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Project information

Scaling Mini-Grid: PPP model development, technical support, data and tender management platform

R. Palacios I.J. Pérez-Arriaga A. González-García S. Díaz-Pastor

July 2020 - December 2020

Funding entity International Finance Corporation (IFC)

Participated by Castalia Advisors, Wayvolution S.L, Waya Energy Inc, Trama TecnoAmbiental S.L, Odyssey Energy Solutions Inc

Objective of the assignment: develop a programmatic, replicable, partnership-driven structuring solutions to scale-up high impact, nascent mini grid markets in sub-Saharan Africa, where:
* Programmatic: design a full IFC program, which should cover pre-development activities, making projects bankable, and IFC and other donor investment package
* Replicable: some parts of the package should be standardized to be replicated (60-80% of the package), while some will need to be tailored to each country.
From a country perspective:
*Cost: if countries want in, they should agree to the package as is.
*Benefit: reduces transaction cost for each project and increases speed of mini grid scale up,
*Partnership-driven: allowing various stakeholders to participate in the implementation of the solution, by means of two things:
1) Involve stakeholders in designing the solution (developers, other MDBs) to ensure that the package proposed will be financeable and that developers will want to bid on it
2) From a PPP angle: leverage private financing for MGs while using public sector to de-risk the project and crowd-in private finance (in line with MFD approach)

Structuring solutions : turnkey solutions /all-encompassing for the Governments to develop a mini grid program (not turnkey solutions to develop mini grids)
*PPP model that includes:
– Regulatory framework (set of rules on tariffs, entry, grid encroachment, etc…, which will be standard although the way of implementing them will vary)
– Allocation of responsibilities and risks (defining where in the PPP spectrum to allocate design, construction, financing, operations and ownership)
– Risk mitigation tools (with special focus on demand, regulatory and currency risk)
– Financing structure: grants/concessional financing, and IFC financing
*Procurement model / bid award criteria
*Standardized approach to define sites/packages of sites to be electrified by mini grids
– High-impact and nascent markets: IFC will start implementing this in markets they have identified as ready to pick up MG development
– Africa: region with the largest potential given current electrification rates. Potential to replicate program to other regions in the future.

Layman's summary: The project aims at developing a programmatic, replicable, partnership-driven structuring solutions to scale-up high impact, nascent mini gr