A technical report on the provision of mini grids by World Bank’s Energy Sector Management Assistance Program (ESMAP) has revealed that national utilities can benefit from financially viable future expansion of grids, if third generation mini grids ARE installed now.
The third generation mini grids are typically designed to interconnect with the main grid, which allows for load balancing as well as transmission and distribution support at the end of the line.
The report which was launched in Accra on Wednesday, says this will promote income-generating uses of electricity and create local economic development, as a result, once the main grid arrives. Significant demand for electricity already exists and customers have a greater ability to pay, increasing the economic variability of the main grids extension.
However, new regulations give developers options for what happens when the main grid arrives, while cost reductions in mini grid components enable developers to build grid-interconnection -ready systems while keeping tariffs at affordable levels.
Even though these regulations exist they are adopted in only a handful of countries so far. Currently Nigeria is one of the frontier countries; the regulator has adopted one of the most comprehensive sets of mini grid regulations in Africa covering issues like licensing, retail tariff setting and what happens when the main grid arrives.
According to a new World Bank report on the mini grids, which were previously viewed as a niche solution, can provide electricity to as many as 500 million people by 2030, helping close the energy access gap. The combination of falling costs, dramatic increase in quality of services and enabling policies has made a scalable option to complement grid and solar home systems
The Bank’s report indicates that comparing the mini grid and solar home systems, the mini grids are a more viable solution for areas with high population density and medium electricity demand. Extending the main grid to serve remote communities is often prohibitively expensive.
Globally, at least 19, 000 mini grids are already installed in 134 countries representing a total investment of US$28 billion and providing electricity to around 47 million people where most are deployed from Asia while Africa has the largest share of planned mini grids.
At present the total mini grid investment in countries with low levels of electricity access in Africa and Asia totals US$5 billion. It is estimated that US$28 billion is needed to connect 500 million people to 210,000 mini grid investments. This can be achieved by setting up policies that support comprehensive electrification programs , promoting viable business models and providing public funding for example through performance-based grants.
“Mini grids are now one of the core solutions for closing the energy access gap. we see great potential for mini grid development at scale and are working with countries to actively mobilize public and private investment,” said Riccardo Puliti, Senior Director of Energy Extractives at the World Bank.
The World Bank has been scaling up its support to mini grids which represents about one-quarter of total investment by the public and private sector countries. The Bank’s portfolio spans 37 mini girds project in 33 countries with a total commitment of more than US$660 million. This investment is expected to leverage an additional US$1.1 billion financing.
