Investors Call for Results Based Financing of Minigrids in Africa

June 10, 2019
Africa needs ‘results based financing’ for minigrids to achieve universal electrification, said a group of energy investors in a paper released today.

Minigrids can help Africa achieve universal electrification, but not without better financing, said a group of energy investors in a paper released today.

With $2 billion under management and more than 100 minigrids built or in the works, the investors offered to match contributions from government or other donors. They called for funding in the form of results based financing, an approach that links financing to achievement of goals.

Definitions of minigrids vary, but they are generally viewed as complex or large microgrids with multiple customers.

A white paper released by the investors noted that rural electrification always has required subsidy. The US spent the equivalant of $18 billion in 2018 dollars on government subsidized loans for rural electrification during the Roosevelt administration, according to the paper.

Other more recent energy programs also show the effectiveness of incentives, the investors said. “In 2000, 1.3 GW of solar was operating globally, and solar PV panels cost $3 per watt. Less than 20 years later, we now have over 400 GW operating globally and modules cost less than $0.4 per watt.”

Minigrids are already often the least-cost option for off grid sites that have a relatively large cluster of people. The paper cited a finding from McKinsey that put the cost of a rural grid connection at $2,300 versus $1,000 for a minigrid serving 100 or more connections.

The investors issued the call for support at the opening of the Africa Energy Forum, a global investment meeting underway this week in Lisbon that focuses on Africa’s power, energy, infrastructure and industrial sectors.

The investors are: Acumen, Blue Haven Initiative, Ceniarth, CrossBoundary Energy Access, DOB Equity, ENGIE Powercorner, Hoegh Capital Partners, KawiSafi Ventures, Renewable Energy Performance Platform (REPP), responsAbility, SunFunder and Triodos Investment Management.

Track news about the role of minigrid development in the electrification of Africa.  Subscribe to the free Microgrid Knowledge newsletter.

About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded RealEnergyWriters.com, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

She has been writing about energy for more than two decades and is published widely. Her work can be found in prominent energy business journals as well as mainstream publications. She has been quoted by NPR, the Wall Street Journal and other notable media outlets.

“For an especially readable voice in the industry, the most consistent interpreter across these years has been the energy journalist Elisa Wood, whose Microgrid Knowledge (and conference) has aggregated more stories better than any other feed of its time,” wrote Malcolm McCullough, in the book, Downtime on the Microgrid, published by MIT Press in 2020.

Twitter: @ElisaWood

LinkedIn: Elisa Wood

Facebook:  Microgrids

In the Race to 100% Renewable Energy, Islands Will Win — With the Right Grid Improvements

March 18, 2024
Looked at individually, islands are often overlooked as unimportant players on the global economic stage. Smaller geographies, smaller communities, fewer resources, and often ...

Get the full report.
Get the full report.
Get the full report.
Get the full report.
Get the full report.

Think Like a Financier to Win Funding for Your Microgrid Project

Get the new special report that lays out how investors and other financiers think about energy projects. The aim is to help move a microgrid from the drawing board to reality ...