Nigeria and other African countries with low levels of electricity access will require $220billion investments to provide mini-grids to connect 500 million people, the World Bank said at the weekend.
In its new report titled: Energy Sector Management Assistance Programme 2019. Mini Grids for Half a Billion People: Market Outlook and Handbook for Decision Makers. ESMAP Technical Report, the bank said globally, at least 19,000 mini-grids are installed in 134 countries, representing a total investment of $28 billion, which provides electricity to about 47 million people.
“Asia has the most mini-grids installed today, while Africa has the largest share of planned mini-grids. However, at present, the combined mini-grid investment in countries with low levels of electricity access in Africa and Asia totals only $5billion compared to the $220 billion needed to connect 500 million people to 210,000 mini-grids in these regions by 2030,” the report noted.
The global lender said approximately 1.2 billion people will need to gain access to electricity to achieve universal access by 2030.
The only way to achieve this is through a combination of the main grid extension, mini grids, and off-grid solar.
According to the report, about half a billion people can be cost-effectively provided with electricity through mini grids. The combination of falling costs, dramatic increase in the quality of service, and favourable enabling environments have made modern mini-grids a scalable option to complement grid extension and solar home systems.
The report, the most comprehensive study on mini grids to date, took stock of the global mini-grid market and industry; analysed in detail the solar-hybrid mini grid costs and technological innovations. It also showed the importance of introducing income-generating machinery and micro-finance early in the planning process; and provided policy makers, investors and developers with insights on how mini grids could be scaled up.
“Modern mini-grids can pave the way for more financially viable future grid expansion, as by the time the main grid arrives, significant demand for electricity already exists and customers have a greater ability to pay.
“The key is to define—in advance—technical standards and commercial options for integration once the main grid arrives. A win-win situation for both the mini grid developers and national utilities,” the report noted.
According to the report, mini-grids are not a new phenomenon: nearly all electricity grid systems in high-income countries started with isolated mini-grids, which gradually interconnected.
Over the past several decades throughout the rest of the world, mini-grids have grown from a niche solution for electrification to being deployed widely.
“Therefore, across the globe, countries need to actively mobilise private sector investment. This can be achieved by setting up policies that support comprehensive electrification programs, promoting viable business models, and providing well-designed public funding, for example through performance-based grants,” the report said.
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