The major hurdles for massive implementation of renewable off-grid rural electrification systems are at present related to socio-economic, policy, regulatory, economics and financing issues and not to technology constraints (Mini-grid Policy Tookit, 2014).

In this light, it is essential to develop market conditions shaped by appropriate policy and regulatory frameworks, which attract investments into renewable energy solutions and enable them to become self-sustainable in often still immature off-grid markets in developing and emerging countries.  

The Alliance for Rural Electrification (ARE) plays a major role in this context

  • by giving key policy, technical and financial recommendations on how to improve market conditions and policy frameworks for renewable off-grid solutions such as mini-grids and stand-alone systems and
  • by sharing best practices on self-sustainable business models that haven been proven by ARE members to work in practice.

Even though recommendations can vary from case to case depending on the local needs and conditions, please find here some general advice, which shall also serve as an overall guideline to improve market conditions for renewables in developing and emerging countries.

Key recommendations for improving policy frameworks & market conditions for off-grid renewables

National Governments

Create favourable policy frameworks and market conditions

Private Sector

“Invest and develop markets”

Development Community

Advise and help in providing appropriate financing

Ensure high-level political commitment

  • Raise the level of ambition for clean rural electrification.
  • Set long term energy policies and strategies.
  • Link implementation plans to development and budget processes.

Focus on further developing self-sustainable business models

  • Design business models that fit local market conditions.
  • Ensure system quality and reliability.
  • Build in replicability and scalability.
  • Implement efficient O&M and payment processes.
  • Existing business opportunities should be used to enhance future ones (increase quality and quality of donor-driven market intelligence) .

Advise and engage

  • Engage with the national governments and key stakeholders from the private sector, civil society and academia who will implement the projects and provide technical, financial and implementation assistance.
  • Stimulate capacity building and sharing of experiences, self-sustainable business models and best practices.
  • Help tailor policies and financial instruments to achieve the highest impact on the ground and stimulate innovation and entrepreneurship.

Define clear and stable regulatory frameworks

  • Ensure clear, swift and streamlined regulatory framework.
  • Safeguard adequate implementation and enforcement of regulations.
  • Ensure swift permitting through standardised procedures.
  • Ensure cost reflective energy prices and avoid giving electricity for free.
  • Enhance information transparency and tariff (methodology) and reduce bureaucracy, which in turn will help tackle corruption and facilitate project implementation.
  • Develop standardised IPP and PPA documentation.

Ensure local community engagement

  • Buy-in/acceptance of local communities is essential for project development.
  • Training and awareness should be integrated in projects as they are an essential part of project development (applying proven best practices and business cases).
  • Foster productive uses for electricity to promote community development, which in turn will allow locals to be able to afford the electricity they consume and spawn further business development.

Help provide access to financing

  • Help increase available public-sector finance and leverage private capital to facilitate small and medium-scale projects – focus on financing the CAPEX, while ensuring the O&M.
  • Facilitate private sector investment by helping to reduce the (perceived) risks on the regulatory, technological, political and market development level.

Create more incentives for the private sector to invest

  • Provide feed-in-tariffs, grants, risk mitigation measures, tax rebates and lower/cancel import tariff and non-tariff barriers for qualitative RE equipment.
  • Provide end-user support e.g. grants for installation.
  • Build on the UN-SDG and COP21 agendas to structure coherent programmes to attract foreign financing and to gain domestic political support for investing in clean rural electrification (e.g. via a national rural electrification fund & capacity building).

Invest now

  • Huge market and household/business demand.
  • Enormous renewable energy potential.
  • Qualitative decentralised RE solutions are readily available at attractive prices.
 

Contact

Marcus Wiemann

Executive Director

+32 2 709 55 44

David Lecoque

Policy & Business Development Manager

+32 2 709 55 25