With Product, Finance, & Policy Actions, Solar Microgrids Can Unlock $740 million Sub-Saharan Off-grid Market

Microgrids could capture an increasing share of the $740 million sub-Saharan off-grid market, according to a report released by Rocky Mountain Institute today. The study found that cost reduction and service improvements, supported by coordinated financing from development agencies and clear off-grid plans from African governments, could enable microgrids to reach up to 31 million people who are without electricity access but with the means to pay.

“The mini-grid market has the potential to reach $1.5 billion annually,” explains  Stephen Doig, MD, of Rocky Mountain Institute, “and could include many millions more people if product manufacturers and services providers, along with development agencies and African governments, take action.” To tap into this market in a cost effective and efficient way, a coordinated effort between the private sector, development partners, and national governments is required.

sub-saharan-off-grid-market

Current addressable market and potential addressable markets with outlined cost reductions in four leading African countries. Image via RMI.

A study by Rocky Mountain Institute has found that solar microgrids could unlock an increasing share of sub-Saharan off-grid market

The report recommends the following next steps to accelerate microgrid growth and innovation:

The private sector should focus on:

  • Continued cost reduction and service improvements, including better site selection, integrated hardware and software, specialized local project development, modular capacity, aggregated finance, and management expertise.
  • End-use service to take advantage of and share the cost savings of high-efficiency appliances.

The role for development partners is to:

  • Play a coordinating and financing role by facilitating discussion between governments and the private sector.
  • Provide carefully placed technical assistance and advocacy for a clear set of microgrid enabling policies.
  • Coordinate blended finance in order to leverage outside investment while at the same time supporting efforts toward the due diligence and de-risking required for full handoff to commercial financiers.

National governments can provide predictable enabling environments for minigrids and reduce regulatory risk for companies and their investors with:

  • Clear, comprehensive off-grid energy plans.
  • Streamlined import procedures.
  • Dependable incentives for renewables and energy efficient appliances.
  • Education and awareness campaigns that communicate the role of microgrids to citizens.

RMI’s report is available at http://rmi.org/energy_within_reach.

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