Enabling Energy Access through Mini-Grid Financing in Tanzania

The Clean Energy Solutions Center provided an overview of results-based finance to the Helios Social Enterprise, which received governmental grant support to progress mini-grids in Tanzania. The World Bank estimates that achieving universal electricity access will require additional investments of USD 900 billion between 2010 and 2030. More than 60% of that that investment is expected to be needed in sub-Saharan Africa alone, which translates into a clear need to scale up public and private finance. One increasingly widespread tool to increase access and mobilize private finance is known as ""results-based finance,"" which links grants to predetermined and verified results.

Well-designed results-based finance initiatives typically aim to meet three key requirements:

  1. Provide a carefully calibrated level of support, based on current technology and deployment costs, as well as the national or regional context
  2. Time-bound to avoid a long-term dependence on the funding available
  3. Well-targeted to avoid the crowding out of private sector-led projects, or business models that are mature enough to scale up without incentives.

Results-based finance can be a powerful mechanism to broaden the base of citizens who are able to afford electrification while enabling a more rapid scale-up in the jurisdictions targeted. This Solutions Center analysis provides an overview of a few such initiatives underway across sub-Saharan Africa, with a focus on Rwanda, Kenya, Mali, Benin and Ghana.

Impacts of Assistance

The information provided to Tanzania on results-based financing will contribute to the advancement of mini-grids by building capacity to develop and implement this powerful mechanism for affordable electrification.