Across Africa, renewable energy is powering more homes than ever, but it hasn’t yet powered prosperity. For smallholder farmers, productive-use technologies such as solar irrigation, cold storage and agro-processing can have a transformative impact. They can reduce post-harvest losses by up to 50%, raise yields and open up new markets for premium products. In India, to take one example, the median dairy farmer using solar-powered micro-chillers from Promethean earned 61% higher profits.
The impact and the promise of these technologies are undeniable. But the scale isn’t. Despite their clear potential, the number of agricultural companies delivering productive use of renewable energy (PURE*) solutions remains small, and fewer still are growing fast enough to meet the scope of the problems they are trying to solve.
What’s holding the PURE sector back?
To help answer that question, Acumen partnered with Open Capital Advisors to explore the barriers to investment and growth in solar-powered cold chain and solar irrigation. This involved anonymized interviews with companies, investors and other ecosystem actors, alongside analysis of publicly available investment data. This article shares the conclusions we came to from that research, along with quotes from Acumen investees and other PURE investors we interviewed.
Solar Irrigation and Cold Chain Investment: A Stagnant Market
Our analysis found that investments in specialized solar irrigation and cold-chain companies have remained largely stagnant. The upticks seen in 2024-25 were driven by just two companies, SunCulture and Ecozen. Overall, 91% of all sector funding since 2019 has gone to these two market leaders, while only seven other companies have managed to raise even $1 million, and many others have survived on small ticket grants.
As one venture capital (VC) Investment officer who is familiar with the PURE space told us, “There has been a lot of pressure on the [PURE] sector to demonstrate the momentum it had at its start, six years ago. As investors, we’ve seen that PURE companies in the market have faced a challenge demonstrating scale — the ability to not just ride investing waves, but to grow and scale their products. The PURE market has taken much longer than expected to reach scale.”
Sales data echo these investment trends. GOGLA reports that solar water pump (SWP) sales were slightly down in 2024 for companies that had reported in multiple cycles, while global solar-powered refrigeration sales were down by 35%.
Sales of solar refrigerators/freezers and solar water pumps in Africa and India
Within Acumen’s own pipeline, we have been able to invest in a handful of outstanding companies. But the pipeline opportunities have been fewer and farther between than we expected: Acumen rejected 60% of that pipeline for being too early-stage, with little evidence of a compelling product-market fit — investor-speak for “they’re not (yet) selling things exciting enough at a price low enough that actual people are willing to pay it.”
Why have there been so few successes? Our research points to a familiar set of structural challenges: limited affordability, weak demand, and business models that are too complex and capital-intensive to replicate quickly.
There is not enough ‘low-hanging fruit’ in productive-use markets
Customers who are seeking to replace existing diesel assets should be an easier sale — they can save money from a well-financed renewable asset, whose operating expenses are almost zero. CrossBoundary estimates that across sub-Saharan Africa there are 465-700 thousand small diesel grain mills, while Hystra and ISF estimate that 1.5 million diesel irrigation pumps have been sold. At ~$1,200 per solar mill and $380 per solar pump (the estimates those respective reports use), that could be over a $1 billion opportunity in just pure sales. But not so fast:
- Those 2 – 2.5 million customers are thinly spread across dozens of countries.
- Solar assets, particularly for milling and cold chain, are still more expensive. CrossBoundary estimates that an average solar mill costs 6x the price of a diesel mill. These assets also create different user experiences (slower, longer-running) which require behavior change.
Even for solar water pumps, which are more cost competitive, there are not many customers looking to replace diesel with solar. The real market is elsewhere.
The Real PURE Market is Much Larger, But Much Tougher to Serve
Most smallholders have never had access to irrigation, cooling or processing technologies. The mechanization rate in sub-Saharan Africa (horsepower per hectare) has barely increased since the 1960s, and is 2% that of India. Unlocking that greenfield opportunity is where real impact lies, but it’s also where the financing and business-model challenges multiply.
New customers represent the PURE sector’s path to true impact and scale. But serving them pushes companies down one (or both) of two difficult paths:
- Solving for affordability: One reason farmers don’t buy existing diesel pumps or mills is because they can’t afford the upfront capital outlay. To reach them, PURE providers either extend asset financing, or offer access “as a service.”
- Solving for market: Another reason farmers don’t adopt PURE is because they are reluctant to invest in new equipment when they lack guaranteed buyers for their produce. Some PURE companies have therefore stepped into off-taker roles themselves, aggregating and selling crops to large buyers.
Both of these paths require additional capital:
- Building a credit or logistics arm requires equity (or significant grants);
- Financing a customer-credit portfolio or leasing out infrastructure needs long-term debt;
- Aggregating produce calls for short-term working capital; and
- Farmer training relies on grant or partnership funding.
Moreover, when companies play the off-taker role themselves, they also take on inventory and price risk, buying produce before securing end-markets, which further tightens cash flows and heightens working-capital needs. The result is a business model that is capital-intensive, slow to prove and complex to replicate.
One CEO of a PURE company acknowledged this issue. He said, “We need to be a leaner organization to keep up profitability, but we are essentially a bank, a solar company and a distribution company.”
Additional Headwinds to Scale in the Agri-PURE Sector
In addition to complex, vertically-integrated models which take time to perfect, agri-PURE companies (which in this article encompass cold chain and irrigation) face other headwinds, including:
- Exposure to climate: Revenues depend on agricultural productivity. When weather patterns shift, farmers’ yields — and their ability to repay or purchase new equipment — decline sharply.
- Dependence on fragile agriculture value chains: For PURE technologies to deliver their intended impact, many factors must align, including: access to quality seeds and inputs, farmer training, timely harvesting, aggregation, and reliable markets. If any link fails, the technology’s value proposition weakens and repayment rates suffer.
- High costs: With slow growth and expensive capital, the sector has not achieved cost competitiveness or economies of scale that would bring down unit prices.
- Low consumer awareness: One CEO told us, “We’ve had the challenge of customer awareness everywhere we’ve tried to set up. We are introducing a new concept from the traditional way of things that people are used to.” That education has a cost, they said: “We did not realize that our most significant expense after infrastructure would be education of local communities.”
Even with these challenges, Acumen’s agri-PURE portfolio companies have managed median annual revenue growth of around 25%, a testament to their resilience. Yet that pace, while impressive, is still not fast enough to attract the next wave of equity investors.
The Agri-PURE Equity Wave is Not Forthcoming
We have enough years of evidence to show that the agri-PURE space is well behind other clean-energy segments. This chart shows the first six years of investment in the off-grid solar (OGS) sector, e-mobility and agri-PURE (irrigation and cold chain), with year one being the first year the segment raised more than $5 million. Off-grid (PAYGo) solar crossed the $100 million annual-investment threshold within four years; e-mobility reached it in six. Agri-PURE has yet to do so.
There are a few reasons for this:
- No unifying investment story: Today, PURE is an impact story, not an investment story. There is not a narrative that creates excitement among development finance institutions, let alone among VC or private equity investors. As one later-stage investor put it, “We don’t see a place for us in PURE yet because of smaller ticket sizes and risk profile.”
- Fragmented sub-sectors: PUE or PURE are umbrella terms for a group of technologies that have very different distribution models, margins and cost structures. Understanding those different sub-sectors requires an investment of time, and not many investors have bothered to make it.
- Investor fatigue: Many equity investors remain cautious after mixed experiences in the PAYGo solar boom, particularly with a sector that may yield lower returns. As one investor notes, “There is investment fatigue from the solar home system sector and it is reflecting in PURE.”
The early influx of equity that powered the PAYGo sector built skills, infrastructure and confidence. Without a similar wave of patient, risk-tolerant capital, PURE innovation has and will continue to stall. Changing that will require a different approach to investing, and stronger ecosystem support. One stakeholder told us, “There are some companies that have a proven track record, but if you want to invest in this space, you have to be patient and flexible. And your version of success needs to include other factors rather than only money.”
The Way Forward for the PURE Ecosystem
To make real progress, the PURE ecosystem needs to be retooled to overcome structural barriers and make more, and more appropriate, capital available for companies. Three priorities stand out from Acumen and Open Capital’s research.
1. Deploy catalytic grants and supply-side results-based financing (RBF) to build investable companies
Most agri-PURE businesses move through several rounds of iteration (e.g., on product design, business model, repayment structures, customer engagement and farmer training) before they find stable demand. During this stage, margins are thin or negative, cash burn is high, and the path to scale is rarely straightforward. And unlike PAYGo solar, agri-PURE companies have limited access to early equity that can absorb this risk.
That’s why catalytic, flexible grants matter so much. While early programs like PREO, EEP Africa, AECF and Energy Catalyst have helped companies validate technology, a significant gap remains for ventures moving from pilot to commercial growth. These companies need larger-ticket, $1 million+ grants that can back team buildout and operations, support model testing, cover specialized equipment and early inventory, sharpen unit economics, and help them enter new markets with enough runway to learn.
You may be asking: Why focus on grants as opposed to equity — even risk-tolerant equity? There are three reasons why grants are preferable:
- Equity is limited in this sector, for reasons we describe below.
- We have consistently seen that PURE companies need to pivot their business models, meaning they need funders that are able to invest in multiple iterations of a business. If equity is used to finance every pivot, founders can quickly become overly diluted.
- Not all PURE business models are appropriate for raising equity capital. For instance, slower growth models don’t lend themselves to VC-style equity raises. However, the path a company will be able to take (e.g., fast growth driven by equity, vs. slower growth driven by positive cash flows) is unclear in the early stages of its journey.
S4S Technologies offers a clear example of what stronger grant funding can unlock. In its early years, S4S relied heavily on grants from Shell Foundation and others to distribute its first 2,700 solar dehydrators. That support let the company test demand, refine operations and build the systems needed for commercial scale. Those proof points helped S4S secure a $1.75 million pre-Series A round from Acumen and other investors, and additional capital to expand procurement and strengthen margins.
Alongside traditional grants, results-based financing can be a powerful way to deliver supply-side support. Larger, multi-year RBFs can help companies validate new markets, improve unit economics or scale proven models by tying funding to verified outcomes, while giving them the flexibility to invest in their teams, capex or operational systems as needed. These are distinct from demand-side RBFs, which explicitly buy down the cost of units for end users.
Without well-designed grants and/or RBFs, anchored in clear milestones and investor expectations, many promising firms will remain stuck in the “missing middle,” unable to grow into investable companies.
2. Combine with structured debt to fill the gap left by a limited equity market
As agri-PURE companies move beyond pilots, their capital needs expand dramatically. They need to finance specialized equipment, carry inventory, build field teams, manage long working-capital cycles and extend credit to farmers. In other sectors, early-stage equity would shoulder this burden. But in agri-PURE, the equity wave that powered the innovations around PAYGo solar simply has not materialized, and is unlikely to do so anytime soon.
The mix of complex operations, long payback periods and modest margins has led to only a handful of agri-PURE companies raising significant equity — including first movers and/or those that have developed more asset-light business models. For those firms, equity will remain important, and it can help them build the teams and systems needed for rapid growth.
But for the vast majority of companies, the primary pathway to scale will depend on very patient, long-term capital and appropriately structured debt. That includes:
- Off-balance-sheet vehicles (e.g., Special Purpose Vehicles, YieldCos and others) that lift heavy assets off company books;
- Receivables financing that unlocks cash tied up in long-tenor payment plans;
- Seasonal working-capital lines accessible to early-stage companies that match agricultural cycles; and
- Blended or concessional facilities that allow lenders to underwrite higher risk.
SokoFresh offers an example of how these different types of capital can be leveraged. The company deploys a fleet of solar-powered walk-in cold rooms designed to eliminate post-harvest losses and unlock farmers’ access to markets. It leases some of those cold rooms to commercial clients, but the rest it operates as an offtaker, purchasing produce from farmers in strategic value chains and on-selling it to international and domestic buyers.
Sokofresh’s capital journey has been unique. It was created out of a venture studio, Enviu, which used grant funding to cover the initial costs of R&D, product development and piloting. In the years since it was spun off as an independent entity, it has raised additional grants and equity, which it has leveraged in creative ways:
- The company has set up a Special Purpose Vehicle with a financing partner to move its expensive assets (solar-powered walk-in cold rooms) off its balance sheet, at an earlier stage than most.
- It has also raised short-term working capital from debt investors such as Rabo Bank, for purchasing avocados and other crops.
The lesson is clear: Agri-PURE companies need capital designed for the reality of their business models — which are slow, iterative and deeply tied to cash-flow stability. Structured debt, blended instruments and long-term patient capital can give companies the space to improve operations and scale sustainably, without taking on unhealthy levels of risk.
3. Build an enabling environment that unlocks affordability and strengthens the ecosystem around PURE
However, even with better financing, agri-PURE companies cannot scale quickly on their own. Farmers still face affordability barriers, awareness remains low, and agricultural value chains lack the coordination needed for PURE technologies to deliver their full value. A stronger enabling environment is essential if PURE technologies are to reach millions of smallholders.
Affordability is the first challenge. Even when companies offer asset financing, many farmers can’t manage the upfront or regular payments required for irrigation or cold storage. Well-designed, temporary end-user subsidies can close that gap, buying down the price of PURE assets in a way that accelerates adoption without distorting the market. To borrow an example from another sector, in Nigeria RBFs have tied disbursements to verified sales of solar home systems, lowering investor risk and giving providers liquidity to expand distribution, innovate on PAYGo models and attract private capital. The Nigerian Electrification Program’s RBF led to annual solar lantern sales jumping by a whopping 72%.
But to be effective, RBFs must be large enough (over $1 million), multi-year and deployed strategically, such as for expansion into new geographies or new customer segments. And the company must be established enough to execute on the RBF — while also having a clear approach to continuing growth once it ends. As one PURE company Acumen interviewed put it: “RBFs are a great option for scale, but there is a need to move the sector away from short-term RBFs.”
Awareness and trust also matter. Many farmers simply don’t know that these technologies exist, and many others don’t understand how they work. Large-scale, public-private awareness campaigns can change that. For example, the World Bank’s Energy Efficiency Awareness Campaign in India dramatically accelerated adoption of efficient appliances and water pumps by pairing mass outreach with community engagement. Uganda’s emerging agri-PURE strategy is an encouraging sign of a similar awareness agenda for PURE. Scaling these types of campaigns could significantly lower customer education costs and increase demand.
Cross-sector coordination is the final piece. Agri-PURE sits at the intersection of energy, agriculture, finance and trade, yet these systems rarely operate in sync. For PURE technologies to deliver real value (e.g., higher yields, lower spoilage and better market access), farmers also need quality inputs, agronomic training, aggregation services and reliable offtake markets. Ethiopia’s Agricultural Transformation Institute offers a model of what this sort of cross-sector coordination can look like: By aligning the Ministry of Agriculture, energy agencies, microfinance institutions and farmer-extension services around solar irrigation, they created an integrated program that boosted both awareness and adoption.
Taken together, these enabling-environment interventions can dramatically increase demand, reduce risk for providers, and create the conditions in which agri-PURE companies can reach true commercial viability.
What will it take to scale the agri-PURE market?
If there’s one lesson from our research, it’s that impact isn’t the missing piece — scale is. Farmers who gain access to irrigation, cooling or processing see meaningful improvements in their income and resilience. But too few companies have developed the business models that can deliver these technologies to large numbers of people. The challenge now is not proving that agri-PURE works; it’s creating models that can reach hundreds of thousands of farmers in a reliable, affordable way.
Building those models requires room to experiment, iterate and strengthen unit economics. And that space only exists when companies have access to the right kind of capital. This is where donors and investors have an outsized role to play. Just as catalytic capital helped unlock the PAYGo solar sector a decade ago, the next chapter of agri-PURE will require a similar commitment to funding the hard work of business model innovation. With the right support, more companies can move from promising pilots to proven, investable scale, ultimately bringing the benefits of productive use of renewable energy to millions more farmers.
* NOTE: We use PURE (productive use of renewable energy) to refer to these technologies, as opposed to the more common PUE (productive use of energy). We see PURE as the more accurate term, since a diesel water pump or petrol-guzzling grain mill could both be described as using energy productively, while our focus (and that of the broader impact sector) is on productive technologies that are powered sustainably.
Daniel Waldron is Head of Insights at Acumen; Duda Slawek is an Associate Partner at Open Capital; Chris Emmott is the Associate Director of Investing in Energy Access at Acumen; Kristi Chon is a Senior Associate on the Chief Investment Office team at Acumen
Photo credit: GroblerduPreez
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