Investors Call for Results Based Financing of Minigrids in Africa

June 10, 2019
Africa needs ‘results based financing’ for minigrids to achieve universal electrification, said a group of energy investors in a paper released today.

Minigrids can help Africa achieve universal electrification, but not without better financing, said a group of energy investors in a paper released today.

With $2 billion under management and more than 100 minigrids built or in the works, the investors offered to match contributions from government or other donors. They called for funding in the form of results based financing, an approach that links financing to achievement of goals.

Definitions of minigrids vary, but they are generally viewed as complex or large microgrids with multiple customers.

A white paper released by the investors noted that rural electrification always has required subsidy. The US spent the equivalant of $18 billion in 2018 dollars on government subsidized loans for rural electrification during the Roosevelt administration, according to the paper.

Other more recent energy programs also show the effectiveness of incentives, the investors said. “In 2000, 1.3 GW of solar was operating globally, and solar PV panels cost $3 per watt. Less than 20 years later, we now have over 400 GW operating globally and modules cost less than $0.4 per watt.”

Minigrids are already often the least-cost option for off grid sites that have a relatively large cluster of people. The paper cited a finding from McKinsey that put the cost of a rural grid connection at $2,300 versus $1,000 for a minigrid serving 100 or more connections.

The investors issued the call for support at the opening of the Africa Energy Forum, a global investment meeting underway this week in Lisbon that focuses on Africa’s power, energy, infrastructure and industrial sectors.

The investors are: Acumen, Blue Haven Initiative, Ceniarth, CrossBoundary Energy Access, DOB Equity, ENGIE Powercorner, Hoegh Capital Partners, KawiSafi Ventures, Renewable Energy Performance Platform (REPP), responsAbility, SunFunder and Triodos Investment Management.

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About the Author

Elisa Wood | Editor-in-Chief

Elisa Wood is an award-winning writer and editor who specializes in the energy industry. She is chief editor and co-founder of Microgrid Knowledge and serves as co-host of the publication’s popular conference series. She also co-founded, where she continues to lead a team of energy writers who produce content for energy companies and advocacy organizations.

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