Thanks for this very helpful note.
Subodh Mathur
21

Many thanks for your comments Subodh, sorry for the slow reply it seems my Medium alerts are not working!

I think there is a potential place for all the types of mini-grids, and the scale of some settlements means that a Type 3 grid with efficient appliances may be fine. I also think that the total number of settlements likely to benefit from Type 3 is larger. In India for example people have raised the question about how many Type 2-scale settlements there even are remaining without a grid connection of some sort? Hopefully some of the geospatial work ongoing will help make this question clearer in different places.

But to your main point on financing, you are right this paper does not really deal with that — but this is because my concern is that any financing proposition to lenders or equity investors relies on a public-private settlement regarding license to operate, which is not yet fully in place. When the ins and the outs are clearer in terms of 1) what you can expect to charge and 2) for how long and 3) whether support is available to make up any shortfall (outside of sporadic grants) — then I think lenders and investors will come in in greater numbers.

In terms of pre-investment support, that’s one attraction of the auction model for Type 2s, where that preliminary survey and design work is done, a public good, and then shared with prospective bidders. For Type 3’s my feeling is that increasingly the systems will be standardised and rapidly deployable — so I’m less sure project preparation grants are appropriate in that case. However, I agree that local developers need support more widely to engage with the sector, and potentially partner with technology providers and others able to bring different pieces of the puzzle. I think that increasingly recognised models and equipment offerings will actually lower barriers to entry.

Thanks again and look forward to continuing the conversation.

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