ARE Partner REN21’s latest Renewables Global Status Report reveals 126% surge in mini-grid start-ups investment
Paris, 16 June 2020 – This year’s Renewables 2020 Global Status Report (GSR) reveals an increase in demand for renewable power, yet the growth in total energy demand outweighs the progress. ARE Partner REN21 warns that if the entire energy system remains the same, the energy transition cannot occur and the world’s hunger for fossil fuels will continue to increase.
ARE takes a closer look into Chapter 4: Distributed Renewables for Energy Access (DREA), where ARE and its Members have been working together to scale up off-grid projects. This year, the GSR reveals a dip in off-grid investments by 41.6% but an increase in the bankability of mini-grid projects, with capital flows doubling to USD 113 million.
Worldwide, the number of people lacking access to electricity dropped to 860 million (11% of the global population) in 2018. DREA systems are present in both urban and rural areas of the developing world and provide a wide range of services, including for lighting, appliances, cooking, space heating and cooling, and productive uses. They represent a key solution for fulfilling modern energy needs and enabling the livelihoods of hundreds of millions of people who still lack access to electricity or clean cooking solutions. In addition, renewable energy (mostly hydropower) supplied, either entirely or partially, around half of the 19,000 mini-grids installed worldwide by the end of 2019. Mini-grids and stand-alone systems are considered to be the least-cost option for providing electricity access to nearly half of the population in sub-Saharan Africa by 2030.
In 2019, GSR found that the momentum for renewable energy-based mini-grids is on the rise. As data on the performance and cost structure of solar and other renewable-based systems become more available, the bankability of mini-grids is improving, and they are attracting interest from governments and investors. A growing number of developers have passed the stage of proof of concept and are now expanding their operations with the backing of commercial financiers. In 2020, the strong flow of investments favoured start-ups over corporate level mini-grid, which surged 126% to a record USD 113 million in 2019.
In 2019, GSR also recorded the highest growth in market for off-grid solar systems (13%) over the past five years – with sales totalling some 35 million units, up from 31 million units in 2018. Derived markets like affiliated off-grid solar products, pico solar systems and market share of solar home systems have all recorded growth, showcasing that the increasing bankability has led to stronger outlook for various off-grid markets.