minigrid-design-charrette-pre-read-12af5002b55112c8.pdf

The document argues that while minigrids are technically feasible, they lack economic viability due to a typical cost of service between $0.55 and $1.00/kWh, which exceeds customers' ability to pay and the cost of alternatives like diesel generators. RMI proposes a hypothesis that costs can be reduced by over 60% to approximately $0.20/kWh by 2020 by addressing six key areas: hardware standardization, load management, customer engagement, project development/O&M efficiency, affordable financing, and supportive policy. The briefing outlines a strategy to test these ideas across three market segments—large under-grid, large off-grid, and small off-grid with subsidy—using Nigeria and Tanzania as primary test cases.

• The current typical cost of service for a well-run minigrid is $0.60/kWh, though costs up to $1.00/kWh are not uncommon. To be competitive, this must be reduced to compete with petrol and diesel generators, which cost between $0.35 and $0.70/kWh, and to align with customer weekly payment capacities of $1-5.
• RMI identifies six primary areas for cost reduction to reach a target of $0.20/kWh by 2020. The largest potential savings come from reduced hardware costs ($0.11/kWh saved, or 18% of the $0.60 baseline) and efficient load management ($0.08/kWh saved, or 13%).
• High upfront costs, which account for 58% of the total cost of service, are driven by hardware (48%) and project development and construction (10%). For a solar-diesel hybrid minigrid with a 200kW peak load, upfront costs can exceed $1 million.
• Poor capacity utilization increases the cost of energy. For example, in a rural East Africa village, adding a flexible water pump for $0.06/kWh can lower the overall cost of energy by $0.29/kWh (32%), while adding a cassava mill for $0.04/kWh lowers it by $0.11/kWh (12%).
• Financial barriers include high commercial debt rates in sub-Saharan Africa, typically above 15%, and significant foreign exchange risk when revenue is in local currency but loans are in foreign currency.
• Unsupportive policies increase costs through bureaucratic delays and taxes. In Sierra Leone, GST and duties effectively add 40% to the cost of goods sold, which is then passed to the customer.
• Nigeria is presented as a primary test case for scaling minigrids because it has 85 million people underserved or unconnected to the grid and an existing annual spend of $14 billion on off-grid power from small generators.

APA

RMI (n.d.). minigrid-design-charrette-pre-read-12af5002b55112c8.pdf. https://rmi.org/app/uploads/2018/04/Minigrid-Design-Charrette-Pre-read.pdf

Chicago

RMI. minigrid-design-charrette-pre-read-12af5002b55112c8.pdf. n.d. https://rmi.org/app/uploads/2018/04/Minigrid-Design-Charrette-Pre-read.pdf.

Wikipedia

{{cite report |author=RMI |title=minigrid-design-charrette-pre-read-12af5002b55112c8.pdf |url=https://rmi.org/app/uploads/2018/04/Minigrid-Design-Charrette-Pre-read.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{rmindminigriddesigncharrettepreread12af5002b55112c8pdf, author = {{RMI}}, title = {{minigrid-design-charrette-pre-read-12af5002b55112c8.pdf}}, institution = {RMI}, url = {https://rmi.org/app/uploads/2018/04/Minigrid-Design-Charrette-Pre-read.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }