This paper studies the feasibility of mini-grids based on renewable energies in Côte d'Ivoire, and then also studies the technico-economic potential and the most suitable configurations in the various scenarios simulated with the software HOMER. Contact online >>
This paper studies the feasibility of mini-grids based on renewable energies in Côte d''Ivoire, and then also studies the technico-economic potential and the most suitable configurations in the various scenarios simulated with the software HOMER.
Côte d''Ivoire has signed the Paris Agreement that aims to achieve a balance between anthropogenic emissions by sources, including electricity, and absorption by sinks of greenhouse gases in the second half of the century.
Whereas only 34% of Ivorians had access to electricity back in 2013 when the post-electoral crisis triggered a 40% decline, close to 94% of Ivorians are now connected to the grid and the most destitute customers benefit from a subsidized rate.
Mini-grids are small self-sufficient electricity grids that connect communities who have not been reached by the main grid. They are not a new technology. In fact, the first grids were...
Based on annual electricity demand of 148.70 kWh per capita, a tariff of $0.4 / kWh gives an average annual electricity expenditure of USD $59.48 per capita: an overall annual mini-grid market size of $27.5m given a mini-grid population of 462,000. A summary of these four market size estimates is shown in Table 10.
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Mini-grids may finally be ready to change the world. But thesmall, self-sufficient electricity grids that connect communities who have not been reached by the main gridare not a new technology. In fact, the first grids were mini-grids. Edison and Tesla changed the world when they pioneered electrification with small privately-run grids,but eventually, the cheaper cost of large centralized grids quickly relegated mini-grids to a footnote in history.
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Now electrification is coming full circle. Due to the declining cost of solar and storage, mini-grids have fallen dramatically in cost and they may change the world again . A recent World Bank report found that mini-grid capital costs in Africa have declined by over 50% in the last 8 years, as "the costs of key mini-grid components, such as solar panels, inverters, batteries, and smart meters, have decreased by 62%–85% as a result of innovations and economies of scale in utility-scale solar projects, the booming rooftop solar industry, and the growing electric vehicle market". Recent analysis has shown that these decreased costs mean that mini-grids are now thelowest cost way of providing power to at least 100 million people living off-grid in Africa.
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But despite this momentum, mini-gridshave not yet begun to seriously scale across Africa. One of the main barriers to growth has been that the underlying assets are extremely hard to finance. Currently, most of the capital supporting the growth of the sector is venture and impact money. These investors should be commended for their courageous work in funding the high growth operating companies who are driving the mini-grid revolution. But, for this revolution to bring real change we will also need to unlock infrastructure capital from the natural long-term holders of infrastructure assets like pension funds, infrastructure funds, and insurance funds. Mini-grids are infrastructure assets and need long term infrastructure capital to scale.
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The first barrier to infrastructure finance is that mini-grids, like most renewable energy projects, are small-scale infrastructure. And small-scale projects are hard to finance. The projects are not large enough to justify the fixed costs of a detailed evaluation of each project. This means projects must be aggregated into pools of sufficient size for investors to assess. The second challenge is that, unlike traditional infrastructure projects, mini-grids do not sell to large governments. They sell to poor rural consumers who are receiving electricity for the first time. This is a very hard risk to measure and price during this early stage of the sector.
There are a few interesting aspects to the structure of this deal. First, to overcome the small scale of the assets, the SPV pools assets and spreads the fixed transaction costs across many assets. Second, CBEA has raised ''blended finance'' from a mix of private impact investors and philanthropic foundations. This means that it is able to accept more risk and finance the ''pioneering'' scale-up of the sector during these early days.
The potential of this model has been further validated by CBEA obtaining a long-term senior loan directly into the SPV from the Renewable Energy Performance Platform (REPP), a funding platform for renewable energy projects. CBEA hopes this investment will provide a blueprint for project financing mini-grids. The team is already planning to replicate the deal structure across Africa, aggregating operating projects to attract both blended finance and eventually increasing amounts of lower cost infrastructure capital from institutional investors.
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"Ultimately this is a drop in the bucket compared to the billions needed to invest in mini-grids", says Matt Tilleard, Managing Partner at Crossboundary Energy Access. "We believe this structure, and this investment, can be replicated at scale across the continent – both by us and others. To achieve universal energy access in Africa by 2030 we need one hundred CBEAs, each investing $100m - $1 billion."
For PowerGen the structure fundamentally changes their business model. "CBEA''s structure provides the type of financing necessary for us to get to the next level of scale" says Powergen President Aaron Cheng. "We can rapidly scale and focus on operational excellence while transferring the financial burden of asset ownership. Operational excellence allows us to put greater focus on what we really care about - providing customers with better service and more value."
Mini-grids have already changed the world once. But 600 million people in Africa still do not have access to electricity. This new financial innovation may be the beginning of a revolution in electrification that finishes what mini-grids started over 100 years ago .
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Abidjan, Côte d''Ivoire – The U.S. Trade and Development Agency awarded a grant to the Ministère du Pétrole, de l''Énergie et des Énergies Renouvelables of Côte d''Ivoire for a feasibility study of the deployment of solar minigrids to help provide electricity to nearly 200,000 people. The project represents Côte d''Ivoire''s first use of solar minigrids to advance its goal of universal energy access by 2025.
"This project employs innovative energy solutions in support of Côte d''Ivoire''s ambitious universal electrification agenda," said Todd Abrajano, USTDA''s Chief Operating Officer and Head of Agency. "Additionally, U.S. companies will have key opportunities to supply the goods and services to create the kind of high-quality infrastructure that is built to last."
USTDA''s feasibility study will specifically assess the technical, financial and economic viability of deploying solar minigrids in as many as 100 unelectrified communities in Côte d''Ivoire. These minigrids will provide electricity to households, local schools, health clinics and other critical infrastructure including cell towers, cold storage and irrigation.
Abdourahmane Cissé, Ministre du Pétrole de l’Energie et des Energies Renouvelables in Côte d''Ivoire said, "Energy access creates economic development, and Côte d''Ivoire is committed to providing energy access to all of its citizens by 2025. We have worked over the past two years with our partners, including U.S. Power Africa, to develop an Off-grid Action Plan for rural areas. It is time to implement that Off-grid Action Plan, and this grant from the U.S. Trade and Development Agency is critical to take a concrete step forward toward this implementation."
"Reliable access to electricity is a precondition to significantly expanding economic growth and opportunity," said U.S. Ambassador Richard Bell. "U.S. support, through USTDA, for off-grid power solutions represents an important part of our commitment to helping Côte d’Ivoire achieve its goal of universal energy access by 2025."
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