Decreasing the cost of solar mini-grids /
Over 600 million people in Africa do not have access to a reliable, safe source of electricity. There is a growing consensus amongst the international community that mini-grids will be a key component of the sustainable solution to this problem.
These innovative products can significantly support developing countries to achieve their ambitions of enabling universal access to energy for citizens. The World Bank’s Energy Sector Management Assistance Program (ESMAP, 2019) estimates that over half of the 804 million people living off-grid can be served effectively by mini-grids. Significant new funding has been committed to support the development of mini-grids, such as USD$150 million allocated by the World Bank to fund a component Nigeria Electrification Project (NEP), which aims to develop a total of 10,000 mini-grids by 2023. Attracting this level of private finance and achieving the target mini-grid construction timelines will require a streamlined approach to planning, procurement and construction. Developers will have to scale their operations dramatically to achieve the number of mini-grids envisioned by planners.
Crown Agents brought our unique specialty in end-to-end procurement and off-grid solar to co-design and implement a bulk procurement platform for the solar mini-grid industry in Kenya, Tanzania, Nigeria, and Zambia. This project is expected to achieve better component prices, decrease the capital cost of mini-grids by 7%, and lead to increased investment in the sector and the accelerated delivery of renewable energy access solutions.
During the design of the platform, Crown Agents worked directly with mini-grid developers and heard first-hand about the challenges they face accessing the best global prices for solar panels, batteries, inverters, and other key off-grid system components. Our approach centered on:
- Collecting data on current pricing arrangements from multiple mini-grid developers, and on challenges in managing international freight and customs in four countries
- Identifying opportunities for savings through the bulk procurement of mini-grid component parts.
- Engaging with component suppliers and developers to build commercial terms which would allow developers to access better pricing based on bulk procurement.
- Scalability is an important consideration in designing innovations.
Scalability is an important consideration in designing innovations. Building on this work, the Rockefeller Foundation and All-On recently launched a $10-million debt facility to support the expansion of bulk procurement in Nigeria. Odyssey, with Rockefeller Foundation investment, plan to expand the platform to cover other Sub-Saharan African countries.