Developing Mini-grids in Zambia. How to build sustainable and scalable business models?

Mini-grids will be one of the key solutions to supply electricity in rural Zambia, as in many sub-Saharan African countries. ENEA, consulting company dedicated on energy transition and energy access, supported the NGO Practical Action to shift the emphasis on sustainable business models for mini-grids. The outcome of this work is meant to be spread among all relevant stakeholders, including public and private actors as well as financing institutions. As part of this study, key learnings are derived from a selection of micro-hydro mini-grids, implemented by Practical Action or other organizations in Zimbabwe, Malawi and Zambia. The various difficulties identified make us believe that the mainstream community-based mini-grid models are not suited to tackle the various rural electrification challenges. A new model must be built. Our point of view is that involving the private sector is necessary to overcome the sustainability issues hampering the community-based models. To successfully do so, ENEA and Practical action propose guidelines to lower the regulation and profitability barriers and thus allow the development of mini-grids in Zambia. Main recommendations are the following ones: Improve mini-grid's financial profitability through stronger revenues. Supporting the customer side to increase electricity consumption and so optimize the load factor is a priority. Improve mini-grid's financial profitability of mini-grid through cost decrease. Clustering mini-grids should be the most efficient way to significantly decrease the global cost by aggregating key activities. Mobilize the appropriate resources and skills. Highly qualified teams, with both technical and management skills, must be involved in these endeavours to successfully manage and operate mini-grids. Initiate a structured program involving public institutions to foster the development of mini-grids. In Zambia, the currently complex political and regulatory frameworks prevent the involvement of private actors. We recommend launching a structured program to overcome current barriers, along with an adaptation of the legal framework