Renewable-energy minigrids can empower informal sector in Africa

About 70% of Africa's population are employed in the informal sector, and renewable energy-based, small-scale microgrids or minigrids present an opportunity to provide decentralised electricity to offgrid and rural communities, which will boost job creation in the informal sector.

Microgrids can provide employment directly during development and for maintenance and enable rural areas to champion their own energy transitions, as well as provide power for other informal businesses to grow employment, says sustainable economy education and skills development nonprofit Green Africa Youth Organisation founder Joshua Amponsom.

Speaking during a webinar on funding minigrids in Africa, hosted by industry body the Africa Solar Industry Association (Afsia) on November 13, he said the global energy transition presented an opportunity for Africa, which had many of the critical minerals needed for the transition. For example, about 70% of known reserves of cobalt were in Africa.

"For example, the mining industry has to evolve to become sustainable and, with many people employed in mining, this presents an underdeveloped market that can be served by microgrids.

"Much of the workforce in Africa is involved in labour-intensive work of finding and mining minerals. We are trying to think, as an organisation, how we can empower the workforce so that they can be more than just the hands digging up the minerals and have the skills to power the just energy transition," he said.

Amponsom estimates that Africa will need more than 100 000 microgrids to provide power to all people without access to electricity.

"This is how we should approach the [minigrid] sector: by developing the workforce and a pipeline of projects and engaging with communities. Microgrids also localise ownership of electricity infrastructure and without the transmission losses of centralised energy systems."

The scale of minigrid development required means that there will need to be lots of installation and maintenance, which means lots of capacity for jobs and a greater need for people trained in renewable-energy systems.

However, few training institutions provide dedicated renewable energy systems training, and education on renewables in general is low. Green Africa Youth Organisation is working with universities across the continent to introduce new programmes, courses and training mechanisms to create the required workforce that can then be employed, he said.

Further, owing to the need for capital expenditure to develop minigrids, it is difficult for local entrepreneurs to become involved in developing or becoming champions of microgrids in their communities.

"Therefore, it is important to look at different funding mechanisms that allow for these expenses to be covered as part of a sustainable model for funding a long-term power source in communities," said Amponsom.

Small, medium-sized and microenterprises play a significant role in microgrids, but the price-points for energy from such systems must be affordable by low-income households.

"Therefore, microgrid projects pivot on enabling policies and will need to be based on public-private partnerships to achieve long-term sustainability," he noted.

An example of the importance of enabling policies was a microgrid that failed after a few years because there was no policy to protect the integrity of the project and back it up over the long term, he added.

In no place on Earth had infrastructure been funded with private funds alone, and infrastructure development needed public support, concurred sustainable energy development company Africa GreenTec CEO Professor Dr Wolfgang Rams.

"Providing electricity for people in the Global South cannot be done by private investors alone, therefore some grants and subsidies are necessary and we as a company developing projects in this sector expect such projects to need them," he said.

Centralised electricity grids were heavily subsidised, which was why tariff structures had been designed to develop this type of infrastructure. Off-grid solutions would need some level of subsidisation, said Africa Minigrid Developers Association COO John Ouko.

"Commercial and industrial businesses can anchor the project and help to attract other equity investors, but investors in this space must expect low returns. Few commercial banks are willing to enter the sector," he added.

This was despite the significant benefits that renewable minigrid projects could provide to communities, and some projects could be covered by donations or a results-based financing programme, said Rams.

However, it was important for projects to look beyond only providing electricity to make a broader beneficial impact, such as through the development of water purification systems that could use the power from a minigrid, he emphasised.

"It is important to not only focus on one solution, but to combine technologies. For example, [Africa GreenTec] offers renewable-energy-powered cooling solutions and, with electricity in the village, people can do more food processing and food storage in the village," he highlighted.

Similarly, meshgrids, which are grids formed from interconnected solar rooftop systems within an area or community, can grow with demand, which is a huge advantage, compared to a community taking some time to take up all the power from a new minigrid, said Rams.

Different applications of minigrids would need different types of funding, such as a large mine or farm being able to build a viable business case for investment while a low-income household will require subsidisation, but the combination of different technologies can help to boost the viability of projects.