- Mini-grids have been a key driver of this reduction, with the number of mini-grid installations.
- Substantial increases in funding for the mini-grid sector have occurred over the past 15 years, with Sub-Saharan Africa being the primary recipient of funding.
In the latest State of the Global Mini-Grids Market Report, mini-grids have been a key driver of this reduction, with the number of mini-grid installations growing six times since 2018.
Mini-grids are increasingly used to power people with renewable energy, contributing to the fight against climate change while bringing life-changing electricity to communities without it.
This growth is particularly notable in sub-Saharan Africa, where mini-grids are feasible for electrification in remote areas.
The report also finds that mini-grids rely on clean energy more than ever. Between 2018 and 2024, the share of diesel capacity in mini-grids significantly declined, 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.
According to the report, there are many reasons behind the mini-grid sector’s growth, from enabling policies to innovative business and financing models. For example, several governments are tailoring regulatory processes for different mini-grid scales to enhance flexibility and reduce costs.
Meanwhile, cost recovery tariffs, using a cost-based formula for calculating revenue requirements, have become common in mini-grid markets, including countries like Ethiopia, Kenya, Nigeria, Tanzania and Zambia.
Substantial increases in funding for the mini-grid sector have occurred over the past 15 years. Sub-Saharan Africa is the primary recipient of funding from private investors, governments, and development partners.
Two key financial trends are evident: 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.
Notably, the price of solar PV panels has plummeted by approximately 90 per cent over the past decade, driven by increased supply and technological advancements.
Another positive trend is that mini-grid companies leverage alternative, high-value applications for surplus energy during the early stages of mini-grid operations to enhance revenues and drive down tariffs.
The sector’s continued growth and increasing energy access rates hinge on more investment in mini-grids. The report provides several recommendations for increasing financial commitments and disbursements.
These 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, among other measures.