Financial and Operational Bundling Strategies for Sustainable Micro-Grid Business Models

Eric Lockhart, Timothy Reber, Peter Weston, Wakar Kalhoro, Samuel Booth

Research output: NRELTechnical Report


One of the biggest barriers to the scale up of mini-grids in Sub Sahara Africa ('SSA') is access to finance. While there are plenty of government and donor-led initiatives, private investment in the mini-grid sector has been slow to take off because of the high level of risk to reward and the relatively high transaction costs compared to larger grid-tied projects. Specific challenges for mini-grids include policy and regulatory risk, a lack of proven business models, and uncertainty about demand and the ability and willingness of customers to pay. Bundling or aggregation of mini-grids is one potential solution to these challenges. At its simplest, bundling means combining projects or different aspects of projects (eg. financial, operational and service) into a portfolio to create economies of scale (eg. lower costs, mitigation of risks, reaching an investment size that is attractive to more financiers.) There are two main types of bundling: Operational bundling - aggregation of similar projects (eg. similar business model, geographical area, technology or customer type) in order to reduce development and operating costs, - Financial bundling - aggregation of projects into a portfolio in order to attract more private investors through the larger ticket size and portfolio de-risking. This report looks at the different mini-grid business and financing models, and the opportunities and challenges around financial bundling. It looks at techniques for bundling through donors and national governments such as tenders, auctions and results based financing. It considers financial pooling mechanisms, including funds for mini-grid growth and end user financing, and financial products for de-risking mini-grid investments. Finally, there are three developer case studies of financial bundling of mini-grids.
Original languageAmerican English
Number of pages39
StatePublished - 2018

NREL Publication Number

  • NREL/TP-7A40-72088


  • finance
  • micro-grid
  • mini-grid


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