Paper published on financing mini-grids at scale
REPP and AMDA publish recommendations on how to unlock financing for mini-grids at scale
The Renewable Energy Performance Platform (REPP) and the Africa Minigrid Developers Association (AMDA) published a position paper today that sets out a series of recommendations for ramping up financing for mini-grids in Africa.
The paper, How to Unlock Financing for Mini-Grids in Africa at Scale Through Multi-Stakeholder Collaboration, is based on insights shared by leading developers and investors from Africa’s solar mini-grids industry during a recent roundtable event co-hosted by REPP and AMDA.
Mini-grids have huge potential for addressing energy access challenges and meeting Sustainable Development Goal 7, with The World Bank’s ESMAP estimating that they could provide electricity to as many as half a billion people by 2030. Critically, however, this would require USD 220 billion of investment, which represents a vast increase on the USD 28 billion invested in mini-grids globally to date.
Project developers and financiers often have different views on the key challenges currently inhibiting sector growth and the possible solutions, including how to increase investment flows. But without a common vision, effective and timely progress is not possible.
Held under the Chatham House Rule, the Mini-grid CEO Roundtable provided both sides with the opportunity to speak openly on these key challenges and share their knowledge and experiences with the common goal of scaling investment in the sector.
The recommendations laid out in the paper are the result of those conversations and are grouped into four categories: achieving scale, unlocking deal flow, strengthening ESG and impact, and mitigating regulatory risk. The findings are further distilled into the following three core messages:
- Agreeing on a common goal and definitions of scale and impact is critical for accelerating mini-grid deployment in line with SDG7 targets.
- The key to unlocking investment flow lies in improving the transparency, collaboration and trust between developers and funders, as well as within these stakeholder groups themselves, with each of them playing their part towards the achievement of SDG7.
- Greater emphasis must be placed on streamlining processes (investment, impact monitoring, regulatory) to improve the efficiency of deal flow.
Ieva Indriunaite, Policy and Partnerships Manager at Camco, said: “Over the last decade, Africa has witnessed a rapid increase in mini-grid deployment and the technology is now widely seen as central to achieving universal energy access in Africa, particular within rural and underserved communities.
“However, today specific financing gaps remain and the speed of capital deployment to support project development is not sufficient to achieve the scale required by 2030. To address this challenge, a stronger understanding and a better alignment between the key stakeholders – developers and funders – is required.
“I am glad that together with AMDA we successfully facilitated a frank exchange of experiences and ideas between the two groups – although this was just a starting point. Today’s position paper draws on the cumulative knowledge and experiences over the past few years to provide a clear set of recommendations on how, through working together, we can move closer towards overcoming the challenges and achieving the level of financing the sector needs to scale.”