A new report details how mini-grids are increasingly being used to power people with renewable energy, contributing to the fight against climate change while bringing life-changing electricity to communities without it.
Currently, 684 million people around the world do not have electricity access, a number that decreased by 466 million between 2010 and 2021.
According to 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.
This growth is particularly notable in sub-Saharan Africa, where mini-grids are recognized as a feasible solution for electrification in remote areas.
The report also finds that mini-grids are relying on clean energy more than ever before. Between 2018 and 2024 there was a significant decline in the share of diesel capacity in mini-grids, plummeting from 42% to 29%. In contrast, the share of solar PV systems has seen a remarkable increase, rising from 14% to 59% during the same period.
The Mini-Grids Partnership developed the report to provide up-to-date insights on the mini-grid sector, including the factors behind its growth, as well as the challenges that must be overcome to continue the momentum. The analysis is designed to provide forward-looking strategies for the sector’s sustainable scale-up, synthesising inputs from stakeholder interviews and extensive desk-based research.
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.
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.
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% over the past decade, driven by increased supply and technological advancements.
Another positive trend is that mini-grid companies are leveraging 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 consequently increasing energy access rates, hinges 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.
Read the full State of the Global Mini-Grids Market Report 2024.
This Mini-Grids Partnership report was produced with funding from UK aid from the UK government via the Transforming Energy Access platform.
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