Falling Short: African Minigrid Market Growing, But Not Fast Enough to Meet 2030 Goals
Unless the African minigrid sector can accelerate deployments, the goal of universal access to electricity by 2030 will likely fall short, according to the latest edition of the African Minigrid Developers Association’s (AMDA) “Benchmarking Africa’s Minigrids Report.”
The African minigrid market is expanding, driving up electrification rates and spurring job creation, according to the report. However, AMDA found that regulatory bottlenecks, funding issues and supply chain problems are hindering the pace of development and driving up costs.
“The third edition of the Benchmarking Africa’s Minigrid Report arrives at a critical moment, as governments, investors, and industry stakeholders must intensify efforts to scale minigrids for Africa’s energy future,” Olamide Niyi-Afuye, CEO of AMDA, said during the launch event. “With data-driven insights and actionable recommendations, we aim to accelerate progress toward universal electrification.”
AMDA is an industry association established in 2018 by 11 minigrid developers. The organization now has 52 members in 24 countries across Africa, including private, decentralized utilities, minigrid developers and operators, and companies that provide minigrid products and services.
AMDA says its members represent 70% of the region’s minigrid developers and that they have commissioned nearly 600 minigrids with a total installed capacity of more than 16.5 MW.
The organization launched its new report last week during the 8th Minigrid Action Learning Event in Lusaka, Zambia.
The conference, which brought together minigrid developers, financiers, government representatives and development partners, was organized by the World Bank’s Energy Sector Management Assistance Program (ESMAP), the Common Market for Eastern and Southern Africa (COMESA) and AMDA.
Minigrids key to Africa’s electrification efforts
Nearly 600 million Africans, 43% of the continent’s population, lack direct access to reliable and affordable electricity. Minigrids, which use software to control distributed renewable energy resources (DER) like solar panels and battery storage, are playing an increasingly important role in many of the continent’s most isolated and poorest regions.
Sometimes referred to as remote microgrids, minigrids are typically built and operated in areas without access to a central electric grid. Microgrids, which also use DERs, are most often grid-connected.
To improve access to affordable, reliable and sustainable electricity, the World Bank and the African Development Bank, supported by private sector energy development partners and nearly 30 African heads of state, launched the Mission 300 initiative in January. The goal of Mission 300 is to bring electricity to another 300 million Africians by 2030.
Minigrids are expected to play a key role in the Mission 300 initiative and they are already in high demand across the continent in places like Zambia, Ethiopia and Nigeria. Nigeria is one of the largest minigrid markets in the world with over 100 systems currently online.
The World Bank estimates that sub-Saharan Africa will need 160,000 new minigrids to achieve universal access by 2030. Achieving this goal may be difficult, based on the AMDA report.
Minigrid deployments face headwinds
Building on findings from its 2020 and 2022 reports, the “Benchmarking Africa’s Minigrids Report” analyzed data from 27 AMDA member minigrid companies, identifying key trends and opportunities for the sector.
For example, AMDA found that increased efficiencies and lower solar photovoltaic component prices led to a 20% decline in capital expenditure (CAPEX) costs since 2020. However, African minigrids still have higher CAPEX costs ($6,824 per kW) compared to global benchmarks ($3,000 per kW).
The report’s authors noted that improving supply chain efficiencies, enhancing economies of scale and addressing taxation of solar PV components “are all necessary to bring down CAPEX expenses further.”
Moreover, AMDA found that despite large pledges of concessional funding, lagging disbursement of that capital is delaying minigrid projects. The report said, “scalability, improving financing mechanisms and strengthening minigrid developers’ capital absorption capacity is essential.”
Regulatory approvals are also slow, according to the report. ADMA said innovative frameworks must be developed to streamline and standardize minigrid approval processes to “ensure the swift, timely deployment of minigrids.”
There’s also good news
While ADMA found many areas in need of improvement, the report highlighted several places where the industry is excelling.
Across the board, countries with minigrid-friendly regulatory and financial policies have the greatest number of minigrids. ADMA specifically highlighted Nigeria as a market others should emulate.
The Nigerian Electricity Regulatory Commission (NERC) issued nearly 200 licenses, permits and certification to minigrid operators in 2024 alone.
Minigrids are also getting bigger and serving more people. No longer just standalone systems, interconnected solutions “offer pathways to megawatt-scale deployments,” the report said.
The minigrid sector is creating jobs and transforming the economic prospects of entire communities. ADMA said the 27 members that participated in the study created more than 6,200 jobs in the last four years. Most of these new roles are in the communities the minigrids serve.
Access to reliable electricity from minigrids also improves the financial well-being of businesses and individuals.
Finally, new financing mechanisms are gaining popularity, helping to improve access to capital. Blended finance sources, which merge public, private and philanthropic capital, escrowed grant payments, and renewable energy credits (REC) are among the financial tools increasingly available to developers.
Moving forward
The ADMA report offers actionable steps for stakeholders to accelerate minigrid deployment in the coming years.
The recommendations include increased collaboration and transparent communication, simplifying licensing requirements and procedures, streamlining funding mechanisms, and targeting revenue-enhancing business models.
“This report provides the most comprehensive, data-backed analysis of Africa’s minigrid industry—shedding light on costs, performance, and investment trends,” said Anita Otubu, senior director at the UN-backed Sustainable Energy for All (SEforAll). “By benchmarking real-world data from developers, the report gives us clear insights into what works, what does not, and where we need to improve.”
You can read the report here.
Zambia announces plans for 200 minigrids
In addition to the launch of ADMA’s new report, host nation Zambia announced its intention to expand investments in off-grid solar energy during the 8th Minigrid Action Learning Event.
"Our target is to have at least 200 solar minigrids operational by 2030, ensuring that every rural district in Zambia has access to clean, affordable, and reliable electricity,” said Makozo Chikote, Zambia’s Minister of Energy.
The country’s efforts will be supported by the World Bank, the Common Market for Easter and Southern Africa, the AMDA and other partners.
“Energy access changes people’s lives. It improves health and quality of life and helps create jobs and livelihoods that lift people out of poverty, said Achim Fock, World Bank Country Manager for Zambia. “In Zambia, Mission 300 includes supporting an acceleration of the deployment of distributed renewable energy.”
Renewable energy to power Nigerian rice farm
In related news, Olam Agri announced today that its rice farm in Rukubi, Nigeria, would be home to a new commercial and industrial (C&I) hybrid solar project. Olam Agri is a global food and fiber agri-business that produces specialty grains, rice, edible oils, sugar, cotton and more.
The Rukubi installation will include a 1.3-MW solar system and an 860-kWh battery energy storage system and will be built under a 10-year power purchase agreement with Husk Power. Husk is one of the largest minigrid developers in Nigeria and has plans to install “hundreds of MWs of C&I solar capacity in Nigeria and other regions of Sub-Saharan Africa over the next five years,” Olu Aruike, Husk’s country director, said in a statement.
They hybrid system will reduce the facility’s reliance on diesel generators, lower emissions, enhance voltage stability and ensure a reliable power supply.
“By transitioning to solar power, we are improving the efficiency of our rice production in Rukubi and contributing to Nigeria’s broader renewable energy goals,” said Anil Nair, country head for Olam Agri. “By implementing renewable energy solutions in Nigeria, Olam Agri is not just meeting its own needs but inspiring others to follow suit and help drive sustainability in the agricultural sector across Africa and beyond.”
