Guide aims to boost understanding of small-scale networks but warns that risk mitigation is important.
The UN Industrial Development Organisation has launched its Clean Energy Mini-Grid Policy Development Guide to help policymakers navigate the renewable mini-grid market. The guide provides tools and recommendations on how to approach policies and regulations in this space and outlines the various forms and models that public-private cooperation could take.
Mini-grids involve small-scale electricity generators that are interconnected through a distribution network for a local group of customers. They operate independently from a national transmission grid, which makes them a valuable tool for achieving universal electricity access in the developing world, especially in remote regions.
The guide highlights a number of major issues that governments and public bodies need to navigate for successful delivery of mini-grids. These include:
- The scale required for sustainable mini-grid business models.
- Variable degrees of private sector involvement resulting from government policy.
- Trade-offs between close government control, minimum financial subsidies and low consumer tariffs.
- Risks resulting from the unpredictability of electricity demand growth in rural areas.
- The need for regulators to factor in relatively high termination risk.
The publication presents a decision tree designed for policymakers to guide them through these and other decision-making challenges. It also reflects on the outcomes of past policy decisions on mini-grid deployment.
The Clean Energy Mini-Grid Policy Development Guide was published at the 6th ARE Energy Access Investment Forum taking place from 17-19 March, 2021.
The report is available in both English here and French here.
