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Rural Electrification Minigrids to Become Investors’ New Darling

Rural Electrification Minigrids to Become Investors’ New Darling

Globally, around 1.2 billion people do not have access to electricity. Cost erosion in solar, wind, and energy storage technology is creating new opportunities for the electrification of rural areas.

On the solution side, two main segments can be distinguished: solar home systems and minigrids/microgrids. Solar home systems are self-sufficient solutions for individual households. A small solar system is typically coupled with a battery to provide power for DC appliances day and night. Minigrids may provide DC power or more sophisticated AC power through a semi-centralized system at the village level.

Intermittent renewable energy from solar, wind or hydro solutions might be balanced by integrating energy storagebiomass or diesel generators. Pay-as-you-go (PAYG) solutions allow for innovative business models with mobile payment options.

In the last few years, the appetite for investing in these segments has been growing from impact and commercial investors.

At the same time, utilities like E.ON and ENGIE have built up minigrid capabilities from scratch. Technology firms, such as Facebook and Microsoft, support minigrid development: they have set up the Microgrid Investment Accelerator ? a US$50 million support vehicle. Finally, foundations like the Shell Foundation and the Rockefeller Foundation foster minigrid improvement. These activities have triggered interest from many new investors. Sometimes, a gap between the status quo and expectations is apparent.

Typically, investors realize this within rather costly due diligence processes. Rural electrification companies must also take significant efforts to collect and present relevant information that is tailor-made for the needs of investors.

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April 12, 2018

Monday 16 April 2018 0 comment


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