CHALLENGES IN FOCUS AND FUNDING IMPEDE EXPANSION OF AFRICAN MINIGRIDS
Why progress toward rural electrification seems so slow
Sub-Saharan Africa is home to two-thirds of the global population that still lacks access to electricity today. There, more than 600 million people live in remote villages that are often far removed from national grids. Add in a roughly equal number who depend on often-unreliable grid power, and one would think the region presents an enormous opportunity for minigrid and microgrid developers.
On the surface, money would not appear to be the problem. Quoted in an article from Greentech Media, Daniel Kitwa, energy access finance advisor at the Africa Minigrid Developers Association (AMDA), says “The minigrid funding commitment from international donor organizations is in the billions.”
According to a July 2020 report from the Mini-Grids Partnership, development finance institutions have pledged more than $2 billion to support the development of minigrids worldwide since 2012, with close to $1.6 billion allocated to sub-Saharan Africa. Yet only 13 percent of the cash committed globally has made it through to projects on the ground, the research found. Africa, which is supposed to get 80 percent of the global cash, has only 39 percent of the projects. AMDA members further report having received just $40 million of public and private grants and $10 million in concessional debt since 2013—roughly 3 percent of what has been pledged to the region. A pair of articles from Greentech Media suggest there are at least two main reasons for this.
First, in the words of clean energy consultant Thomas Hillig, “Villages are just not able to pay for electricity.” That leaves rural minigrids and microgrids in the realm of donor financing. As a result, practically all rural microgrid and minigrid projects are being funded by international financing programs, “without,” as Hillig says, “any economic or business case behind them.” This creates a challenging model for scaling up a business, and only a fraction of commitments from donor organizations has so far made its way into projects.
This has led a growing number of minigrid developers focusing on urban and peri-urban markets, the latter being areas on the borders between cities and rural areas. These customer groups tend to have higher electrification requirements than do rural villagers, and they provide more consistent demand for reliable and affordable minigrid services.
Regulations are a problem
Another problem is that donor financing is being held up because projects can’t get through national regulations that were never designed with minigrids in mind. Despite a decade of progress, building minigrids in Africa remains “a big challenge,” says Brian Somers, founder and CEO of minigrid developer Standard Microgrid. “It is a heavily regulated space. We’re working in frontier markets with customers that have never had electricity before.”
It’s not just the customers that have to be educated about minigrids. According to Somers, African regulators only have one rulebook, and it’s designed for monolithic state utilities. Getting a minigrid off the ground can require almost as much paperwork as building a coal-fired plant.
Together, these articles provide an excellent overview of both the opportunities and obstacles facing efforts to bring renewable electricity to underserved populations in Africa. Read more here and here.
2020 was a devastating year in so many ways. You, like us and so many others, were forced to change direction. Adapt.
This metamorphosis was unpredictable, unsettling, disruptive, and altering. And while we momentarily saw emissions go down, the year was more poignantly marked by other "milestones." The hottest year on record. Raging fires. Political disruption ...to name a few...
The tumult of 2020 almost mimics, to some degree, the history of the clean energy industry. Which is to say we in this field are familiar with **big** ups and downs over the decades.
However, and fortunately, 2021 onward predicts some Ups for our mission.
According to the International Energy Agency (IEA), renewable energy sources, collectively, are expected to be the main generators of electricity by 2025. Surpassing coal!
And according to BloombergNEF, "wind and solar [will] grow to meet 56% of world electricity demand in 2050."
We could go on! But for now, on a somewhat positive note, we're wishing you a Happy New Year as we look forward to leaving behind what we needn't carry with us.