Lessons for Modernizing Energy Access Finance, Part 2—Balancing Competition and Subsidy: Assessing Mini-Grid Incentive Programs in Sub-Saharan Africa

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2020-12-15

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Abstract

Rapid technology development and falling hardware costs have made mini-grids a potentially game-changing platform for enabling universal electrification. With the capacity to power commercial and industrial loads and provide 24/7 service, mini-grids can bring reliable grid-level service to places that are unlikely to be serviced with a stable connection in the near future. Of the roughly 800 million people globally without access to electricity, mini-grids could represent the least-cost option for meeting the electricity needs of 490 million by 2030. In response, governments and development partners are putting in place support programs to accelerate the scale-up of mini-grid deployments. These support programs aim to reduce risk and improve returns for private developers and lower connection costs for rural populations.

This policy brief summarizes a review of 20 such mini-grid incentive programs in sub-Saharan Africa, 17 of which are still being implemented. The programs analyzed primarily used one of two mechanisms to stimulate investment:

auction programs that invite developers to submit bids for the construction and, in most cases, the operation of mini-grids at specific sites, typically awarding an up-front capital subsidy to the selected developers; and

results-based financing (RBF) programs that have a set subsidy per connection that is paid to developers after verification that a household or business has been connected.

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Phillips, Jonathan, Benjamin Attia and Victoria Plutshack (2020). Lessons for Modernizing Energy Access Finance, Part 2—Balancing Competition and Subsidy: Assessing Mini-Grid Incentive Programs in Sub-Saharan Africa. Retrieved from https://hdl.handle.net/10161/26617.

Scholars@Duke

Phillips

Jonathan Phillips

Area Director, Nicholas Institute for En

Jonathan Phillips is the Director of the James E. Rogers Energy Access Project at Duke University, with an appointment at the Nicholas Institute for Energy, Environment & Sustainability. His work focuses on policy, regulatory, and economic issues related to rural electrification, grid de-carbonization, off-grid energy systems, and energy for productivity.

Phillips was the senior advisor to the president and CEO of the Overseas Private Investment Corporation during the Obama Administration, helping scale-up the agency’s climate finance capabilities and lead the implementation of strategic initiatives, including the agency’s $2.1 billion Power Africa portfolio.

Before that, Phillips led private sector engagement and programming with Power Africa at USAID, helping ramp-up the $300 million presidential initiative into one of the largest public-private development partnerships in the world.

From 2007-2014, he held a variety of roles in the U.S. Congress, most recently serving as the senior policy advisor to Senator Ed Markey of Massachusetts. He supported many notable legislative efforts, including serving as one of the lead authors of the Waxman-Markey cap-and-trade bill that passed the House in 2009. He also served on the House Select Committee on Energy Independence and Global Warming as well as the House Natural Resources Committee.

Phillips was a business and economic development volunteer with the Peace Corps in Mongolia. He received a bachelor’s degree from the Milwaukee School of Engineering and a master’s degree in public policy from the Harvard Kennedy School.


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