This paper is based on a comprehensive literature review of publications from

academia, industry, governmental and international institutions relating to business

models, finance, and operational risks and challenges of mini grids in SSA. Firstly, we

investigate the different business models that currently exist for mini grids in SSA and

provide insights into the opportunities and challenges of each approach. Secondly,

we identify access to finance as a prominent challenge to the further expansion of

‘third generation’ or solar/ solar-hybrid mini grids in the region. In so doing, we

explore the different configurations of actors, institutions and processes involved in

the provision of finance and investment for the sector. Finally, we examine some of

the key investment, regulatory and operational risks and challenges in the sector’s

current and future development. Through such a study we shed light on the

challenges and opportunities faced by the evolving sector in the region and

consider successful approaches and best practices to advance sustainable energy

access.

Despite notable growth in connections to solar or solar-hybrid mini grids in SSA and

elsewhere, progress in bridging the rural electrification gap has been slow, with more

than 560 million people still lacking energy access in SSA, particularly in remote areas

considered too poor to afford cost-reflective tariffs. More clarity is needed between

the optimistic promises and enthusiasm expressed in influential energy publications

regarding solar mini grid development, and the level and quality of finance

available for mini grids in the region. Moreover, while financial sustainability is often

regarded as the main challenge for mini grid expansion, there is a complementary

need for proven, successful, and scalable business models.

While the literature points to hybrid ownership, partially subsidised models, a focus on

anchor customers, and the bundling of projects into financial portfolios as the most

promising business strategies, we argue that there is no one-size-fits-all solution for

mini grid business models in SSA. Success depends on specific external and internal

challenges unique to each context (Franz et al., 2014; Safdar, 2017). Through our

review, we find that an optimistic narrative towards private sector participation may

not always translate into greater accessibility and affordability, particularly for

geographically remote and low-income users and that while the mini grid sector in

SSA has grown significantly in recent years, securing adequate and appropriate

external finance remains a key challenge.