FROM PROCUREMENT TO PERFORMANCE: Towards a private sector-led, service-based model to scale up sustainable electrification of public institutions

The document examines the failure of grant-based 'design, procure, install' models for electrifying public institutions, which often lead to premature system failure due to neglected operation and maintenance (O&M). It proposes a service-based model where private providers install and maintain systems over 10-15 years, with governments paying for performance verified by third parties. The brief identifies key barriers—including public sector affordability, private sector capital risks, and grid arrival—and presents case studies from Benin, Kenya, Niger, and Nigeria to demonstrate the model's potential.

• Conventional equipment-ownership models for public institution electrification are often unsustainable because they prioritize up-front capital expenditure over long-term operation and maintenance (O&M). This is frequently driven by short donor project timelines that prioritize "timely disbursement" over long-term planning.
• Evidence from Malawi indicates significant failure rates in off-grid energy systems for health and education; one study found that 38 percent of systems lost all energy service within a few years. In another audit of Tier 1 health centres in Malawi, only 57 percent of 396 discrete off-grid solar PV systems were functional.
• A performance-based service model shifts the burden of up-front investment to the private sector, which is paid by the government based on meeting key performance indicators (KPIs) over a 10- to 15-year period. This aligns incentives for the provider to ensure long-term quality and reliability.
• Public sector affordability is a major barrier; research in Nigeria showed that while health clinics were responsible for utility bills, their reported willingness to pay for solar O&M averaged only USD 14 a month, which is considered well below the actual required amount.
• To mitigate payment risks and attract private capital, the document suggests using de-risking instruments such as results-based financing (RBF), Distributed Renewable Energy Credits (D-RECs), and government-backed payment guarantees similar to those used for Independent Power Producers (IPPs).
• The risk of 'grid arrival' can be mitigated through specific contractual clauses, such as buy-outs of solar assets by the utility, net metering arrangements, or pre-defined termination terms to ensure the private provider can recoup investments.
• The World Bank's ROGEAP project in Niger and Nigeria is piloting a model where the private sector recovers capital costs within four years, followed by monthly O&M payments, using digital remote monitoring to trigger payments based on performance.
• The GreenStreet Africa initiative proposes a blended finance facility that aggregates solar projects into portfolios, using local currency private-placement bonds backed by third-party guarantees to make projects attractive to private IPPs or ESCOs.

APA

Sustainable Energy for All (2021). FROM PROCUREMENT TO PERFORMANCE: Towards a private sector-led, service-based model to scale up sustainable electrification of public institutions. https://www.seforall.org/system/files/2021-12/Procurement-to-Performance-SEforALL.pdf

Chicago

Sustainable Energy for All. FROM PROCUREMENT TO PERFORMANCE: Towards a private sector-led, service-based model to scale up sustainable electrification of public institutions. 2021. https://www.seforall.org/system/files/2021-12/Procurement-to-Performance-SEforALL.pdf.

Wikipedia

{{cite report |author=Sustainable Energy for All |title=FROM PROCUREMENT TO PERFORMANCE: Towards a private sector-led, service-based model to scale up sustainable electrification of public institutions |date=November 2021 |url=https://www.seforall.org/system/files/2021-12/Procurement-to-Performance-SEforALL.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{sustainableenergyforall2021from, author = {{Sustainable Energy for All}}, title = {{FROM PROCUREMENT TO PERFORMANCE: Towards a private sector-led, service-based model to scale up sustainable electrification of public institutions}}, institution = {Sustainable Energy for All}, year = {2021}, month = nov, url = {https://www.seforall.org/system/files/2021-12/Procurement-to-Performance-SEforALL.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }