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Mini-grids receive a boost after challenging 2020

Out of a population of 1.3B, the African continent stills counts an estimated 600M of people who do not have access to electricity. Efforts are being done in most countries to solve this issue and 3 solutions are possible: extending the traditional grid, providing stand-alone solar home systems (SHS), and building mini-grids (MG). These 3 options all have pros and cons but one thing is for sure: if Africa is to reach universal electrification, the solution will inevitably need to be based on a mix of these 3 electrification solutions. And mini-grids are believed to be the cheapest electrification option for 100 million people in Africa.

In 2020, the COVID crisis affected MG developers and projects more than any other segment of the solar industry. Indeed, MG development requires more work in the field, more logistics, access to more remote areas, and direct contact with the population, all of which were made particularly difficult with COVID and the associated movement restrictions. As a result, many MG projects which were under development or going through a tender phase were slowed down or completely put on hold. It is fair to say that 2020 was not a great year for the mini-grid sector.

But 2021 looks significantly more promising and should see some interesting developments once the effects and limitations of COVID become more manageable.

Several tenders are indeed continuing their path, while others have been announced recently. Among the most notable MG efforts on the continent, Togo has a privileged place with the AT2ER tender for 317 mini-grids across the country, backed with West African Development Bank financing.

Neighboring Benin also offers great prospects as 119 MGs have been awarded to bidders and are at different stages of construction.

Nigeria also is a hot destination for MG developers as the Federal Government and its international partners are betting big on MGs to increase electricity access in the country: more than 100 MGs are already in operation or under construction in the country, and another 300 are said to be under development.

Sierra Leone also does pretty well when it comes to MG as more than 50 MGs are already in operation and another 45 are expected to be commissioned soon.

Finally, some major announcements have been made in a few other countries such as Senegal which recently launched a tender for 133 MGs and wants to have 1,000 villages supplied with MGs across the nation in total.

Cameroon also wants MGs to play an important part in the national electrification strategy with a target of 688 sites.

Last but not least, Madagascar is also seeing great potential in MGs and more than 50 MGs are currently being developed across the island.

On top of this enthusiasm for MG and the solution they will offer for rural electrification, it is also important to note that DFI financing is growinglybeing mobilized for such projects, with the objective of unlocking private capital to join the effort. The World Bank is one of the main supporters of MG development across the continent, being the primary financier of 60% of the MG programs currently in place across Africa.

AfDB has recently announced an $8M package with the goal to create 80MW of MG capacity. On its side, SEforALL has launched the Universal Energy Facility, a $3M results-based financing mechanism focusing on MGs in Madagascar, Sierra Leone and Benin. Another notable development in the MG space to watch in 2021 is the Essor project in DRC. After a demanding tender process, the consortium formed by Eranove, AEE and Gridworks has been awarded the first stage of this landmark MG initiative launched by DFID and supported by AfDB. This stage aims at building mini-grids in 3 remote cities of DRC for a total of 25,000 household and SME connections. These will probably be the largest MGs of the continent, if not the world.

 

Excerpt of: Africa Solar Outlook 2021, by AFSIA. Download the full document.