Mini-Grids for the Base of the Pyramid Market: A Critical Review

Abstract

The lack of access to electricity of more than 1.1 billion people around the world remains a major developmental challenge and Goal 7 of the Sustainable Development Goals (SDG) as well as Sustainable Energy for All (SE4ALL) have set a target of universal electrification by 2030. Various studies have identified mini-grid-based electrification as a possible solution. There is a growing body of literature available now that has explored the feasibility, practical application and policy interventions required to support mini-grids. Through a review of available literature, this paper explores whether mini-grids can be a solution for the base of the pyramid (BoP) market and the challenges faced in deploying mini-grids in such markets. Interventions to support the mini-grid deployment are also discussed. The paper finds that the mini-grids are targeting the BoP market but the business is not attractive in profitability terms and requires financial support. Lack of regulatory clarity and non-coordinated policies affect the financial viability of projects, which requires careful support. Mini-grid electrification has hardly been embedded in rural development agenda and hence they have not contributed significantly to livelihood generation. Careful realignment of policies, regulatory frameworks and support systems can better support mini-grid deployment in developing countries.