Mini-grids are being promoted in developing countries to increase electricity access in remote areas (SDG 7), and to meet demand for productive use of energy in these areas (SDG 8). This paper shows that in addition, renewable energy-based mini-grids can substantially reduce carbon emissions by decreasing the dependence on fossil fuelintense national grids (SDG 13). If they were to be deployed at their potential scale, the CO2 equivalent savings potential is estimated to be up to 390 million metric tons per year until 2050 in sub-Saharan Africa and South Asia, ceteris paribus. Yet to date, few examples of financially sustainable mini-grids in developing countries exist. This paper argues that in order for mini-grids to reach their full potential, four main things need to happen: (1) business models need to focus on provision of physical electricity-based services in addition to merely selling electricity to improve the financial performance of mini-grids; (2) the regulations governing mini-grids in developing countries need to be enable rapid project development; (3) the market environment needs to be improved for both local and international companies; and (4) governments and international development agencies need to cooperate closely and include mini-grids as a core element of their electrification (and finance allocation) strategies.
Keywords Mini-grids, renewable energy, energy business models