The Investment Fund for Developing Countries (IFU), the Danish development finance institution, has led a Series B investment round of $38m in Daystar Power, a provider of hybrid solar power solutions to businesses in West Africa.

“We believe that Daystar Power has the right elements — the client base, technology, engineering expertise, and executive leadership - to scale off-grid solar across West Africa. Not only is Daystar Power at the forefront of a growing market, it is helping to accelerate the adoption of renewable energy in some of Africa’s fastest growing cities,” said Thomas Hougaard, Vice President Sub-Saharan Africa, IFU.

IFU is joined by new investors STOA, a French impact infrastructure fund, Proparco, backed by a guarantee from the European Union under the African Renewable Energy Scale-Up facility (ARE Scale-Up) and Morgan Stanley Investment Management.

“STOA is excited to start this journey alongside Daystar which is perfectly positioned to provide reliable, environmentally friendly and cheap electricity to businesses across West Africa. This investment reflects a core part of our mission – we aim to invest more than 50% of our capital in Africa and in renewable energies,” said Charles-Henri Malecot, CEO, STOA.

Taking into account the previous round by Verod Capital and Persistent Energy, Daystar Power has received equity investments totaling $48m.

With the fundraise, Daystar Power will grow its operations in its key markets of Nigeria and Ghana, while deepening its presence in other regional countries such as Côte d’Ivoire, Senegal and Togo.

Daystar Power is on track to expand its installed capacity to over 100 megawatts, meeting demand from its clients in the financial services, manufacturing, agricultural and natural resources sectors.

Daystar Power will continue to enhance its digital offerings and expand its local teams.

“Proparco is delighted to support the growth of Daystar Power (DSP) which represents our third commitment under the ARESUF facility backed by the European Union. In line with Proparco’s objectives of improving energy access and reducing greenhouse gas emissions, this funding will enable DSP to expand reliable power supply at competitive cost to West Africa’s C&I sector,” said Damien Braud, Head of Private Equity Africa & Middle East division, Proparco.

“Morgan Stanley Investment Management’s Climate Impact Solutions fund seeks to generate compelling returns with a focus on helping to solve critical climate issues. Our aim in partnering with the team at Daystar Power is to help deploy clean energy at commercial scale – creating a positive, long-lasting environmental, health and financial impact in West Africa,” said Vikram Raju, Head of Climate Impact, Morgan Stanley Investment Management AIP Private Markets.

“Sunray Ventures founded Daystar Power to address one of West Africa’s most significant barriers to economic development — access to reliable and affordable power. We are happy that this transaction will provide Daystar Power with the required financing to continue to lead in off-grid solar for commercial and industrial customers in West Africa,” said Christian Wessels, Co-Founder of Daystar Power and Sunray Ventures.

“By offering our commercial and industrial clients cheaper, reliable and cleaner power, we have seen a more than 50-fold increase in power-as-a-service revenue over the last two years,” said Jasper Graf von Hardenberg, CEO and Co-founder of Daystar Power.

“African businesses are realizing that solar power — stand-alone or in tandem with a second power source — is a superior energy alternative to the often-unreliable grid or too expensive, polluting diesel generators.”