On the 13th of November 2024, a panel of experts gathered for the webinar “Financing Renewable Microgrids in Africa,” hosted by the RePower project and moderated by Belén Gallego, CEO of ATA Insights. The session brought together leaders from Africa Minigrid Development Association (AMDA), Green Africa Youth Organization (GAYO), and Africa GreenTec (AGT), who offered their perspectives on the complex challenges and transformative opportunities within the microgrid sector across the continent. This discussion emphasized the need for innovative financing, regulatory support, and community engagement to ensure sustainable electrification for Africa’s underserved regions.
The context: RePower’s mission in rural africa
As Belén Gallego introduced, RePower is an ambitious EU-funded project with a goal to bring renewable electricity to 20,000 off-grid customers in sub-Saharan Africa by 2027. With a budget of €12.7 million, the project aims to install plug-and-play microgrids, integrating solar panels, battery energy storage systems, and biomass CHP to lower energy costs and spur economic growth. RePower focuses on capacity building and stakeholder engagement to develop sustainable, community-tailored solutions aligned with the UN’s goals for universal energy access. This project context set the stage for the speakers to explore how microgrids can become viable, large-scale solutions through strategic financing.
Providing financial expertise to microgrid developers
John Ouko, COO of AMDA, highlighted AMDA’s role as a representative body for mini-grid developers and operators in Africa. Ouko described AMDA’s work through four key pillars: delivering member value, engaging in policy and regulatory advocacy, facilitating access to capital, and developing research and standards. These pillars support AMDA’s mission to foster a conducive environment for private-sector mini-grid companies, ultimately contributing to universal energy access. With over 49 member companies across 24 African countries, AMDA is advancing a cohesive approach to mini-grid development through capacity building, financial matchmaking, and data standardization. These efforts include AMDA’s benchmarking report, a critical data source for stakeholders, which will soon release its third edition.
Addressing financing challenges, Ouko noted that mini-grid companies often face underfunding and limited financial expertise. AMDA, in response, provides financial workshops and access to a database of past investments to guide developers in sourcing equity, debt, and grant funding. Ouko underscored the need for patient capital, particularly from pension funds, to support the sector’s long-term goals and encourage sustainable investment.
Getting the community involved to enhance the resilience of electrification efforts
Joshua Amponsem, Founder of GAYO, explored the role of workforce development and community ownership in microgrid success. He noted that achieving universal electrification in Africa requires an estimated 160,000 mini-grids, highlighting the importance of local expertise and community engagement. With Africa’s informal sector comprising about 70% of the workforce, Amponsem argued that microgrids could unlock significant employment opportunities by training locals in technical fields and fostering small business growth.
Amponsem also addressed affordability, suggesting that microgrid financing models should account for low-income households and the informal sector’s needs. He advocated for decentralized ownership models where communities co-own infrastructure, which not only lowers costs but also fosters local commitment to maintaining systems. GAYO’s partnerships with universities and energy commissions aim to promote policies and training programs that support a just and sustainable energy transition.
Tapping into diverse sources of financing to make microgrids happen
Wolfgang Rams, CEO of AGT, shared AGT’s unique model of combining microgrid development with essential services, such as water purification and cooling. Founded in 2015, AGT operates in multiple African countries, including Mali, Senegal, and Kenya, and has achieved notable success through crowdfunding and impact measurement. Rams stressed that sustainable microgrids go beyond energy provision, creating opportunities for local businesses to thrive and enhancing community resilience.
Rams explained that AGT’s model uses a blend of financing tailored to different target groups. While consumer-level microgrid access may rely on grants and subsidies due to low energy demands, small businesses and industrial users generate revenue, allowing AGT to employ a mix of microfinance and private funding. Rams highlighted that successful financing requires a multifaceted approach that combines grants, loans, and private capital tailored to the unique needs of each customer base.
Overcoming financial and regulatory challenges
The discussion revealed several critical obstacles to scaling microgrids in Africa. Chief among them is the lack of financial infrastructure suited to the long-term needs of microgrids. While the initial capital costs often receive grants or subsidies, funding for maintenance and eventual asset replacement remains scarce. This gap poses a risk to the sector’s sustainability as aging infrastructure could lead to service disruptions or expensive replacements if not properly maintained.
Panellists emphasized the necessity of policy frameworks that accommodate the financial realities of microgrid developers. Policies promoting regulatory consistency, tariff standardization, and streamlined reporting could alleviate administrative burdens and attract more investors. Additionally, integrating policies that support renewable energy education and technical training could build local capacities to manage these energy systems long term.
The Path forward: building sustainable microgrids
The panellists agreed that sustainable financing and community buy-in are paramount to scaling microgrids across Africa. From GAYO’s emphasis on workforce training to AGT’s impact-focused services, the session highlighted that a successful microgrid ecosystem relies on diverse funding sources, skilled local operators, and well-aligned policies. As Ouko pointed out, refining funding models to include refinancing options or patient capital could offer microgrid developers a more sustainable path forward, preventing infrastructure obsolescence and supporting long-term viability.
The insights from this webinar underscore that financing solutions for renewable microgrids must be as flexible and innovative as the technologies themselves. By fostering public-private partnerships and promoting localized training, Africa’s energy landscape can shift toward greater inclusivity, reliability, and resilience, ensuring that rural communities not only gain access to power but also prosper economically and socially.
You can watch a video recording of this webinar here:
https://repowerproject.com/materials-from-the-webinar-financing-renewable-microgrids-in-africa/
Disclaimer: The RePower project is funded by the European Union under grant number 101096250. Views and opinions expressed are however those of the author(s) only and do not necessarily reflect those of the European Union or CINEA. Neither the European Union nor the granting authority can be held responsible for them.