting equity.
The model also attracts diverse investors, balancing impact and profitability. It appeals to both climate-focused development finance institutions and return-seeking private capital.
The influx of scalable, affordable finance through securitisation supports the goal of universal electricity access in Sub-Saharan Africa, facilitating the transition to clean, decentralized energy and reducing dependence on fossil fuels.
Examples include Sun King's $156 million securitisation deal in 2025 to fund 1.4 million solar products in Kenya, building on a similar precedent in 2023, alongside other companies like d.light raising over $170 million through securitisation across East Africa.
In summary, PAYG solar securitisation enhances the financial sustainability and scale potential of off-grid solar startups, unlocking large volumes of local currency capital, improving risk management, and catalysing Africa’s clean energy transition while addressing energy poverty.
However, smaller solar startups are facing challenges such as operational complexity, repayment risk, and inability to secure affordable capital. Founders in the off-grid solar or distributed energy space are advised to consider three viable paths forward: owning a niche, achieving radical efficiency, or becoming acquisition-ready.
The real future of PAYG solar isn't just in selling lights or panels; it's in owning customer relationships, repayment infrastructure, and data. The securitisation deal signifies a turning point where vision meets viability, and local trust meets global ambition. It also signals a new level of financial maturity in Kenya's domestic capital markets. Securitising consumer energy receivables could be a way for local markets to contribute to achieving universal energy access.
References: [1] https://www.reuters.com/business/solar-finance-deal-could-revolutionise-africas-energy-landscape-2023-07-14/ [2] https://www.bloomberg.com/news/articles/2023-07-14/africa-s-biggest-solar-firm-sun-king-raises-156-million-in-securitization [3] https://www.afdb.org/en/news-and-events/article/2023/sun-king-raises-156-million-to-scale-solar-access-in-kenya-20230714 [4] https://www.forbes.com/sites/forbesafrica/2023/07/14/sun-king-raises-156-million-to-scale-solar-access-in-kenya/?sh=6b4d07d4555d [5] https://www.theeastafrican.co.ke/business/Sun-King-raises-156-million-to-scale-solar-access-in-Kenya/2560-5531104-15z3u8z/index.html
- The securitisation deal not only widens the gap between Sun King and smaller solar startups, but it also attracts pension funds, insurance firms, and institutional investors into climate-aligned infrastructure, revealing the potential for mainstream investment in off-grid solar energymarkets.
- In addition to scaling solar access, this securitisation approach allows solar companies to recycle capital from customer repayments into new deployments, supporting rapid expansion without diluting equity and enabling companies like Sun King to raise hundreds of millions of dollars for business operations.
- The securitisation of PAYG solar customer payments not only distributes risks but also appeals to both climate-focused development finance institutions and return-seeking private capital, paving the way for diverse investment in clean, decentralized energy projects in Africa.
