Big Gains from Mini-grids: Bringing Clean Energy to Rural Madagascar

Solar-hybrid mini-grids are being built and are operating in underserved areas.
8 January 2025
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Powering Madagascar

In Madagascar, only 36% of the population have access to electricity. In rural areas, the situation is even more dire, with only 10% of the rural population electrified. This severely impedes the country’s sustainable development.

The Malagasy government aims to ensure access to affordable and clean energy by 2030, in alignment with Goal 7 of the United Nations Sustainable Development Goals. This ambitious target is hampered by limited financial resources and a challenging landscape, both at the national and community levels. It is not financially viable or physically feasible to extend the existing state utilities network to remote rural communities.

Why solar mini-grids?

To overcome these hurdles, solar-hybrid mini-grids are being built and are operating in underserved areas with private sector participation. Considering Madagascar’s very low population density and high sun exposure, these mini-grids are often the most cost-effective solution for universal access to reliable and affordable electricity.

The good news is that the past few years have brought a welcome change to the renewable energy sector in Madagascar, and despite complications, there is also plenty of opportunity. The regulatory environment in Madagascar is enabling private sector activity at scale (e.g. clear licensing procedures, cost-reflective tariffs and government support).

This reflects the view of ANKA that “Madagascar’s regulatory framework has greatly improved the business in recent years. Major efforts are being made to make the sector more attractive to the private sector and investors.”

The UEF

In 2020, Sustainable Energy for All (SEforALL) established the Universal Energy Facility (UEF), a multi-donor subsidy fund that provides a results-based incentive to private developers. Once a mini-grid project is approved, the UEF grants US$592 per electricity connection, supporting upfront costs and project viability, as well as reducing financial risk.

As of early 2024, the UEF signed with 4 developers (Africa GreenTec, ANKA Madagascar, Autarsys and WeLight) to deploy 30 mini-grids in Madagascar, of which 27 have now been fully constructed. The result has yielded a total photovoltaic capacity of 832 kilowatts peak installed, and reduced 614 tonnes of carbon dioxide emissions per year. More than 600 businesses and institutions have been electrified, and over 250,000 people benefit from new or improved access to electricity.

UEF’s flexibility and reach is evident in the different channels by which developers can obtain financial support. ANKA has won bids from invitations to tender, while other developers have got involved through LinkedIn.

Developers’ main challenge and how the UEF is providing a solution

The obvious challenge faced by developers is the financial risk involved. Getting their projects financed is difficult enough without the extra obstacle of low purchasing power of electricity customers. This is where blended finance comes in, with the UEF winning praise for being an extremely effective subsidy scheme. With the burden of financing eased by the UEF, developers can redirect their efforts to finding solutions to other issues.

Mini-grids are often the most cost-effective solution for universal access to reliable and affordable electricity.

Other challenges and suggested solutions

Other challenges abound, including long lead times exacerbated by tedious procedures, especially issues regarding customs. The recent cancellation of import exemptions on taxes for rural electrification and renewable energy projects has been counterproductive: with equipment stuck in customs, projects have been subject to lengthy delays. Africa GreenTec highlights that “transparent and speedy processing is key.”

Separately, ANKA noted that navigating the physical landscape has proven challenging: “If road infrastructures are not simply lacking, they are severely degraded.” Africa GreenTec agreed and proposed a solution: “Joint efforts of the state and international donors must focus not just on national roads, but also on secondary roads to give better access to rural communities.”

Another major challenge developers face is end users’ unfamiliarity with electricity. “Raising awareness and informing our customers is one of our most important tasks. Often, people in the villages have little experience with electricity,” says an Africa GreenTec representative. Developers have put together a sensitisation process to inform training sessions aimed at end users. The training includes public information events and one-on-one discussions before and after a mini-grid comes into operation. These provide explanations on how electricity can be used safely and efficiently, and how the tariff system works.

Once the beneficiaries are better informed, the developers often engage local electricity committees (LCEs) to act as an interface and gain the trust and cooperation of the local communities that they serve. LCE members are elected or appointed by the communities themselves, allowing for an open dialogue where any grievances can easily be raised and solutions agreed upon.

To further ensure inclusion, developers tend to hire locally. For example, Africa GreenTec has five engineers employed at their headquarters, with two engineers stationed at each mini-grid site.

Lighting the way forward

With the “great support” of the UEF, Africa GreenTec is currently constructing the first of 68 sites for a big project with the German development organisation GIZ. Autarsys is focusing on capacity-building, developing partnerships and raising awareness on productive energy use. Apart from scaling up their mini-grid operations in Madagascar, ANKA is also looking to consolidate their presence in new markets in sub-Saharan Africa (they already have projects up and running in Zambia and the Democratic Republic of the Congo).

These developers have achieved success by collaborating with the UEF in their quest to end energy poverty. They are lighting the way forward with valuable lessons learned for scaling up decentralised electrification in Madagascar and beyond.

For more information and to get involved, visit the UEF page on the SEforALL website .

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