Rural electrification in Madagascar: The limits of the EPC model in a complex & high-risk environment
In Madagascar, rural electrification is often approached as a technical challenge. However, field experience demonstrates that financing remains the primary constraint to scaling sustainable energy access. For companies such as INERGY, historically positioned as an EPC (Engineering, Procurement and Construction) contractor, this reality highlights the structural limits of the traditional model.
The EPC approach—centered on infrastructure delivery financed by a client—proves insufficient in a high-risk environment. Projects are constrained by the lack of creditworthy off-takers, limited access to local financing, and extended, uncertain decision-making cycles. As a result, technically viable projects often struggle to reach implementation.
Madagascar’s geographic characteristics further increase project complexity. High logistics costs, dependence on imported equipment, and limited accessibility to rural areas significantly affect project viability. In parallel, perceived regulatory and political risks contribute to a cautious investment climate, restricting the mobilisation of capital.
In response, INERGY is progressively evolving beyond the EPC model towards an integrated project development approach. This transition aims to strengthen upstream structuring by combining technical expertise with financial engineering. It includes the design of blended financing solutions mobilising concessional resources, climate finance, and private investment, while ensuring alignment with on-the-ground realities.
Such an approach requires strengthened collaboration with development finance institutions, donors, and impact investors. INERGY is actively seeking to partner with funding stakeholders to co-develop bankable projects and deploy financing mechanisms adapted to complex and high-risk environments.
Blended finance instruments play a critical role in bridging viability gaps and enabling private-sector participation where purely commercial models remain limited. In this context, financial innovation becomes a key enabler for scale and long-term impact.
Madagascar reflects a broader challenge across underserved markets: achieving universal energy access requires aligning technical delivery with robust and adapted financing frameworks. Platforms such as the Alliance for Rural Electrification contribute to fostering dialogue and connecting field actors with financial partners.
Scaling rural electrification ultimately depends on the ability to structure effective financial partnerships and mobilize adequate resources to support implementation.