In a bid to scale up access to electricity in Nigeria and other African countries, mostly in the rural areas, a whopping $1.6 billion of concessional capital funding is needed to boost minigrid sector in Africa, the Africa Minigrid Developers Association (AMDA) has disclosed.
AMDA explained that in 2020, only 13 per cent ($208 million) of the $1.6 billion of concessional capital committed to the minigrid industry was disbursed to minigrid developers despite progress on all business metrics across the industry. In a report made available to New Telegraph from Nairobi, Kenyan, and signed by Catherine Njuguna, Global Director of Communication, Power for All for Africa Minigrid Developers Association, minigrids continue to outperform national and sub-national utilities on service metrics, including up-time, power quality, number of reliable connections and downstream job creation. According to the AMDA report, the sector is struggling to scale up and realise its potential to accelerate access to clean and affordable energy, particularly in rural areas, in a continent with nearly half its population, 600 million people, still lacking access to electricity.
The association explained in the report that it was calling for more support from governments and donors to the minigrid sector in Africa, which has shown strong resilience in the face of COVID-19, but continues to face financial, policy and regulatory constraints. AMDA said that financing of the sector remained slow due to the continued government bias toward the centralised grid. While talking on the launch of the second edition of ‘Benchmarking Africa’s Minigrids report,’ a flagship report for AMDA, an industry association created by minigrid developers to boost the health of the sector and deliver on global renewable energy access objectives, the report showed that the minigrid industry in Africa doubled the number of people it connected to modern and reliable electricity in the last two years amidst COVID-19.
It stated: “Today, more than 500,000 people, healthcare facilities, schools and businesses in sub-Saharan Africa are now accessing stable electricity, thanks to minigrids.” Chief Executive Officer at Africa Mini-grid Developers Association (AMDA), Jessica Stephens, explained: “We have an opportunity to build dynamic, intelligent and renewable energy infrastructure that helps grow communities and economies. “Energy is the foundation for all of the SDG’s and as such needs the kind of support from governments and donors that traditional utilities have received. This is critical for the sector to realise this potential and provide stable renewable energy infrastructure to hundreds millions of people.” The report presents an indepth analysis of changes that occurred in the industry in 2020 and 2021, including the impacts of COVID-19 and uncovers emerging opportunities for achieving immediate scale and long-term sustainability. According to AMDA’s report, key sector findings show the number of connections almost doubled from 40,700 connections to more than 78,000.
The number of operational private sector minigrids grew by 39 per cent, from 288 sites in 2019 to 400 in 2021. AMDA further stated in the report that, revenues grew consistently as operational costs dropped, indicating that the industry is approaching financial viability. The Average Revenue Per User (ARPU), a key metric of industry sustainability and business success, was $8.30 per month for sites commissioned before 2019, up from $4.29 in the previous AMDA report.
On the policy and regulations, it said licensing remained a substantial hurdle with projects often taking more than a year for approval due to complex regulatory frameworks. “There is an urgent need to create a regulatory structure that reflects the decentralized nature of minigrids, that allows for bundling sites and bulk licensing of portfolios,” it noted.