Delivery Model: Policy Frameworks and Instruments

The concept of a minigrid ‘delivery model’ is a key concept for this project.

Definition: A minigrid delivery model, determined by the national government, is the cornerstone of a country’s over-arching minigrid regulatory framework. It defines who finances, builds, owns and who operates and maintains the minigrids. Where applicable, it seeks to engage the private sector. A minigrid delivery model is closely associated to other key components of a minigrid framework, including tariff structures/mechanisms and subsidy levels/mechanisms.

In each country, identifying one (or more) delivery models will provide a framework for all sector stakeholders to plan for the longer term, particularly with regard to mobilizing private investment as one of the main objectives of the project. The figure below describes the spectrum of design options for delivery models, across a number of different elements (ownership, policies, finance etc.).

This decision-making process around identifying a delivery model is complex and should ideally be done in the form of a national dialogue involving all relevant stakeholders to varying degrees (different ministries such as energy, finance, health and environment, local authorities, the public, the media, the beneficiary communities, utilities, the private sector, and other key stakeholders) in order to build a national consensus on the basis of which large-scale deployment of mini-grids can be accelerated and have a sustainable impact.

Pilot projects planned under this project will also seek to fit into this framework. The more clarity there is on the part of the government regarding the choice of delivery model, the easier it is to develop or plan business models which can reduce minigrid costs. A clearly identified delivery model minimizes the risk of investments being made based on assumptions that are not in line with government expectations and may lead to conflicts and economic losses down the line. It also helps the government to answer the important questions related to the rural electrification sector to provide clarity for private investors and operators and build confidence.