Solar minigrids stand to unlock $740 million off-grid market in sub-Saharan Africa through action on product, finance and policy

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Rocky Mountain Institute

Mar 20, 2017, 00:05 ET

Boulder, Colorado (PRWEB) March 20, 2017 -- Minigrids, small isolated distribution networks increasingly powered by clean energy, could capture an increasing share of the $740 million sub-Saharan off-grid market, according to a report released by Rocky Mountain Institute today.

The study found that cost reduction and service improvements, supported by coordinated financing from development agencies and clear off-grid plans from African governments could allow minigrids to reach up to 31 million people in the region who are without electricity access but with the means to pay.

“The minigrid market has the potential to reach $1.5 billion annually and could include many millions more people if product manufacturers and services providers along with development agencies and African governments take action” said Stephen Doig, MD, Rocky Mountain Institute.

While the potential for the minigrid market is undeniably strong, the uptake of minigrids has been slow – even in leading markets such as Kenya. Minigrids provide electricity access for residents and businesses that are either positioned far from the existing grid or where the current grid is not reliable. To tap into this market in a cost effective and efficient way, a coordinated effort between the private sector, development partners, and national governments is required.

The report recommends the following next steps to accelerate minigrid adoption and innovation:

Private sector

  • Focus on continued cost-reduction and service improvements. Opportunities include better site selection, integrated hardware and software packages, modular capacity, specialized local project development and management expertise, aggregated finance.
  • Focus on end-use service instead of power consumption to take advantage of and share the cost savings of of high efficiency lamps and other appliances.

Development partners

  • Play a coordinating and financing role by facilitating discussion between governments and the private sector, and providing carefully placed technical assistance and advocacy for a clear set of minigrid enabling policies.
  • Blended finance, coordinated by development partners, can begin to leverage outside investment while supporting efforts to better understand the due diligence and de-risking that will be required for full handoff to commercial financiers.

National Governments
Provide predictable enabling environments for minigrids. Reduce regulatory risk for companies and their investors with:

  • Clear, comprehensive off-grid energy plans;
  • Streamlined import procedures;
  • Dependable incentives for renewables and energy efficient appliances; and
  • Education and awareness campaigns that communicate to citizens the role of off-grid products, and minigrids in particular.

The report was made possible by the generous support of The Rockefeller Foundation and Virgin Unite, and is available at http://rmi.org/energy_within_reach.

Figure ES-1: Current addressable market and potential addressable markets with outlined cost reductions in four leading African countries.

Mark Grundy, Rocky Mountain Institute, +1 (646) 643-9946, [email protected]