Nigeria, Ethiopia, Kenya comprise key markets for mini-grid developments in Africa
Nigeria, Ethiopia and Kenya are emerging as dominant markets for minigrid developments in Africa, alongside Tanzania and Uganda.
Off-grid renewable energy options, notably standalone systems and mini-grids, are projected to see strong sustained growth in the coming decade, in response to demand for energy in areas unlikely to be serviced by national grids, according to the latest African Energy Outlook 2021 report released by the African Energy Chamber.
Towards 2030, standalone systems and mini-grids could provide almost 50 percent of the new electricity access as this represents the least cost solution to connect about 450 million (41% of the population) people on the continent. In Nigeria, over 40 percent of its 200 people have no access to the conventional grid.
To bridge the energy access gap in Africa, governments will require a successful mix of strategies that integrate grid extension and improvement, mini-grids and standalone generating systems. Mini-grids are cheaper and cleaner than owning generating sets. They use renewable energy resources and bring the load closest to the community where the electricity is consumed, minimising technical losses.
“The mini-grid and standalone generating systems are a multibillion-dollar market in Nigeria. This is because there are areas where it is neither economically nor financially feasible to extend the national transmission lines to,” Ayodele Oni, energy partner at Bloomfield Law Practice, said. “Pricing remains a major challenge though and electricity distribution companies also weaken the expansion of mini-grids in Nigeria,” he said.
The relevance of minigrids in addressing the energy access challenge is spurred on by the increasing competitiveness of solar and battery storage, not forgetting improved energy efficiency of appliances.
“There are huge opportunities in Nigeria’s mini-grid market. We have not even started scratching the surface. Challenges exist but the rewards are worth fighting for,” Habiba Ali, CEO, Sosai Renewable Energies Company, told Businessday.
Owing to the heightened importance the Covid-19 pandemic has put on access to affordable and reliable energy, short- to medium-term recovery planning by most governments is highly likely to prioritise expanding access to areas the grid is yet to reach to reduce vulnerability and improve resilience.
For example, Nigeria’s government has detailed in its 2020 Economic Sustainability Plan a solar power strategy that it seeks to install five million solar-home systems and mini-grids for communities and health clinics.