Lacking electricity grid access, 65 percent of people living in Sub-Saharan Africa -- more than 600 million -- turn to kerosene, diesel generators, car batteries or a mix of traditional biomass, such as charcoal, for power. These sources take a disproportionate toll on household budgets and income, and come with a variety of damaging effects on human and environmental health and quality.

Mobile, pay-as-you-go home "solar plus storage" energy systems continue to spread across Sub-Saharan Africa, bringing the benefits of reliable, affordable and more environmentally friendly electricity to millions that have never known them before. Power generation and distribution capacity needs to be scaled up in order to stand a fair chance of creating the foundation for broad-based, sustainable socioeconomic development government and community leaders aim to realize, however.

Hybrid minigrids based on solar PV generation, battery-based energy storage and back-up diesel, other liquid fuels or perhaps biogas or mini hydroelectric power, hold out the promise of bridging "this critical gap between smaller, solar-powered, off-grid efforts and the hundreds of millions of people traditional grid extension has failed to reach," according to a new white paper from the Rocky Mountain Institute (RMI). Various barriers stand in the way, however; minigrid deployment costs prominent among them.

From solar lanterns and home energy kits to solar minigrids

"At the smallest scale, solar lanterns and home solar systems can light a house, run a radio, recharge a mobile phone, and, increasingly, power small appliances such as fans and televisions. The market for these solar home systems is growing rapidly. Equally important, the solar lantern and home systems have proven to be a viable business and market opportunity, attracting hundreds of millions of dollars in investment," according to the authors of "Minigrids in the Money: Six Ways to Reduce Minigrid Costs By 60%."

A "critical leap" in the scale of power generation and distribution needs to happen in order to build upon and realize the full range of socioeconomic and environmental benefits of off-grid, solar-plus-storage-centered rural electrification, however, according to the RMI report.

“Once communities have access to larger, more reliable amounts of electricity, they can use cassava grinders, welding equipment, refrigerators, water pumps, washing machines, and scores of other important devices. That puts more money into people’s pockets, enabling the kind of transformation in their rural economies that so many African governments are seeking,” said RMI Manager Kelly Carlin.

"There is a vital role for minigrids—small-scale distribution networks with local generation based primarily on solar PV power, backed up with batteries or gensets for reliable 24/7 power. However, while successful examples exist, minigrids have largely failed to scale across the subcontinent," RMI says.

A variety of barriers stand in the way. According to RMI's white paper:

Most minigrids are still too expensive. Although several companies are now developing standardized designs, most current minigrids are unique, custom installations. As a result, the typical levelized cost of energy (LCOE) for a well-run minigrid today is at least $0.60 per kilowatt-hour (kWh).

Minigrid-produced power is underutilized. The typical rural customer lacks the resources to buy water pumps, small grain mills, refrigerators, and other devices and appliances—even sometimes a fan—that would put to use more of a minigrid’s potential electricity generation. Poor utilization rates thus further drive up the resulting cost per unit of electricity sold because a smaller number of kilowatt-hours of consumption share the up-front capital and ongoing operational costs. Moreover, the demand that does exist may not match the generating profile of a solar-based minigrid.

Financing is expensive or unavailable. Minigrid companies have struggled to secure equity, or either concessional or commercial debt, keeping them from scaling up their operations. In addition, any financing that is available is expensive, with rates of local, commercial debt available to developers typically 15% or more in sub-Saharan Africa.

Regulatory and policy barriers slow progress and increase costs. Slow, unclear, or unpredictable licensing and tariffs, as well as requirements that limit the prices that can be charged for electricity, add further challenges and risks.

A pathway to reduce minigrid costs 60 percent

RMI's analysis revealed a pathway to reduce minigrid costs by 60 percent. If achieved, "this would rapidly accelerate market growth for minigrids by cutting the LCOE (levelized cost of energy) of minigrid-produced power from between $0.60 per kWh to $1.00 per kWh today to $0.25 per kWh by 2020," according to RMI.