Business Issues for Mini-Grid-Based Electrification in Developing Countries

Abstract

The off-grid electrification business in general and mini-grids in particular face investment as well as commercial challenges arising from, among others, locational disadvantage, limited customer base, poor paying capacity and ambiguous business environment. This chapter provides an overview of the business environment and discusses the financial and economic viability of projects. It then presents examples of alternative business models used for delivering such mini-grids. This chapter suggests that project design (i.e. sizing, technology choice and standardised delivery model) and appropriate utilisation of plant play a crucial role. Careful funding and risk mitigation finally improves the long-term viability of the project.