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Monica_55905 Dec 02

Hosted Digital Dialogue: IFC, World Bank and MIGA - The Mini-Grid Challenge in Africa

Hosted Digital Dialogue: IFC, World Bank and MIGA - The Mini-Grid Challenge in Africa image
Digital Dialogue hosted by IFC, World Bank and MIGA at aef 2020, during the Digital Energy Festival. 

There is something of a gap between excitement and practicality when it comes to mini-grids’ development in Africa at present. Merging those two elements will be key to unlocking the undoubted potential they have to bring electrification to all corners of the continent.

“As a general impression, the market of mini-grids is extremely interesting – everybody (all stakeholders) has started to understand that mini-grids are a necessary part of the solution to reach universal access to electricity before 2030,” affirmed Benedikt Lenders, Head of Minigrids, ENGIE Powercorner Africa. However, the challenges inhibiting this enthusiasm aren’t minor. In fact, they can be split into two substantial areas: access to finance; and regulation.

The former can also be divided into two categories. First is the role that concessional finance has in kickstarting a complex cycle. Without subsidies and grants, we can’t reach scale, and without scale, the sector can’t mature to a point where it no longer relies on subsidies. The second aspect of finance derives from the fact that 140,000 mini-grids are needed by 2030, to the tune of around $180 billion.

With only impact capital, this simply won’t occur, and the need for commercial capital to join the equation is paramount. For this to happen, the mini-grid sector as a whole needs to become more attractive and reliable, which brings in the second overriding challenge – regulation. As part of a wider need to de-risk across demand, currency and tariff setting, having a robust regulatory framework in place is critical to making mini-grids a viable and bankable prospect to this vital commercial contingent.

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