Update on UK DFID support to the Green Mini-Grids sector in Africa

By: Steven Hunt, Senior Energy and Innovation Advisor, DFID.
Twitter and medium: @stevenahunt

The recent 4th Mini-Grids Action Learning Event in Abuja, Nigeria in December 2017 was a watershed moment in DFID’s support to the mini-grids sector in Africa.  The event, co-organised by World Bank ESMAP, the Nigerian Rural Electrification Authority, the Climate Investment Funds and UK aid, was by far the largest gathering of its type so far.  This demonstrated both the huge potential of Nigeria as a market, as well as growing engagement in the mini-grid sector in Africa more widely, driven by the continued cost reductions, technological innovations and new delivery models discussed in Abuja.  The main shift which the event highlighted for DFID though was how the work to support the emergence of a thriving mini-grids sector in Africa has developed from an original focus on Kenya and Tanzania plus regional co-operation, to a genuinely multi-country effort using a range of financing and technical tools, and involving a wider range of partners and programmes.

While the efforts to unlock the potential of mini-grids to accelerate energy access in Kenya and Tanzania continue, with updates below on both, there is also active UK aid support to the mini-grids sector via bilateral programmes in Sierra Leone, Somalia, DRC and Mozambique.  Further, through our participation alongside other funders in a range of other programmes, UK aid support is reaching out to further governments, mini-grid developers and communities via programmes including our partnership with the Shell Foundation, the Energising Development Results-Based Financing (RBF) Facility and more.

Some highlights of the past year, current status updates and opportunities going forward in each of these countries and programmes include the following:

In Kenya, the GMGs Kenya programme has signed £9.6m worth of funding agreements establishing the Kenya Green Mini Grid Facility, managed by Innovation Energie Developpement (IED).  The Facility provides both technical assistance and financial support, and has recently finalized funding support to 3 developers, namely Powerhive, Powergen and RVE.Sol, to deliver an expected 15,000 connections in three sites in Western Kenya in 2018.  Further, the implementing partner on the work in Kenya, Agence Francaise de Developpement (AFD) has also been successful in raising €5m of further funding for the Facility from the EU Infrastructure Trust Fund (ITF).  In the coming year the new funding will focus on providing support to additional mini-grid developers and to monitor the impacts of funded GMGs projects.

In Tanzania, the Tanzanian Rural Energy Agency (REA) is in the process of signing contracts with 23 developers who have successfully applied to the REA Results-Based Financing facility for mini-grids funded by UK aid and the Swedish International Development Cooperation Agency (Sida).  The combination of hydro, solar and hybrid projects are expected to deliver around 35,000 new household connections over the next 4 years, serving 175,000 people. The RBF payments of around $19.5m, to be provided based on service level, are estimated to leverage over US$160m of other finance into the sector.  In addition, REA are in the final stages of securing a mini-grid Technical Assistance consultancy, jointly funded by DFID, Sida and the World Bank which will provide capacity support to both REA and project developers working in the country.

In Sierra Leone, in first eleven months of the programme 54 Community Health Centres (CHCs) across the country were electrified, including one opened by the country’s President, with 6kW systems through our partnership with UNOPS and the Government of Sierra Leone.  A second auction was launched in late in 2017 for private companies to maintain and operate bundles of the 54 sites, as well as to co-invest themselves in the development of 40 additional mini-grids in agreed locations.  The results of the auction will be announced soon, engineering works to expand the existing mini-grids in terms of capacity and connections have already begun, and the 40 additional grids will be installed over the next 18 months.  The most recent annual review is available here.

In Somalia the Energy Security and Resource Efficiency in Somaliland (ESRES) programme supported the installation of hybrid mini-grids at 6 sites in 2017 as part of the phase 1.  The programme also supported development of The Somaliland Energy and Electricity Act (SEEA) which allows for an Electricity Commission to be established that will oversee and create policy and regulation for the sector.  The programme is currently procuring the manager for the second phase, which should commence in late 2018.  The most recent annual review is available here.

In DRC, the Essor Access to Energy Project is developing 3 large mini-grid projects in off-grid urban centres of with populations between 100,000 and 300,000 inhabitants.  Essor is supporting the Government of DRC in concessioning via competitive auction 3 pilot mini-grid projects, requiring a total investment of about $100m.  The design team in DRC are already benefitting from a growing network of agencies developing auction, procurement and concession approaches to mini-grids including exchanges with colleagues at GIZ in Nigeria and UNOPS in Sierra Leone in particular.  The AfDB, through the SEFA fund, has also joined the Essor program to support the Government of the DRC in fast-tracking the implementation of additional privately-run green mini-grid projects across the country.

In Mozambique, BRILHO is a five-year programme aiming to expand energy access for rural households and businesses. The programme will work at policy and market level to encourage private sector innovation and investment, resulting in growth in the renewable energy market for solar home systems; mini-grids able to support productive energy use; and, improved cookstoves. Currently, the BRILHO programme is in a procurement phase to select a service provider to implement the programme. We expect the procurement to be concluded and the programme to commence in mid-July. In the meantime, the programme is supporting the Government of Mozambique to assess the profitability and feasibility of FUNAE Solar Panels Factory, and making recommendations to improve its economics.

In addition to DFID’s support via country programmes, our partnership with the World Bank Energy Sector Management Assistance Programme (ESMAP) and the African Development Bank’s Sustainable Energy Fund for Africa (SEFA) have continued with substantial progress in the past year on each.

Through our partnership with the Sustainable Energy Fund for Africa (SEFA) at the African Development Bank (AfDB), packages of mini-grid policy and market development support have been approved to a further 3 countries bringing the total now to 6, with Niger, Burkina Faso and the DRC being added to Mozambique, Rwanda and the Gambia.  In addition, a second phase of the regional Market Development Programme has started, building on the learnings from the first phase.  First phase successes included supporting the development of the GMG Africa Strategy endorsed by the African Union and the GMG Helpdesk which has to date supported 49 GMG developers in 21 African countries.  15 of the 49 developers are active in Nigeria, including the Havenhill Synergy who have an operational mini-grid at Kigbe, which I was fortunate enough to visit with colleagues in December and there is a short video here of the visit.

The ESMAP Global Facility on Mini Grids at the World Bank is currently engaging 15 World Bank Task Team Leaders (TTLs) across 12 active and 8 pipeline projects funded in whole or in part by the World Bank, totalling US$340 million in approved investments just for the mini grid components of these projects.  In addition to this “learning by doing” pillar, the Global Facility is also supporting global knowledge development and as part of this in 2017 convened a series of Action Learning and Exchange Events, including the Action Learning Event in Abuja in December.  At that event knowledge products in 10 key areas needed to unlock mini-grids  were also on show including detailed analysis on the cost of mini-grids, mini-grid policy frameworks and in the use of geospatial mapping.  The next generation World Bank support planned with REA to the Nigerian mini-grids sector discussed at the ALE event in December, will be one to watch in 2018.

In addition, mini-grids are featuring in other DFID-supported clean energy access investment facilities and partnerships, and we have been increasingly building the links between these.  These include for example joint support in the off-grid utilities space with the Shell Foundation, through which we were pleased to see Husk Power recently raising a substantial funding round and rapid progress on the Odyssey Platform which now has $30m worth of mini-grids being designed in their platform,amongst others.  The Energising Development Results-Based Financing Facility has continued to deliver results and learning in Rwanda in particular where the facility has supported 23 solar DC grids and one hydro mini-grid, with 2 solar AC grids ongoing. The Kenya RBF has 2 mini-grids in construction (due for completion in May 2018), 5 more expected to be delivered under the second call, and feasibility studies are now being completed for other 7 sites in Marsabit County and 1 refugee camp site in Turkana County for a 3rd call in the first half of 2018.

An increasing focus in the mini-grids sector is regarding how to improve both the impacts and the viability of mini-grid electrification by encouraging and enabling consumers to use electricity via domestic and productive appliances.  January 2018 saw the launch of the Efficiency for Access Coalition with USAID, SIDA, Rockefeller Foundation, Good Energies Foundation, Shell Foundation, GIZ, IFC and others joining DFID in launching the initiative at the Global Off-Grid Lighting Conference in Hong Kong.  This Coalition, via the secretariat CLASP and the Energy Saving Trust, will be the framework for delivery of our new £18m Low Energy Inclusive Appliances programme also announced at the event.  LEIA seeks to help halve the cost and double the efficiency of a range of off- and weak-grid appliances in least developed countries.

Finally, in addition to providing funding support through a range of partnerships, we have also been active in seeking to support co-ordination, communication and coherence in the mini-grids sector between the industry, governments, funders and facilitators of the sector.  In particular, jointly with the World Bank and African Development Bank, we convened a meeting of mini-grid funders in London in September 2017 and the group is developing a shared funding database and action list.  Through our partnership with the Shell Foundation we have jointly supported the African Mini-Grid Developers Association (AMDA), and are engaging closely on the role that the SEforALL Mini-Grids Partnership can play in convening industry, governments and funders around shared priorities and agreed approaches.

We hope that 2018 will be another exciting year for the mini-grids sector in Africa and we will be communicating announcements and updates through a range of channels in the coming year including the Mini-Grids Partnership twitter feed @minigrids and my own twitter feed at @stevenahunt

For further information on the GMGs Africa initiative and any of the specific initiatives mentioned above, please contact:

GMGs Kenya – Sabita Thapa, Arthur Honore

GMGs Tanzania – Jorgen Eriksson

GMGs Regional Facility – Mansoor Ahmad, Jeff Felten

Action Learning and Exchange – Steven Hunt , Jon Exel

Rural Electrification in Sierra Leone (RESL) – Tom Ratsakatika, Nick Gardner

ESRES Somalia – Angus Miller
Essor DRC – Alexander Hamilton Stéphane Woerther

Brilho Mozambique – Sergio Dista

TIME Partnership with Shell Foundation – Magdalena Banasiak, Emma Miller

Results-Based Financing Facility with EnDev – Phil Mann,, Elina Weber

General Inquiries – Steven Hunt