Two years ago, at a World Bank meeting in Kenya, mini-grid companies (or decentralized utilities as we call them) jointly concluded with donors that one of the major barriers to scaling finance for mini-grids is the lack of reliable benchmark information exists about costs, system and business performance, and finance needs in the mini-grid space. This situation too often prevents financiers from being able to appropriately evaluate companies for investment – so they simply don’t invest.
By the time that World Bank meeting had concluded, strong support had developed for creating an Africa Mini-grid Developers Association (AMDA) to specifically deal with this gap. Since then, the founding members of AMDA have built out key policy and regulatory principles for the sector which they consider as fundamental to successfully achieve universal energy access. Importantly, we have also developed a set of Key Performance Indicators (KPIs) that members are required to share information on, including: connection costs, number of connections, reliability of service, reliability of payments, annual revenue per user, and sources and quantity of funding.
If a company were to share this information alone, it would represent a risk. But by sharing it together, we are creating a rock-solid foundation for our messaging and work with governments and donors (showing we are cheaper and more reliable per connection than big utilities), and to financiers (showing what is needed, what is possible financially and how we can better support the sector). We plan to collect this data continuously moving forward by partnering with a leading data firm and publish it freely online so decentralized utilities can also use it to better understand how they are performing vis-à-vis others in the sector.
With this valuable information, AMDA will work together with other partner such as Lusophone Renewable Energy Association to inform a strategic and targeted set of policy and finance advocacy and influencing objectives around Sub-Saharan Africa. We are currently fundraising to use this data to both build out strong research and analysis projects on, among other topics, off-taker risk and load growth, and project finance for decentralized utilities. We are also working hard to find funding to build out AMDA chapters and teams across the continent so that we can help companies improve access to finance.
We have a long road ahead, but we feel that rapid progress is possible once the right information is in the hands of the right people. And we are working hard to make that happen. If you are interested in becoming an AMDA member and meet our membership criteria, please get in touch!
Chief Executive Officer, Africa Mini-grid Developers Association
Board of Directors, Alliance for Rural Electrification