- Green Rising
- Posts
- Time to take that big gamble on off-grid solar now?
Time to take that big gamble on off-grid solar now?
After decades of promising trials and steady growth, expectations of a breakthrough are high
Green Rising
October 03, 2024
Hello – thousands of industry insiders will meet at the Global Off-Grid Solar Forum & Expo in Nairobi next week.
They arrive amidst an accelerating sense on the continent that the time has come for their solution.
One, the necessity of connecting Africans to clean power has become undeniable – not only to boost prosperity but also to avoid emissions.
And, two, building traditional grids to reach all populations is evidently impossible.
In the meantime, off-grid solar technology has matured. And business models are as good as they’re going to get.
The moment of truth is here. Will off-grid happen at scale? A lot more still needs to go right in the near future.
⏳ Today’s reading time: 4 mins
1. 🚁 Heli view: How much does it cost to connect 380 million Africans?
The answer is not difficult. Experts reckon it takes $90 billion to connect 380 million extra Africans to electricity.
Or $237 per individual currently powerless.
But that’s only the start of achieving a generations-old ambition on the continent.
Beyond numbers: Experts suggest 380 million Africans is the maximum reachable sustainably with off-grid power in the foreseeable future, given population density.
Yet to do so, a lot more is needed than money – though that too.
Governments, regulators and investors all have to take daring leaps.
Status quo: Africa has perhaps 12,000 mini-grids of which just over 3,000 are solar. Connecting 380 million people requires building and running a total of 160,000 mini-grids.
Current construction plans don’t show a path to 160,000.
The number of announced projects is in the single-digit thousands.
Kenya has ambitious plans to create 137 mini-grids. Great, but…
The crux: The public sector once monopolised power provision, but failed, conclusively, and now has essentially given up on universal access.
Everybody knows the answer is the private sector (which is keen to be involved).
But governments are struggling to play even the still needed role of regulator.
Old vested interests are inhibiting private energy provision in much of Africa.
Tailwinds: At the recent New York Climate Week, African energy talk was fulsome. High-profile leaders see transformative change.
Raj Shah, the president of the Rockefeller Foundation and former head of USAID, declared: “The message to African energy entrepreneurs is easy: Now is your moment. You’re about to have the kind of regulatory and policy clarity in major sub-Saharan economies that people have been asking for for two decades.”
Reality check: Many investors and operators are more cautious. Hurdles differ from country to country.
Feeding back into grids is made exceedingly hard by local regulations.
A lack of standardisation across jurisdictions increases costs unnecessarily.
And yet: There is quite a bit to celebrate, cautiously.
The capital cost per kWp for solar panels dropped 26% in the past three years.
Since 2015, private-sector funding has increased sixfold.
Public nurturing: Some governments have embraced the obvious and improved policies.
Kenya supports pay-as-you-go models to make solar affordable.
Sierra Leone and Ethiopia include mini-grids in national electrification plans.
Size matters: Most African mini-grids generate 10 kW to 1 MW. But recently we've seen a trend toward bigger projects.
In DR Congo, local startup Nuru is building Africa’s largest mini-grids with combined capacities of 13.7 MW.
Money matters: The financing environment is improving step by step.
Innovative models such as a blended finance approach combining grants, debt and equity are mitigating risks and attracting private capital.
Mini-grid developers like CrossBoundary are offering bundled services, combining electricity with appliance financing to boost productive energy use.
The opportunity: Even the poorest parts of Africa can contribute to global decarbonisation. They don’t emit much in terms of greenhouse gases yet can benefit from reducing them.
Mini-grids slash emissions in unelectrified villages by up to 71% as well as boost incomes.
In Hakwata village in Zimbabwe, 248 youths became carpenters in mechanised workshops and are earning an income thanks to a solar mini-grid.
In sum: This is a make-or-break moment for off-grid in Africa. Wait another decade and the opportunity to benefit local prosperity and the planet as a whole may well have moved on.
The current focus on decarbonisation is key to enthusiasm for African mini-grids.
That may not last. Investment climates are as volatile as the weather.
Now is the time for mini-grids to prove their worth at scale and benefit the continent.
2. Cheat sheet: The six parts of a mini-grid
(i) Power generation system: This can be renewable (solar, wind, hydro) or nonrenewable (diesel generators).
(ii) Energy storage system: Batteries or other forms of storage for periods of high demand (televised sport) or low supply (night-time).