1. What is the RBF?
The Liberia Solar Home System Results-based Financing (LSHS-RBF) programme is jointly implemented by Energising Development and BRAC Liberia with funding from the Netherlands Ministry of Foreign Affairs (DGIS), and the Rural and Renewable Energy Agency (RREA) with funding from the World Bank. The LSHS-RBF provides Direct Subsidies (DS) which reduce the overall cost of ownership of SHS for eligible beneficiaries thus addressing the affordability gap and Indirect Subsidies (IS) which aim to provide an incentive for companies to expand and operate in underserved markets.
In a Results-based financing (RBF) approach commercial off-grid solar (OGS) companies receive a financial incentive for achieving agreed-upon results including sales/installation of SHS to eligible customers (see Annex 2: Frequently Asked Questions for further information on RBFs).
The programme will run from December 2023 until June 2025 for the Direct Subsidy and up until December 2026 for the Indirect Subsidy.
The objective of the RBF is to provide access to quality, clean, affordable, and better energy services in existing and underserved markets across Liberia through stand-alone solar home systems (SHS) and close the affordability gap faced by the most vulnerable parts of the population. The key result indicator is the number of people provided with new or improved electricity access through SHS. The RBF also aims to encourage the growth of emerging solar companies where possible and support their participation in the OGS market growth.
1.2 Target population
The RBF will target vulnerable beneficiaries (customers) in underserved and remote off-grid areas of Liberia. Annex 3 provides an overview of all eligible counties and districts. Generally, all sales to these counties are eligible to receive an Indirect Subsidy (IS), which provides an incentive for companies to expand and operate in underserved markets. Additionally, the most vulnerable beneficiaries – i.e., eligible residents of Gbarpolu and Grand Cape Mount counties – are eligible to receive a Direct Subsidy (DS), providing a direct price reduction to end-consumer prices (see Annex 4).
It is estimated that the program will reach at least 37,000 people through DS, and 78,000 people through IS.
1.3 Product eligibility and requirements
The two RBF components support sales of the following product categories:
- For the Indirect Subsidy (IS) component, eligible products include all Verasol-certified SHS that meet at least Tier 1 service level1; with a maximum capacity of (up to) 350 Wp.
- For the Direct Subsidy (DS) component, eligible products include all Verasol-certified SHS that meet at least Tier 1 service level (see definition of MTF tiers); with a maximum capacity of (up to) 20 Wp. Thus, all sales meeting the requirements of the DS component can also be eligible to receive an IS payment.
All products sold under this programme must comply with a minimum 2-year warranty period on the solar home system and minimum 1-year warranty on accessories (e.g., radio, flashlight) from date of purchase, s. section 3.1. The following table provides an overview of product eligibility requirements for both RBF components.
All products sold under the LSHS-RBF must be labelled with a product sticker which will include but not be limited to the logos of the donors of program. Costs for labelling must be born by the companies. Label templates will be provided by BRAC Liberia to contracted companies.
1.4 Incentive budget and levels
Companies are encouraged to apply for participation in both RBF components, DS and IS. All DS-supported sales are eligible for IS-support, but not vice versa. The total budget for disbursement of Direct Subsidies (EnDev/BRAC Liberia) amounts to approx. USD $2.1 million, while the total budget for Indirect Subsidies (RREA/World Bank) amounts to USD $1.5 million.
1.4.1 Direct Subsidy – Introduction, incentive level, and budget allocation
The aim of the Direct Subsidy (DS) is to reduce the end-user price and address affordability challenges in the sector. As such, the entire incentive fully benefits the end-user and is thus reflected in a price reduction (“Discount”). Customers are required to pay the remaining share of the product price, the so-called “customer contribution”. Customers are free to choose a system according to their needs and ability to pay the remaining customer contribution. Companies will be provided with a DS Customer Eligibility Tool (see FAQ for further information on this tool) during the program. The DS Customer Eligibility Tool will be used by a companies’ sales team to ensure that a targeted potential customer meets the eligibility criteria for the DS component, and that this potential customer has not previously purchased another system under the program or already has access to electricity (that he/she can afford).
The DS component will initially be piloted in two counties, and – depending on success of the pilot – scaled up at a later stage to include more counties. DS incentives are disbursed for all eligible and verified sales within the following counties (for list of eligible districts in those counties, see Annex 4):
Participating companies are informed about the incentive level at the time they join the programme. Any subsequent changes to the incentive level will be communicated before the new incentive levels are enforced.
1.4.2 Indirect Subsidy – Introduction, incentive level, and budget allocation
The aim of the Indirect Subsidy (IS) component is to promote the sustainable development of the off-grid solar sector and enable companies to provide access to energy for residents in rural and/or hard to reach areas. The subsidy can be used by companies to build infrastructure, support logistics and product distribution, and provide after-sales services and maintenance, thus indirectly contributing to price reductions. The incentive level is structured according to remoteness and/or difficulty of doing business in the respective county. The more remote, or more difficult business operations, the higher the subsidy. Counties are divided in three distinct groups:
The Indirect Subsidy (IS) is restricted to one system per household, and as such it is the company’s responsibility to ensure that sales are made to eligible households who have not previously purchased an SHS under the program. The RREA will work to develop a customer eligibility tool for the IS component, to assist companies in determining customer eligibility before making a sale, using customer ID to enable companies to confirm that an individual has not already bought an SHS under the LSHS-RBF.
Companies have the option to request a down payment of 30% of their allocated funding from the IS prior to sales (as an advance). This downpayment amount will be disbursed upon proof of purchase of the product by the company and physical inspection of shipment/goods in Liberia, and the remaining share upon verification of sales. Companies that do not request a downpayment will receive 100% of the incentive upon verified sale.
1.5 Implementation partners
This RBF programme is jointly implemented by Energising Development and BRAC Liberia, and the Rural and Renewable Energy Agency (RREA).
Energizing Development (EnDev)
EnDev is a multi-donor partnership promoting access to sustainable, modern, and affordable energy services to the most vulnerable communities, and is currently funded by Germany, the Netherlands, Norway and Switzerland. EnDev is jointly coordinated by Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and the Netherlands Enterprise Agency (RVO). EnDev has been commissioned by the Netherlands Ministry of Foreign Affairs (DGIS) to implement a novel Demand-Side Subsidy (DSS) – here called Direct Subsidy (DS) – component in four sub-Saharan countries, including Liberia.
BRAC Liberia is an established, registered national NGO since 2008 and is an important development actor in the Liberian development ecosystem, with a track record implementing a transformative social enterprise programming in 11 of the 15 counties in Liberia. BRAC Liberia is an operating affiliate of BRAC International (BI) and supports BRAC’s holistic approach, combining social development with market-based solutions to achieve impact at scale. BRAC Liberia acts as Fund Manager of EnDev’s DSS component in Liberia.
Rural and Renewable Energy Agency (RREA)
The Rural Renewable Energy Agency (RREA) is a key governmental body in Liberia tasked with accelerating rural economic transformation through renewable energy. Focusing on rural and peri-urban areas beyond the national grid’s reach, RREA designs, implements, and promotes projects using solar, wind, biomass and hydroelectric power. By developing mini-grids, stand-alone solar systems, and other off-grid solutions, the agency works to align with Liberia’s sustainable energy goals. RREA is the lead implementing agency for the World Bank and implements the RBF together with EnDev and BRAC Liberia.
2. How does it work?
Applications will be accepted on a rolling basis until 31 May 2024. Please note: Funding will be allocated on a first-come-first-serve basis and therefore early applications are strongly encouraged. Failure to submit an application within the specified timelines will result in the application being nullified.
All applications must be submitted digitally via email using the Application Form or RBF Fund Management Platform, with supporting documents attached. The LSHS-RBF will use an innovative web-based platform for key interfacing aspects such as tendering and application, evaluation, process management, monitoring, verification of sales, tracking of disbursement requests, and financial reporting. This platform may not be available at the beginning of the programme, but at a later date. Initially, application and claim processes will be handled manually.
Companies will be provided with capacity building support from BRAC to ensure that they fully understand the application process and/or that they can prepare and submit the required documents needed for the application.
The steps below provide a comprehensive overview of the contracting process for the RBF project:
- Application submission by companies
- Pre-screen check by BRAC to ensure that all required documents have been submitted
- Review of application
- Due diligence site visit and additional document review
- Signing of agreements by companies
Companies meeting eligibility requirements (see section 3 and Annex 1) will be evaluated through the submission of applications, application scoring, and due diligence. This process will focus on companies’ track record, capabilities, systems and processes, in order to confirm that companies are able to deliver on the sales targets set out in their application form.
If a company’s application is successful, the company signs Service Contracts for each subsidy component applied for (DS & IS). The service contracts for the DS component are signed with BRAC Liberia and witnessed by EnDev Liberia. The service contracts for the IS component are signed with RREA.
Both service contracts will be result-based contracts, which set the maximum results the participating organization may achieve during the contract period. In addition, the service contracts provide information on eligible products, applicable incentive levels, as well as the rights and obligations of both parties.
As the service contracts are results-based, participating companies do not receive any funds if they don’t make or claim any sales. Also, there are no penalties for not making sales or not reaching the maximum results outlined in the service contracts.
The service contracts will be valid until the end of the RBF or until the earmarked incentive budget for each component is exhausted. The program adopts a performance-based approach, where companies may see their awarded amounts adjusted based on their performance.
Once the service contracts are signed, companies can start selling SHS under the LSHS-RBF.
For the DS component, companies must verify and confirm the eligibility of every end-user using the DS Customer Eligibility Tool before signing a contract (see FAQ document for further information).
Once the sales agent/company finds the end user eligible, he/she can be registered in the DS Customer Eligibility Tool and a contract between the company and end user can be signed. If a company sells at the subsidised price to end users that are not eligible (e.g. not living in the areas mentioned above) it will not receive a subsidy for these end-users. Upon installation, the company or its related sales agent validates the installed product (incl. the serial number) using the DS Customer Eligibility Tool.
Each company must offer a minimum of 2 pricing groups/offers (w/ one being a pay-as-you go model) and may have a maximum of 4 pricing groups/offers per product. Furthermore, companies will be required under the programme to affix a sticker with the programme name and names of donors on all products sold under the LSHS-RBF (a sample file will be provided to each company by BRAC Liberia).
For the IS component, companies must verify that a customer is living within the eligible districts (see annex 3) and that they have not previously purchased a system under the program. This can be done by asking customers and by physically inspecting the location to ensure that there is no other installed system purchased through the program at the location, e.g. by checking that the system does not have a programme sticker on it sold through the program should have a sticker with the programme name, and names of donors.
The RREA will develop a customer eligibility tool for the IS component to assist companies in determining customer eligibility (that an individual has not already bought an SHS through the LESSAP RBF) before making a sale. The IS Eligibility Tool may not be available at the beginning of the programme, but at a later date.
Participating companies will claim funds for supported systems centrally through BRAC Liberia for both RBF components. For a claim to be eligible, it must meet the following criteria:
- Claim size: minimum 100 eligible sales for the first claim, thereafter minimum 200 eligible sales;
- Submission period: between each claim request, there should be a time lag of at least 3 months.
- Last claim: The last claim must be submitted 8 weeks before the end of the contracting period.
Reporting requirement: Companies need to comply with the reporting requirements to be eligible for claiming (see FAQ for details on the claiming process).
2.4 Verification and disbursment
Following the claim verification step by BRAC, a statistically significant sample of customers is verified using phone and field verification by an Independent Verification Agent (IVA).
Once the verification is completed and the claim passes, BRAC initiates the disbursement for DS claims, and RREA initiates the disbursement for IS claims. The disbursement is adjusted if:
- System supported by the RBF has been returned or repossessed,
- Sales could not be validated,
- The customer was ineligible at the time of purchase,
- The customer gave the system to someone in an ineligible county,
- The customer has not bought a system,
- The customer had another system previously purchased under the LSHSRBF
3. Is my company eligible to participate?
The RBF supports the sale of SHS to eligible end users on a commercial basis. As such, private firms, NGOs, or cooperatives (in the following: “companies”) that follow commercial business models are eligible to apply for the programme.
Companies with a pay-as-you go model and/or direct cash sales model are eligible for the programme (Please note: Rental and fee-for-service models as well as productive-use-of-energy (PUE) applications are not eligible under the LSHS-RBF, but may be considered in a later phase of the programme). Detailed minimum eligibility criteria can be found in Annex 1.
On the application form companies are expected proof and describe the following: at least one year’s market experience; dedicated sales and marketing staff; a clear approach to credit risk management for pay-as-you-go sales (if applicable); the ability to collect customer details through a database and provide all information required for RBF claims; the ability to honour warranties and provide adequate after-sales services (see section 3.1); the ability and commitment to e-waste management, in particular to ensure responsible management of products at end-of-life (see section 3.2); the ability and commitment to develop and implement a gender policy.
Applicants that have received grants from other organisations in the past and/or are currently receiving grants from another organisation are eligible to apply. However, these companies must disclose this information in the application process and provide required documentation. Companies that receive grant funding from BGFA will be asked to sign a data sharing agreement as part of their contracts to ensure that BGFA sales are not counted for this RBF program and vice versa.
In general, it should be noted that the following companies are excluded from the programme:
- Charities and research / academic institutions operating in Liberia or outside of Liberia
- Private companies owned or co-owned by staff from BRAC Liberia, GIZ, RREA, World Bank or any other institution directly involved in the RBF.
3.1 Warranty, after-sales services, and Grievance Redress Mechanism (GRM)
Companies are expected to offer a minimum warranty as stipulated in section 1.3 on all products sold under the LSHS-RBF. This includes provision of written information to customers at the time of sale regarding (e.g., as part of sales agreements) about warranty period, customer rights and after-sales services, contact information, customer complaint hotline, and safe disposal of products etc. Companies are expected to solve customer complaints within a reasonable time period. Companies shall outline their after-sales and warranty policies in the respective section on the LSHS-RBF Application Form.
During the programme’s verification steps and through its Grievance Redress Mechanism (GRM), companies’ compliance with its after-sales commitments will be routinely checked and verified. RREA and BRAC Liberia reserve the right to penalize inadequate provision of after-sales services and repeated violations of warranty terms with exclusion from the programme.
3.2 End-of-Life Management
Companies are expected, at a minimum, to provide customers with information regarding how to dispose of products at end-of-life verbally and in writing at point of sale. It is desirable for companies to have systems in place or planned for the repair and resale of products, or for recycling of them. Companies are expected to outline their approach to end-of-life management and safe handling of e-waste in the respective section of the LSHS-RBF Application Form.
4. How can I apply?
The call for interested companies starts on 8th December 2023. Applications are assessed on a rolling basis until May 31, 2024. Please note: funding will be allocated on a first-come-first-serve basis and therefore early applications are strongly encouraged.
All companies interested in applying for the IS and/or DS subsidy must send a letter of intent to email@example.com and you will be provided with the application form (find here the form), application template (find here the excel file), and the required annexes. Companies meeting the eligibility criteria can then apply through BRAC Liberia by submitting a soft copy of the Application Form and requested annexes via email to firstname.lastname@example.org with the subject line “LSHS-RBF Application”
5. How can I get further information?
For further information, please refer to the FAQ document available in annex 3. If you have any further questions, please feel free to contact the below:
For general inquiries and inquiries related to the Direct Subsidy (DS) component:
Attn: Melvin Harris
For inquiries related to the Indirect Subsidy (IS) component:
Cc: Steven Payma Business Development Consultant
Rural Renewable Energy Agency email@example.com