By Chidi Nwafor 

Continued from yesterday

An investment committee, on the other side of that table, is very rarely evaluating a single site on its own terms. It is evaluating whether this site is the first of many that can be underwritten using one legal structure, one technical standard, one monitoring system, and one due-diligence process — because the transaction cost of evaluating a modest single-site mini-grid individually is not meaningfully lower than evaluating a portfolio of fifty, and no institutional balance sheet can afford to run that arithmetic project by project, indefinitely, at the volumes the sector needs. The mandate is real. The appetite is real. What is missing is a unit of supply the mandate can actually absorb.

This is not a story about cautious financiers or underprepared developers. It is a structural mismatch between the unit the sector is good at producing — the single, well-built site — and the unit institutional capital is built to absorb, which is the standardised, aggregated portfolio.

Every successful mini-grid that remains an isolated success represents more than one electrified community. It represents dozens of future communities that may never receive power because the first project never became a repeatable investment model.

What this costs, and what it is worth
None of this is unique to Nigeria, and none of it is really about mini-grids as a technology. ESMAP’s own data on Africa and South Asia together show total mini-grid investment of around $5 billion for roughly 11,000 sites serving some 31 million people, a fraction of the $220 billion the model says is needed globally to hit the 2030 target. Contrary to popular belief, money is no longer the scarcest resource in this sector. Patient capital exists.

Development finance institutions have made that clear. Private investors are increasingly interested. What remains scarce is the kind of standardised pipeline that allows large pools of capital to deploy quickly without reinventing due diligence for every individual site.

Development finance institutions, blended finance vehicles, and increasingly private investors have made their appetite for this sector clear, repeatedly, in public. The shortfall is in the aggregation and standardisation layer that would let that capital find one hundred sites at once instead of evaluating one site one hundred times.

That gap is also, properly understood, where the opportunity sits and where the next phase of the sector will actually be won. A single mini-grid is a project. Two hundred mini-grids, aggregated into one structure with shared documentation and a common operating platform, is an asset class; and asset classes are what institutional capital is actually designed to hold.

Building that structure is unglamorous work: standardised power purchase templates, a shared technical specification robust enough to survive across regions, a monitoring platform that lets one operations team manage hundreds of sites instead of visiting each one, and a project preparation facility that treats the early-stage work feasibility, permitting, community agreements; as infrastructure worth funding in its own right rather than a cost each developer absorbs alone.

The developers and DFIs that build that connective tissue first, rather than simply building more individual sites, will not just capture more of the $220 billion. They will set the standard the rest of the sector eventually has to adopt, the way a handful of early aggregation platforms in other infrastructure classes ended up defining how entire markets financed themselves for a generation afterward.

I still think about that simple question: “If this works here, why isn’t the next village already connected?” It is the kind of question only someone outside the sector would ask, precisely because they assume success should naturally lead to replication.

But replication has never been automatic. The next village is not waiting for better solar panels. It is not waiting for cheaper batteries. It is not even waiting for another successful pilot. It is waiting for someone to build the institutional bridge between success and scale.

That bridge is the missing middle. Until we build it, we will continue celebrating thousands of successful mini-grids while hundreds of millions of people remain without reliable electricity. The future of mini-grids will not ultimately be decided by engineering. It will be decided by whether we can transform isolated projects into an investment system capable of delivering energy access at continental scale.

Concluded.

Nwafor is founder and lead strategist at De-Lazuli Consult, an advisory practice focused on energy transition, project finance, DFI engagement, and carbon market strategy.

He wrote from Abuja, via: [email protected], +2348094561290.