Risk Management for Mini-Grids: A New Approach to Guide Mini-Grid Deployment

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Source:
Alliance for Rural Electrification
Authors:
David Manetsgruber
Bernard Wagemann
Bozhil Kondev
Katrin Dziergwa
Date:
1 January 2015

This report addresses the gap in communication and language that exists between mini-grid developers and investors about mini-grid risks and their management. The authors suggest that standardized risk management processes would be help overcome the gap and create an improved base of understanding by both developers and investors. They argue that such reliable frameworks will be crucial to fostering development of the entire rural electrification market and attracting investors from the private sector in particular. The empirical survey conducted for the study identified a range of risks affecting mini-grid development and operation, and the authors argue that evidence shows that three particular types of risks pose the most significant challenges for the further development of the mini-grid sector. These include political risk, payment risk and resource price variability.