The Sustainable Energy Fund for Africa (SEFA) has approved a $1m grant to launch the first phase of a Green Mini-Grids (GMG) Market Development Program (MDP), which will be implemented by the SE4ALL Africa Hub in coordination with SE4ALL’s Clean Energy Mini-Grid High Impact Opportunity stakeholder group.

Alex Rugamba, African Development Bank Director of Energy, Environment and Climate Change, said: “Green mini-grids provide the most affordable solution to a specific market need that is underserved by grid connection and solar home systems, yet the GMG market is still in its infancy on the continent because the sector faces significant barriers to growth.”

“SEFA’s Green Mini-Grid Market Development Program will help overcome those barriers to create the opportunity for scaled-up investment in this promising sector,” he said.

The program aims to remove or reduce market barriers at regional scale and strengthen the ecosystem for the emergence of a thriving GMG sector in Sub-Saharan Africa.

The program will support the efforts of relevant stakeholders such as governments and project developers in creating a favorable environment for scaling up mini-grid investment on the continent and expanding energy access to underserved communities through GMGs.

Green mini-grids are village or district level electrical distribution networks that serve the needs of communities too distant to be economically connected to the grid in the near to medium term, but densely populated enough to offer economies of scale in power delivery compared with individual home systems.

The International Energy Agency has estimated that 40% of investment required to achieve universal electricity access by 2030 can most economically be achieved through mini-grids.

The MDP is a multi-phased program which includes: generating market intelligence on the GMG opportunity in Sub-Saharan Africa; promotion of linkages between relevant stakeholders; strengthening the capacity of developers to operationalize GMG business models; promoting a sound policy and regulatory environment; coordinating a regional approach to mini-grid quality assurance; and engaging project financiers while supporting the development of suitable financial solutions.

In May, SEFA launched a call for proposals targeted at public-sector institutions to further support the creation of an enabling policy and market environment for GMGs at the country level.

SEFA is a $90m multi-donor facility funded by the governments of Denmark, the United Kingdom and the United States.

The fund supports the sustainable energy agenda in Africa through: grants to facilitate the preparation of medium-scale renewable energy generation and energy efficiency projects; equity investments to bridge the financing gap for small- and medium-scale renewable energy generation projects; and support the public sector to improve the enabling environment for private investments in sustainable energy.

SEFA is hosted by the Energy, Environment and Climate Change Department of the AfDB.