Africa’s Largest Mini-Grid to Provide Affordable and Sustainable Electricity in DRC

By Subhash Ghimire 

Highlights:

• Over 28,000 households and businesses in eastern Democratic Republic of Congo will have access to affordable and reliable electricity
• The project showcases how several parts of the World Bank Group innovated to provided guarantees to private sector clients 
• Once completed, this will be the largest mini-grid on the continent

As the largest country in Sub-Saharan Africa by area, the Democratic Republic of the Congo (DRC) is endowed with exceptional natural resources.  However, persistent conflicts and a challenging political and economic environment have made infrastructure development difficult. With an electrification rate of just 19%, DRC has the second-highest number of people globally — about 77 million — without access to electricity. Less than 2% of rural areas are electrified.

La Société Nationale d’Électricité, the country’s government-owned utility, has limited money to invest in grid expansion projects, complicated by the sheer size of the country and the dispersed population. The national grid coverage is non-existent in remote areas, yet economic activity and potential electricity demand remains robust. 

The Multilateral Investment Guarantee Agency (MIGA), the International Finance Cooperation (IFC), and International Development Association (IDA) are working with the private sector to bring affordable and sustainable electricity to the country. A recently approved project will be the biggest mini-grid project on the continent with multiple city-scale mini-grids (or metro-grids). 

Private sector-led mini-grids are central to the government’s strategy to accelerate access to electricity, however private sector involvement in the electricity sector has been very limited to date with only 5 percent of the installed capacity produced by private sector, mainly due to high country and regulatory risks and the absence of reliable data on demand and consumer willingness to pay.

The demand for electricity in the residential segment is expected to grow by 11 percent, while the demand from mines and primary industrial consumers is expected to increase at a rate of 4 percent through 2030. 

MIGA has provided a guarantee of $50.3 million to Congo Energy Solutions Limited (CESL), which has big plans to expand its operations across DRC to provide energy to up to five million people by 2025. MIGA mobilized the support of the IDA Private Sector Window and MIGA’s Renewable Energy Catalyst Trust Fund for the guarantee. IFC’s financing package, committed in July 2023, also included a subordinated quasi-equity investment through the  Finland-IFC Blended Finance for Climate Program.

CESL’s investment into Nuru SASU, a DRC-based company building and operating solar-hybrid metro-grid sites, will add up to 15MW of metro-grid capacity, and it has a future pipeline of another 39MW of mini- and metro-grids. As a result, over 28,000 households and businesses in eastern DRC will have access to more affordable and reliable electricity.

“Though it was a complicated transaction, MIGA worked diligently to innovate and provide guarantees to de-risk this metro-grid investment,” said Jessica Stiefler, Senior Underwriter and Distributed Energy Lead at MIGA. “We are committed to supporting private sector investment and accelerating access to clean and reliable sources of energy.”

Renewable electricity offers an opportunity for DRC to reduce poverty by unlocking new pathways for economic growth, facilitating investment in green solutions, and providing access to marginalized people. Additionally, it will displace diesel generators with a greener source of energy, reducing greenhouse gas emissions by an estimated 9,458 tons of carbon dioxide equivalent per year. 

Role of MIGA's De-risking Instrument 

MIGA was instrumental in encouraging private sector participation in addressing DRC’s power deficits in an environmentally and financially sustainable manner. MIGA’s guarantees will help alleviate investors’ risk concerns in fragility and conflict-affected DRC. MIGA’s de-risking instruments will provide investors with additional benefits, given the agency’s capacity to intervene and play an honest broker role in case of disputes or claims.

MIGA’s partial expropriation coverage is one of the innovative aspects of the project. Each mini-grid is separately covered from an expropriation perspective.

“As an African, it was exciting to work on this important project. This clean energy project with battery backup provides stable power supply,” said Asenath Mutumbi, lead Underwriter for the Nuru project. “Stable power supply has already enabled SMEs and some MIGA projects to carry out their work without interruption, and we hope that this project is scalable and replicable across other geographies.”

Mutumbi also highlighted that the risk was too high in eastern DRC for the client to undertake the project without MIGA’s guarantee. In turn, MIGA’s support was made possible by the risk sharing mechanism provided by IDA Private Sector Window (PSW). 

“IDA has embraced a greater emphasis on the role of access to energy to advance poverty reduction and it is increasing its electrification goals in Sub-Saharan Africa. The Nuru project exemplifies the type of high-risk high reward projects that are ideal candidates for IDA PSW support,” said Federica Dal Bono, Lead for Private Sector Window at the World Bank.

“The MIGA facility extended to Nuru was critical in closing our investment. We could not have secured the capital without it,” said Jonathan Shaw, CEO of Nuru. “MIGA’s team was highly engaged and worked with our company and our investors to ensure that the offering from MIGA was able to address the unique regulatory and contextual complexities of Congo’s market.”

The project is expected to showcase the commercial viability of solar hybrid meter-grids in DRC as a green and reliable source of electricity, and demonstrate the effectiveness of the associated regulatory framework, thus increasing private participation in this sector.

The project has pre-paid power systems, where customers pay for energy consumption over time. With one mini-grid  already up and running, they have not had any issue with demand. 

Working together as One World Bank Group   

The 2018 WBG Systematic Country Diagnostic for DRC highlighted the need to expand access to electricity services and to develop new business models to attract private investment, including locally operated mini-grids with hybrid solar or hydro technologies that favor lower investments and operating costs. In November 2022, the World Bank Group announced an initiative to accelerate the pace of electrification in Africa to achieve universal access by 2030, and the project is aligned with the announcement.

The World Bank Group is working with the government on DRC’s strategy on mini-grids and increased focus on delivering mini-grids at scale in the country. IFC supports this effort through the Scaling Mini-Grid DRC advisory engagement, as well as with MIGA through the Scaling Mini-Grid (SMG) initiative, the regional WBG platform designed to help scale up private investments in the mini-grid sector. IFC strengthened the project company’s financial model, carried out feasibility studies for new sites for future expansion, and identified potential partners to strengthen the project’s capacity.

“IFC’s, MIGA’s and IDA’s support to Nuru is one more example of how the World Bank Group is stepping forward to expand access to reliable energy in Africa,” said Sarvesh Suri, IFC’s Director for Infrastructure & Natural Resources, Africa.  “Pioneering companies like Nuru in the mini-grids sector are setting up examples for other private investors to consider investing in distributed generation in Africa, which will be critical toward achieving universal access to clean, reliable and affordable electricity by 2030.” 

The project showcases the One World Bank Group approach, where MIGA, IFC, and World Bank worked together to innovate and make this investment happen.