Sub-Saharan Africa Records High Mini-Grids Funding In Last 15 Years

Yemisi Izuora

Nigeria among other countries in the Sub-Saharan Africa has seen a significant increase in mini-grids projects funding which heightened in the last 15 years.

The State of the Global Mini-Grids Market Report 2024, developed by the Mini-Grids Partnership, shows that the number of mini-grid installations has grown six times since 2018.

The report which provides comprehensive insights on the global mini-grid market and highlights key trends in the sector further provides a definitive source of information to mobilize investment in the mini-grid sector and serves as a benchmark to allow decision makers to measure progress in the sector.

According to the report produced with funding from UK aid from the UK government via the Transforming Energy Access platform, shows that between

2018 and 2024 there was a significant decline in the share of diesel capacity in mini-grids, plummeting from 42 per cent to 29 per cent.

In contrast, the share of solar PV systems has seen a remarkable increase, rising from 14 per cent to 59 per cent during the same period.

There have been substantial increases in funding for the mini-grid sector over the past 15 years, with Sub-Saharan Africa being the primary recipient of funding from private investors, governments and development partners, said the report.

The research work shows that two key financial trends are evident with a significant rise in total committed funding, exceeding USD 2.5 billion in 2023, and a sixfold increase in private investment from less than USD 100 million in 2015 to nearly USD 600 million in 2022.

The declining costs of mini-grid components, including PV modules, inverters, batteries, battery inverters and smart meters, have significantly enhanced the financial viability of mini-grid projects.

Several governments are tailoring regulatory processes for different mini-grid scales to enhance flexibility and reduce costs, while cost recovery tariffs, using a cost-based formula for calculating revenue requirements, have become common in mini-grid markets, including countries like Nigeria, Ethiopia, Kenya, Tanzania and Zambia.

The report also made recommendations for further increasing financial commitments and disbursements for mini-grids include which include making grants easier to access; de-risking investments through regulation and contracting; and enhancing efficiency and collaboration to boost disbursement rates of committed finance.