Across Sub-Saharan Africa, millions of people still don’t have reliable access to electricity. Minigrids (small, local power systems that work independently from the main electricity grid) are becoming an important solution to this problem. The Benchmarking Africa’s Minigrids (BAM) Report 2024 by the Africa Minigrid Developers Association (AMDA) gives valuable insights into how the sector is growing, what challenges it faces, and its potential for the future. Minigrids offer a clean, flexible, and cost-effective way to bring power to remote and underserved areas, where building large power lines is too expensive or difficult.
According to the World Bank, reaching 380 million people in Africa with electricity by 2030 will require more than 160,000 minigrids, costing a total of about US$91 billion. These minigrids could provide electricity at a cost as low as US$0.20 per kilowatt-hour, making them the cheapest option for over 60% of people who currently don’t have electricity. But even with this strong potential, progress in building these systems has been slow.
One big reason for the delay is the lack of affordable, long-term funding. There are also issues with slow government approvals and delays in handing out promised financial support. For example, a 2024 report by Power for All showed that only 14% of committed funds had been given out, which has led to major delays and slowed down growth in the sector.
Still, there are signs of progress. Between 2022 and 2024, 27 minigrid companies, including 24 AMDA members working in 19 African countries, built 116 new minigrid sites. Nigeria led with 57 new sites, followed by Uganda with 29, showing how strong partnerships between governments and businesses can help bring minigrids to communities at scale.
A joint effort by the European Union (EU) and GIZ led to the launch of 25 minigrid sites as pilot projects to test how well these systems work under Uganda’s rules. Uganda now has plans for 346 more sites to be developed by 2030, showing its growing commitment to clean, local energy.
As Uganda’s minigrid sector continues to grow, electric vehicle (EV) companies like Yongeza Capital, GOGO Electric, SPIRO, Kiira Motors Corporation, and others have a promising opportunity to integrate minigrid power into their operations. This shift supports a more sustainable and energy-efficient future, while also creating benefits for partners such as Watu Credit.
Uganda’s success is partly due to a supportive environment with concessional and commercial funding. However, most developers still struggle to attract commercial investment. Blended finance, which combines public, private, and charitable funds, has become a helpful way to lower risks and bring in private investors. Programs like the Beyond the Grid Fund for Africa (BGFA) and the Climate Finance Blending Facility are good examples of how public-private partnerships can make minigrid projects more appealing to investors.
The way minigrids are being built is also changing. They are getting larger and more efficient. The cost to build minigrids has dropped by about 20% between 2020 and 2024, from US$8,500 per kWp to an average of US$6,824 per kWp. This drop is because of the falling prices for solar equipment, the use of solar-diesel hybrid systems (which are cheaper than solar with battery storage), and companies capturing economies of scale. However, building minigrids in Africa is still more expensive than in other parts of the world, where average costs are around US$3,000 per kWp. Higher costs in Africa are often due to difficult transportation, scattered populations, and low demand in many areas.
To make minigrids work over the long term, developers need a good mix of funding sources. While public funding is still important, commercial financing is key for helping projects grow faster and become more efficient. Developers are also being encouraged to try new business models that allow local communities to take part, own, or even run their systems. For example, NRECA International has helped create rural electric cooperatives in Liberia, Uganda, and Zambia, where communities operate the minigrids themselves.
Developers are also looking at ways to increase income and reduce electricity use. Working with microfinance companies and appliance sellers, minigrid companies can help small businesses use electricity for things like farming equipment, refrigeration, mobile phone charging, and small-scale factories. Services like clean water supply, battery rental, and electric vehicle charging can also help boost income, but the main goal is to encourage useful, everyday electricity use that helps communities grow.
There is room for optimism. AMDA members say they plan to increase their minigrid deployments tenfold over the next 5 years. This wouldn’t fully close the electricity access gap, but it shows big ambition. If governments, donors, and private companies support this push, it could lead to faster and more widespread access to clean energy.
The sector is already helping local economies. Over the last four years, the 27 developers in this study have created 6,234 jobs, showing how minigrids can support economic growth as well as energy access.
But major regulatory changes are still needed. According to the World Bank, reaching even a more modest goal of 9,000 minigrids will require governments to approve 1,500 new projects each year, something that will only happen if rules are simplified and made more efficient.
In the end, minigrids in Africa offer more than just electricity, they are a chance to boost economic opportunity, create jobs, and support climate goals. But to succeed, the sector will need better funding systems, smarter regulations, and strong partnerships across governments, communities, and the private sector.
