AMDA CEO on the role of mini-grids in powering Africa

In a groundbreaking move, the Africa Mini-Grid Developers Association launched a benchmarking report that sheds light on the crucial role of mini-grids in providing affordable, clean, and reliable electricity to all Africans. The report not only identifies the barriers hindering the sector's growth but also proposes solutions to overcome them. Aaron Leopold, the CEO of the Africa Mini-Grid Developers Association, sat down with CNBC Africa to discuss the key findings of the report and the future of mini-grids in Africa. The association, established two years ago, aims to enhance the understanding of financing, performance, and policy within the mini-grid sector. This report marks their first comprehensive analysis of the private sector's operations in the continent. Leopold highlighted the challenges faced by state-run utilities in achieving universal electrification in Africa. As a result, decentralized energy technologies like mini-grids have emerged as a promising solution, particularly in rural and remote areas where traditional grids are unfeasible. However, the opacity of mini-grid operations has posed difficulties for policymakers and investors in comprehending the sector's dynamics. The report provides valuable insights from various African countries, shedding light on the rapidly growing mini-grid industry. The statistics indicate that while mini-grids are gaining popularity, there is still significant room for expansion across the continent to achieve universal access. With the World Bank projecting a need for over 140,000 mini-grids to serve the entire African population, the sector's growth potential is immense. Despite the increasing popularity of mini-grids, Leopold emphasized the ongoing affordability challenge in rural areas. The installation costs have seen a remarkable decrease of over 60% since 2015, making them a more viable option for communities. Currently, the average cost per connection stands at $733, significantly lower than traditional utility connections in remote areas. Leopold expressed optimism about the long-term feasibility of mini-grids, citing their 20-30 year lifespan as a sustainable investment for rural communities. To address affordability issues, he proposed the implementation of cross-subsidization, leveraging profits from urban areas to lower costs in rural regions. The report underscores the crucial role of mini-grids as a cost-effective and reliable alternative for rural electrification. Leopold urged governments to leverage the report's findings and consider mini-grids as a viable solution for expanding electricity access in underserved areas. While mini-grids offer a high service quality with minimal outages, there remains a need for increased collaboration between the public and private sectors to drive adoption. Leopold emphasized the importance of regulatory stability and long-term donor support to attract investments and propel the sector's growth. Despite a growing interest from international and local companies, securing investment capital remains a challenge due to regulatory uncertainties and political fluctuations. Leopold highlighted the necessity for a cohesive continental support mechanism to provide a conducive environment for investors looking to commit to the mini-grid sector. In conclusion, the future of energy in Africa hinges on the widespread adoption of mini-grids as a sustainable solution for delivering electricity to remote communities. Through concerted efforts from governments, investors, and donors, mini-grids have the potential to revolutionize energy access and drive socio-economic development across the continent.