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The Africa Mini-grid Developers Association targets data and finance, policy action

Author: William Brent, Power for All

Officially launched earlier this year after two years of incubation, the Africa Mini-Grid Developers Association (AMDA) is moving ahead full-steam with ambitious plans to scale the sector by pressing for better policy and greater finance, and is beginning with creating more, and more transparent data.

In an interview with Power for All, AMDA CEO Aaron Leopold said mini-grids are best understood as decentralized or rural utilities. “Mini-grids are just the product,” he said, noting that being perceived as utilities is critical to ensuring that mini-grids are included as an integral part of Africa’s future energy system.

AMDA near-term priorities include mobilizing new, more commercial investors, but also ensuring that already committed funds are actually getting to developers.

“Over $1 billion has been committed by various donors and concessional lenders, but less than 10% has been spent,” said Leopold. “So $900 million is waiting… so success for AMDA is a very, very clear and smooth process for getting that money out the door.”

Closing that delta in committed capital in large part depends on better data, new financing structures and more informed policy and regulation.

“There has been no data baseline for what people can expect: what is the service level, at what reliability, at what cost?” AMDA’s CEO said. “There is a need for data transparency and a lot more data to create those benchmarks… our first important movements will be on data gathering.”

Leopold said that AMDA would start to make more data available on its website and elsewhere (currently aggregated from more than 100 mini-grid sites). All AMDA member companies are required to share data on about 40 key performance indicators (KPIs), including cost, quality and reliability.

Besides data, AMDA believes that smarter result-based financing (RBF) incentives and better cross-subsidization between large, centralized utilities and smaller, decentralized utilities are two components to accelerating growth. “If the goal is to deliver better and more expanded services, neither big nor small utilities can do that alone,” Leopold said. To that end, mini-grids developed by AMDA companies are required to design systems to be in line with national regulations, to ensure the possibility for integration and partnership.

Policy and regulation, however, have also been a stumbling block in some countries.

“A lot of policy redesign was happening, and companies didn’t and still don’t feel like they are represented in the policy-making process for their own sector,” Leopold said.

AMDA’s policy advocacy goals will differ and require different skill sets for each country, since each one is at a different stage of development, Leopold said. For example, he noted, in Mali the sector is quite developed and requires little support, while in DRC regulation is unclear despite having many active projects, and in Nigeria, with some of best regulation on the books, it would be more about monitoring the implementation and holding government and donors to account on their commitments.

AMDA has 17 founding member companies in Tanzania, Kenya and Nigeria, with plans to broaden membership to all of Sub-Saharan Africa in three years. By the end of 2018, AMDA hopes to have a presence in about a dozen countries, with staff in 3-4 countries. It is also talking with existing trade associations in some countries to partner, providing information and advocacy support. Current members are private sector only, but Leopold said AMDA is still looking at opening up membership to non-private sector players.

Both AMDA and Power for All are Mini Grid Partnership (MGP) steering committee members. Leopold said AMDA is excited to work closely with the MGP to build market intelligence and regular sector data, adding that AMDA data is already showing that even without achieving scale, companies in the sector can do more at a lower cost.

“Feeding that into MGP is important,” he said. “AMDA is helping MGP to think through how it can add the most value to organizations that want to work more with the sector, but haven’t found their way yet.”

 

Listen to the full interview here: