ARE-OFID Cooperation on hybrid mini-grid systems

About OFID

The OPEC Fund for International Development (OFID) firmly believes that access to reliable, affordable, economically viable, socially acceptable and environmentally sound energy services is crucial for developing countries. In this context, OFID has recognised the importance of mini-grids and is giving strong priority to encouraging the private sector involvement in this market. 

The ARE-OFID Cooperation

Through grant funding of USD 900,000 provided by OFID, ARE could match the grant with the same amount of private sector investment. This project pipeline was waiting for such de-risking mechanisms for business ventures which facilitated the deployment of hybrid energy mini-grids for affordable and sustainable energy services.

Four ARE members will implement hybrid mini-grid systems

• In Blendio, in the Sikasso Region of southern Mali, ACCESS S.A.R.L. installed a solar park of 55 kWp and a genset of 68 kW serving 200 households and 20 productive users.
• In Jharkhand, India, Association Mlinda installed three hybrid mini-grids in three rural villages (Narotoli, Sahitoli, Pasanga), with a capacity of 69.5 kWp each with a 7.5 kW diesel genset. In total, 358 households, 57 productive users and 61 commercial outlets connected.
• In Bangladesh, Rahimafrooz Renewable Energy Ltd installed an 80 kW solar diesel hybrid mini-grid on the Island of Muradpur, benefiting 115 households and 50 productive users.
   
• The fourth project aiming for the installation of a hybrid mini-grid system in Titimane, one of the remotest areas in Mozambique had to be terminated by project developer Energias de Portugal, S.A. because the government unexpectedly decided to extend the national grid to the location of the project the entire action became non-eligible for funding, as one of the main requirements for the receipt of funds under the present grant scheme, was the absence of plans for connecting the target beneficiaries to the main electricity grid in the years to come. Via ARE all received grant payments were returned back to OFID by EDP.

For all three projects, cash flow analysis that included the cost of equipment replacement, when required, and the tariff consumers are able and willing to pay for electricity indicated a positive Net Present Value (NPV) and an Investment Rate of Return (IRR) that is greater than the discount rate taken into account are only possible when OFID’s grant is included.

Project period:

2014 - 2018