How a mini-grid boom is rewriting Africa’s energy story

Africa is experiencing a surge in off-grid energy solutions, particularly mini-grids, as the continent grapples with mounting electrification challenges. With over 600 million people still lacking reliable electricity, governments and private investors are fast-tracking decentralised energy initiatives to bridge the gap. These efforts aim to provide a sustainable and scalable alternative to costly and unreliable grid expansion, with mini-grids emerging as a cornerstone of the region’s energy transition.

Nigeria is leading the continent in mini-grid deployment, boasting 82.37 megawatt peak (MWp) of installed capacity, significantly outpacing other nations such as Cameroon (13.93 MWp) and Madagascar (7.14 MWp).

Recent policy reforms and increased investment have catalysed rapid deployments, reducing reliance on expensive diesel generators and unstable grid connections. Governments and investors are prioritising decentralised renewable energy (DRE) projects, accelerating electrification in rural and underserved areas.

Several large-scale mini-grid initiatives are currently underway. These are:

Financial innovations unlock growth

Historically, financing constraints have hindered mini-grid expansion, with banks and institutional investors wary of the perceived risks. However, new financial mechanisms such as blended finance, pay-as-you-go (PAYGO) models and impact investment are unlocking capital for the sector. 

Investment and advisory firm Social Investment Managers and Advisors has put in $400 million in solar start-ups, benefiting 26 million people while cutting 20 million tonnes of carbon dioxide emissions. Such investments are instrumental in scaling mini-grids and other off-grid energy solutions.

To ensure long-term sustainability, developers are shifting focus from individual projects to scalable platforms that can deploy mini-grids across multiple regions. This approach streamlines operations, reduces costs and enhances investment attractiveness. Additionally, financial innovation is making mini-grids more viable for both investors and end-users, driving rapid market expansion.

A paradigm shift is underway as national utilities increasingly collaborate with decentralised energy firms. Traditionally, DRE companies operated separately from state-run utilities, but new partnerships are emerging. Wheeling agreements allow a share of commercial and industrial (C&I) energy to be directed towards utilities, while hybrid energy systems integrate mini-grids with national grids for enhanced reliability.

The East Africa Power Pool, set to launch a centralised energy market by 2025, will further streamline cross-border energy trade and improve renewable energy integration. These advancements promise greater stability and efficiency, reducing reliance on fossil fuels and strengthening Africa’s energy security.

Challenges hindering off-grid expansion

Despite progress, mini-grids and other off-grid solutions still face multiple barriers to large-scale adoption. These are:

Addressing these challenges will require coordinated efforts among governments, private sector stakeholders and development organisations. Stable regulatory frameworks, targeted subsidies and technological advancements—such as smart metering and remote monitoring — will be essential to overcoming barriers and ensuring sustainable expansion.

As off-grid solutions gain traction, the focus must shift towards scaling impact-driven models that prioritise affordability, accessibility and resilience. Blended finance mechanisms, innovative service models like PAYGO and stronger public-private collaboration will be crucial in accelerating deployment. Governments must also integrate mini-grids into national electrification plans to optimise investment and efficiency.

Off-grid energy solutions, particularly mini-grids, hold immense potential to bridge Africa’s energy access divide. With continued investment, policy support and technological innovation, decentralised renewables will play a pivotal role in shaping a more resilient, inclusive and sustainable energy future for the continent.