São Paulo, Brazil, December 18th ,2024 – IFC invested $20 million (equivalent to BRL 115 million) to support the growth of Sol Agora, a fintech provider of long-term financing for micro and mini-distributed solar power generation assets across Brazil, which are mainly used by Brazilian households. IFC’s investment will support Brazil’s efforts to address climate change challenges and pave the way for a sustainable energy future.
This investment will help Brazil diversify its national energy matrix by developing renewable energy solutions that are essential in the reduction of carbon emissions, increase resilience and support the transition to a low-carbon economy. Generating electricity at the consumption point minimizes transmission and distribution losses, leading to a more efficient use of the electricity produced and ultimately resulting in lower energy bills and cost savings for Brazilian households.
IFC acquired senior quotas of the IS Sol Agora Green II ESG FDIC[1], Sol Agora’s second FIDC, which reached approximately BRL900 million in commitments, and has been fully called and disbursed. Sol Agora launched its first FIDC at the end of 2022 and has raised more than BRL1,4 billion in FIDCs so far, financing over 43,000 clients throughout Brazil. Sol Agora FIDCs purchase loans to Brazilian households and small and medium enterprises originated on Sol Agora’s digital platform for the acquisition and installation of solar generation equipment.
IFC supports the expansion of proven clean energy solutions as well as the deployment of more nascent transformative technologies in emerging markets. This investment in Sol Agora FDIC is aligned with IFC’s goal to help expand access to climate finance for solar systems by making it accessible to a broader range of customers, including by improving financing terms so that installations are more affordable for households and small and medium businesses. Solar asset-backed securities issued by FIDCs are a nascent asset class and capital market instrument, and IFC’s investment in Sol Agora FIDC’s will ultimately contribute to strengthening Brazil’s capital markets.
“We are excited to partner with Sol Agora to expand financing for solar solutions in Brazil. This initiative contributes to Brazil’s efforts towards sustainable economic growth and enhanced climate resilience, supporting the country in its quest to become a global climate leader,” said Manuel Reyes-Retana, IFC Regional Director for South America. “This investment aligns perfectly with IFC’s overarching strategy for Brazil over the next five years, which focuses on building a more productive, inclusive, and greener economy,” he added.
Responsible for about 40 percent of greenhouse gas emissions in Latin America and the Caribbean, Brazil has pledged to cut emissions by 48 percent by 2025 and 53 percent by 2030 from 2005 levels. By 2030, Brazil aims to boost renewables (excluding hydro) to 45 percent of its energy mix, up from 22 percent in 2022, and achieve net-zero emissions by 2050. To meet carbon neutrality by 2050, Brazil needs an estimated 4.3 percent of GDP in annual investment between 2022 and 2030, and even more for the period up to 2050. IFC estimates that Brazil has a climate-related investment potential of $1.3 trillion for the period of 2016 to 2030. To finance these investments, it is critical to expand access to climate finance.
“Credit is a cornerstone of fostering the distributed generation market globally, and Brazil is no exception. At Sol Agora, we have assembled a team with a proven track record in Brazilian credit and capital markets, supported by best-in-class technology and governance practices. Partnering with IFC represents a transformative milestone that reinforces our progress while enhancing our capital structure and fundraising capabilities. With IFC’s unparalleled expertise and global perspective, we are well-positioned to scale our impact and navigate the opportunities ahead more effectively”, Antonio Nuno Verça, CEO of Sol Agora.
