2030 Finance | August 7, 2018

Solar mini-grid project pipeline comes into focus in Africa, Asia and Latin America

David Bank
ImpactAlpha Editor

David Bank

It’s going to take years for utilities’ grids to reach remote villages in Africa, if they ever do.

Standalone solar home systems are filling some of the gap. But in many cases local “mini-grids” that can power businesses, schools and other loads are the least-cost option with the broadest social and economic benefits.

Investors put $750 million into pay-as-you-go home-solar companies from 2012 to 2017, but the top five mini-grid developers in Africa raised barely $100 million in the same period.

Sizing the mini-grid opportunity in Africa for impact… and investment

Investors can no longer say they can’t find deals to invest in. At least 550 renewable energy mini-grids are under development in Africa, Asia and Latin America by private power utilities that have listed their projects with Odyssey Energy Solutions, a software platform that aims to streamline mini-grid financing. The projects, which need financing of between $40,000 and $3 million each, could together bring electricity to more than 275,000 customers.

“We’re able to aggregate projects into bankable portfolios that meet investors’ ticket sizes and diligence requirements, paving the way for more capital to come into the sector,” Odyssey’s Emily McAteer said in a statement. She said the 550 projects are in various stages of feasibility analysis and development.

In 2014, the International Energy Agency forecast that minigrids would be the least-cost energy-access option for 140 million people by 2030. Last year, the IEA more than doubled that estimate to 290 million people.

  • European utilities… like Engie, E.ON, Enel and EDF, as well as multinationals such as Caterpillar and Mitsui are ramping up their mini-grid investments as well.
  • Billionaire backers… of mini-grids include Bill Gates and Breakthrough Energy Ventures, which has made one of five sectors for its $1 billion clean energy fund. Microsoft co-founder Paul Allen’s Vulcan Ventures has identified three strategies for financing mini-grids at scale.
  • Village models….Power for All’s analysis of 45 mini-grids in India found community based minigraids, structured as “village energy committees” or rural electricity cooperatives allow communities to become active stakeholders. Most mini-grids paid back their original investment in four years, and mini-grid companies in South Asia reached positive net-income in less than eight years.

    Mini-grid developers get ready for debt capital to scale up access to clean energy