Bridging Africa’s Energy Gap: Lessons from Sierra Leone’s Mini-Grid Sector

Electricity is referred to as a prerequisite for economic development with its huge contribution to improving social infrastructure.

To enhance inclusive socio-economic development, adequate electricity is needed all over the world, especially on the African continent.

Unfortunately, the majority of the African population, 60% to be precise, lives in rural areas which only have access to about 5% of modern sources of electricity.

Specifically, about 80% of the 1.5 billion people in the world affected by energy poverty reside in Africa.

This means that a large part of the African population is deprived of other essential social elements such as financial services, education and health which mainly require electricity to function efficiently.

In an attempt to stimulate rural development, African countries have adopted policies that focus primarily on expanding the coverage of their national networks.

The expansion of national distribution networks is however limited by low purchasing power,
and low population density in rural areas.

It also faces non-technical shortcomings that lead to huge business losses.

As an alternative, there is growing interest in decentralized generation and distribution of electricity via mini-grids.

Mini-grids were touted as vital platforms for improving energy access in Africa. Sub-Saharan African countries, such as Sierra Leone, with a national electrification rate of 26% in urban communities and 6% in rural areas, are ranked among those with the lowest access rates to electricity. world.

As a result, Sierra Leone is among the African countries that have gone from pilot mini-grid projects with a record number of development of 92 mini-grid sites in just two years.

The successful development of mini-grids should be based on end-user needs and their active involvement, allocation of responsibilities, capacity building, appropriate financing models, market mapping and supporting policies.

The development of mini-grids in Sierra Leone has been mainly funded by donors.

The largest, the Rural Renewable Energy Project (RREP), focuses on creating an enabling environment for the mini-grid market to be driven solely by the private sector.

The RREP aims to provide around 5 MW of renewable energy to rural communities by developing around 94 solar mini-grid installations through public-private partnerships (PPPs).

The policy and regulatory approach to mini-grids in Sierra Leone takes a very centralized approach.

All rural electrification planning falls under the mandate of the Ministry of Energy (MoE), unlike related agencies in other countries.

Additionally, Sierra Leone does not have a rural electrification master plan, but its off-grid electrification strategies are contained in different energy policy documents such as the Power Sector Reform Roadmap ( 2017-2030).

This strategy is beneficial in helping to formulate solutions that resonate with
local conditions and national frameworks.

The latter provides the framework for the restructuring of the electricity sector aimed at achieving long-term electrification objectives.

Interestingly, the electricity and water regulations
European Commission (EWRC) has developed regulations on mini-grids which contain specific stipulations on licensing procedures, commercial agreements, service to consumers and grid interconnection.

The tariff framework for mini-grids in Sierra Leone is set by the EWRC.

They contain provisions relating to cost-reflective retail tariffs, market entry procedures, contractual arrangements, mainline entry, technical and service standards, and guidelines and licensing for capacity and framework based mini-grid projects.

To ensure affordability of tariffs, reflect the cost of service and know the market, Sierra Leone takes a participatory approach.

For example, prior to the rollout of the RREP in 2016, a demand assessment involved 2,500 interviews, 68 rural communities and feedback from 1,950 households. The assessment established that mini-grid electricity would result in savings of 52% for households compared to
alternative sources of fuel.

Sierra Leone uses both donor and government funds to cover mini-grid construction expenses.

In addition, it provides for an in-kind subsidy to operators which covers the investment costs of distribution assets.

The government of Sierra Leone has also launched
several tax incentives aimed at reducing tariffs.

These interventions include corporate tax exemptions, goods and services tax exemptions for mini-grid projects, and duty exemptions on major solar equipment.

Overall, mini-grid systems in Sierra Leone have increased reliability and electricity supply.

Due to their local ownership, mini-grids have minimized the risk of theft, which is quite common with grid-centric alternatives.

Hybrid mini-grids overcome power intermittence characteristic of mainstream hydropower
sources subject to seasonal variability.

Additionally, mini-grids have an overall net effect of improved environmental performance with high scores on energy efficiency and lower carbon emissions.

In countries like Sierra Leone, mini-grids present a major development opportunity due to a less developed national grid but a vibrant private sector.

Nevertheless, the development of mini-grids is limited by poor appraisal, lack of local expertise, institutional barriers and regulatory deficits.

The continued adaptation of mini-grids in Africa must, for the foreseeable future, focus on commercial viability, maximum high quality access and unsubsidized tariffs.

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