MINIGRIDS IN THE MONEY

The report identifies that the typical LCOE for well-run minigrids is at least $0.60 per kWh, which is too expensive for widespread use. It proposes six cost-reduction pathways—hardware standardization, demand stimulation, customer engagement, clustered project development, low-cost financing, and regulatory reform—to bring the LCOE down to $0.25 per kWh by 2020. The document also provides an investment roadmap to transition from grant funding to commercial debt.

• The current levelized cost of energy (LCOE) for a well-run minigrid is at least $0.60 per kWh, making it unaffordable for widespread use without subsidies.
• Up-front costs account for 60% of the cost of service from minigrids, while ongoing costs make up the remaining 40%.
• The report identifies a pathway to reduce minigrid LCOE by 60%, targeting a cost of $0.25 per kWh by 2020.
• Hardware costs can be reduced through the use of standardized 'minigrid-in-a-box' designs, bulk purchasing, and leveraging global cost declines in solar PV and inverters.
• Underutilization of power is a major cost driver; LCOE can be lowered by $0.08 per kWh by locating minigrids near 'anchor' loads like grain mills and stimulating productive use of energy.
• Building minigrids in closely spaced clusters rather than isolated sites can reduce overhead costs by up to 60% and overall power costs by $0.05 per kWh.
• High commercial debt rates in sub-Saharan Africa, typically 15% to 20%, hinder scaling; reducing the cost of capital by 4% could save $0.03 per kWh.
• Regulatory barriers, including customs duties and VAT, can add nearly 50% to total hardware costs; supportive policies could reduce LCOE by $0.03 per kWh.
• An investment roadmap is proposed to transition minigrid funding from grants ($3–$10M for 3–10 projects) to impact investors, venture capital, and eventually private equity and commercial debt.

APA

Agenbroad, J., Carlin, K., Ernst, K., Doig, S., Ayandele, E., Olu, O. A., Santana, S., Sherwood, J., & Wanless, E. (2018). MINIGRIDS IN THE MONEY. RMI. https://rmi.org/app/uploads/2018/12/rmi-seeds-minigrid-report.pdf

Chicago

Agenbroad, Josh, Kelly Carlin, Kendall Ernst, Stephen Doig, Ebun Ayandele, Olu Aruike Olu, Scarlett Santana, James Sherwood, and Eric Wanless. MINIGRIDS IN THE MONEY. RMI, 2018. https://rmi.org/app/uploads/2018/12/rmi-seeds-minigrid-report.pdf.

Wikipedia

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BibTeX

@techreport{agenbroad2018minigrids, author = {Agenbroad, Josh and Carlin, Kelly and Ernst, Kendall and Doig, Stephen and Ayandele, Ebun and Olu, Olu Aruike and Santana, Scarlett and Sherwood, James and Wanless, Eric}, title = {{MINIGRIDS IN THE MONEY}}, institution = {RMI}, year = {2018}, month = dec, url = {https://rmi.org/app/uploads/2018/12/rmi-seeds-minigrid-report.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }