Policies and regulations for private sector renewable energy mini-grids

Access to electricity is vital for socio-economic development. But power cannot be extended to everyone solely through national electricity grids. Off-grid renewable energy solutions are crucial to achieve universal access to electricity. Most of these will involve mini-grids – isolated, community-level power grids, which can eventually be absorbed into the main grid or may continue to operate autonomously. To attract private investment in renewable mini-grids, policy makers need to select the right policies and create an effective regulatory framework. This report examines the key factors influencing investors in mini-grid projects, including licensing, tariff regulation, access to finance and specific project risks related to the eventual arrival of the main grid. Different combinations of policies work with different power-generation technologies. The report also examines the specificities of mini-grids connected to solar, biomass, wind and small hydropower, or some combination of these with other energy sources. Appropriate policies will not only speed up electrification but also improve the quality of service and enhance the effectiveness of well-targeted public spending.