Green mini-grids: Evidence from India's experience provides lessons for scale-up in low-income countries

Abstract

The International Energy Agency (IEA) has estimated that, in order to achieve universal access to electricity, mini-grids will have to provide around 40 % of the new capacity needed by 2030. While the use of diesel mini-grid systems is expanding, green mini-grid options exist, but have struggled to expand beyond pilot projects and will not make a meaningful contribution to sustainable energy for all targets at the current deployment rates. Key barriers include lack of access to affordable longer-term finance, weak effective consumer demand, local capacity issues, and policy uncertainty. This paper presents the experience and lessons of policy initiatives in India to promote village electrification based on renewable-energy-powered mini-grids that have high scale-up potential worldwide, especially in Africa. An analysis of the scale-up potential of the renewable-energy-based mini-grids implemented in India has been undertaken under the four pillars of sustainability, viz. (1) technical, (2) financial, (3) institutional, and (4) social. In addition, the assessment also covers environmental sustainability to ensure that the chosen options are not only climate-friendly, but also do not lead to local environmental problems. This assessment has been used to suggest a strategy for scale-up in low-income countries particularly in Africa, which includes a cluster-based approach to mini-grids that can help in providing the scale of operation to cover the issues around the management, operation, cost recovery, social and institutional issues, and diversification of energy use. A decision-making tool for ranking various renewable-energy-based mini-grid options has also been presented, which includes a scoring matrix based on the capital cost, generation cost, environmental impact, local manageability, and ease of operation and the potential for enhancing the livelihood opportunities.