In our last issue we looked at Low Carbon Energy Development in Zimbabwe in general and the challenges associated with its deployment. In this edition of our newsletter, we discuss off grid renewable energy development in rural areas with a special focus on mini-grids. This is a very integral part of the National Renewable Energy Policy (NREP).[1] This is more so because according to the World Bank 68% of Zimbabwe’s population is rural.[2] The rural electrification rate in Zimbabwe is below 19%.[3] Global statistics show that 600million of the 1.1billion people who do not have access to electricity are found in Sub-Saharan Africa.[4] There is therefore a large gap in the provision of electricity in rural areas which present opportunities in renewable energy investment.

Owing to these statistics, the government’s Vision 2030 which aspires to transform Zimbabwe into an upper middle income economy, reduce poverty and promote social and economic development among other goals can never be achieved if there is no universal access to electricity, particularly in the rural areas where the majority of Zimbabweans reside.[5] This target is set on the United Nations Sustainable Development goals meant to achieve universal access to sustainable energy by 2030 under the SE4ALL initiative.[6]

In its latest NREP document, the Zimbabwean government acknowledges the presence of huge and diversified Renewable Energy potential, which can address power shortages and the widening energy supply-demand gap in rural areas where there is no access to basic energy sources.[7] Most importantly, the policy document makes it clear that access to reliable energy to the rural population is through off grid solutions.[8] All human development undoubtedly depends on access to energy. With 68% of the rural population accounting for the greatest number of the population without electricity access, achieving the 2030 target remains a tall order.

However, all hope is not lost as alternative approaches to electrification such as the off grid technologies in particular mini-grids under discussion in this issue can be deployed. Be that as it may such deployment is not without its own challenges but recommendations will be made in that regard. The discussion will mainly focus on the rural areas but the author is still cognizant that there is no universal electricity access in the urban populations.

There are basically two ways of providing electricity in rural areas; on-grid electrification (through grid extension) and off-grid electrification. Off-grid electrification refers to the provision of electricity to parts of the population who do not have access to it by means other than a connection to an existing centralized power grid. It is distinct from on-grid electrification where electricity is provided through a connection to a large centralized grid (a national grid that is usually interconnected).[9] The association of off grid electrification with rural areas is because of the economic undesirability of connecting sparsely populated communities to the grid.[10] Generally the following are characteristics of rural communities;(i)Decentralized population ;( ii) Geographic isolation ;( iii) Underserved in terms of healthcare, education, clean water, sanitation and other infrastructure and inability to participate in regional and national markets.[11]

However, it is also pertinent to note that off-grid systems are considered when there is no compelling reason not to extend the grid to a particular community.[12]For other rural communities therefore, it might be more economically feasible to proceed by way of grid extension so long as they are located near existing on-grid infrastructure.[13]

Off-grid electricity choices in this Zimbabwean context can be in the form of mini-grids (powered by solar, hydro or wind); energy kiosks, solar lanterns, solar home systems and disposable batteries. Mini-grids are “self-sufficient” electricity grids that connect communities who have not been reached by the main grid.[14] The choice of which mini-grid will mostly be influenced by cost and the needs of the rural community; that is, whether the electricity is needed for households, community services or productive uses.[15] In the same vein, motivation for off grid electricity projects also varies. For the government, the aim is to increase economic activity and critical social needs; for the local communities it could be access to a more modern lifestyle and for the private entrepreneurs it would be building profit for the energy business.[16]

The legal framework relating to rural electrification is the purview of the Rural Electrification Agency (REA), a government body established in terms of the Rural Electrification Fund Act[17] whose mandate is to give access to electricity to rural communities.

The REF Act provides the legal framework for deployment of electricity in rural areas. The major objective of the Rural Electrification Fund is to ensure that there is equitable distribution of resources in the electrification of rural Zimbabwe.[18] The major source of revenue of the Rural Electrification Agency comes from a 6% levy that is charged on all electricity consumers and any surplus remaining in the national electricity account.[19] Historically, the funding of the REA has been hampered by budgetary constraints and this leaves the Agency unable to fulfill its mandate. Deployment of electricity to rural areas has therefore been lethargic. This calls for unique and homegrown solutions to funding of rural energy projects outside of the national fiscus.

The agency launched several programs including the Expanded Rural Electrification Programme (EREP) and Electricity End Use Infrastructure Development which are all targeted at increasing the uptake of electricity in rural areas.[20] The Agency also launched a master plan to coordinate its rural electrification efforts through the use of Geographic Information Systems (GIS). The GIS amalgamates data across rural communities to determine which areas are closer to national grid networks and which areas are too remote. Areas that are too remote are then earmarked for off-grid systems. This plan is accessible to the public thus giving the private sector the opportunity to take part in the rural electrification process.

THE MASHABA SOLAR MINI-GRID.[21]
This is the country’s first inclusive solar mini-grid. It is situated in Mashaba, Gwanda, Matabeleland North Province. Upon completion it will have a total output in excess of 160KW and benefit 10 000 people in 2800 households. Its current output is 99KW and its catchment area is within a 25km radius. It will power 3 irrigation schemes, 5 business centers clinic, a school and a study center. It is a Private-Public-Partnership being implemented under the Sustainable Energy for Rural Communities (SE4RC) initiative and is jointly funded by the European Union (EU-ACP), the OPEC Fund for International Development (OFID) and the Global Environmental Facility (GEF). Its implementers are Practical Action and Dabane Trust with support from government ministries and departments.

The project will complement the UN and Zimbabwean government efforts to increase electricity access by 2030 as discussed before in this article. For instance it will; boost agriculture in the area and move it from merely a subsistence to more commercial nature; improve health delivery, improve education and even allow children to use computers which is critical in this century; improve business and therefore boost economic development; cater for low household energy requirements such as lighting and entertainment  and build local technical skills of local technicians who will maintain the infrastructure even after full commissioning of the project.

An analysis of the NREP shows that it does not do justice to mini-grid energy development considering its importance in rural electrification. Ultimately the policy does not achieve its aim of improving electrification levels and energy access in distant rural areas which lack access to grid infrastructure. By insufficiently advocating for ad-hoc regulation and provisions for mini-grids in relation to an assessment of their different cost structures, their size and economic profiles of consumer bases and magnitude of electricity sales, the policy fails the good policy framework test.[22] The International Energy Agency concluded that world over for mini-grid development to be possible the related policies and regulations have to be adequate.[23] The main factors being legal and licensing provisions, cost recovery and tariff regulation and access to financing.[24]

Off-grid RE development in Zimbabwe continues to face a myriad of challenges chief of which is the high capital outlay needed to set up off-grid projects.[25] This is directly linked to the issue of accessing finance both at a government and community level. By their nature rural communities are often very poor as they rely on subsistence farming and other mini economic activities, which leaves very little in the form of capital funds. The responsibility of electrification thus lies solely on the government whose mandate is to look out for the social and economic needs of its citizens without discrimination. As regards Off-grid RE infrastructure however, the charitable international community and other private investors seem to be taking the leading role.

The unpredictable economic policies in Zimbabwe not only make planning difficult but also mean some of the proposed financing for the development of off-grid RE technologies cannot be guaranteed.[26] For instance the adequacy of the Budgetary Allocation which the government is supposed to provide developers with yearly to boost the off-grid projects cannot be guaranteed. In the same vein, subsidies to be provided by the government in order to make the project financially sustainable cannot be guaranteed either. Subsidies are very important if the sustainability of the project for its lifetime is to be guaranteed. Considering the limited capacity of the rural population to pay higher tariffs, operational costs cannot be totally recovered from tariffs but will need more government subsidy.[27]

Institutional and political challenges also impede the setting of tariffs high enough to recover these operational costs.[28] Thus a business model were the government has the highest input in the project is likely to be more ideal. The government’s aim is to increase economic activity and critical social needs whereas for the private entrepreneurs it is mostly about building profit for the energy business. That is why most mini-grid investors in Zimbabwe are not investing away from the national grid but near it in order to export some power to the main grid. According to PV magazine, “..the efforts of governments and private investors are necessary as public financing needs to be complemented by private funding while ensuring equitable services for the most vulnerable and marginalized communities.”[29]

The NREP also makes provision for concessional loans in favor of off-grid projects employing RE sources from the Green Energy Fund. However, the adequacy of the funds thereof is likely to be questionable if at all they are available as the national government might fail to finance the fund. Coupled with an unstable currency in operation, the economic environment becomes hyper-inflationary leading to the depreciation of the fund’s value. The absence of foreign currency required to import the requisite equipment for mini-grid development has also been cited as a challenge by players in this field.[30]

In analyzing the five initiatives set out by the policy for financing off-grid RE development this leaves out one feasible option, which was used for the Mashaba Project, that is grants. This would however be a more ideal model with modifications were the government is partnering these international agencies and other NGOs, but were the responsibility of maintaining and operating the grid lies with the responsible government institution such as REA. The community can still participate by providing skilled manpower to work for the responsible government institutions. That way the tariff can be balanced along the lines of on-grid electricity were maintenance and operation costs are the mandate of the government and therefore offlaid. Whatever comes from the tariff can be for the investor to recover their costs. Where there is no private investor the funds can be retained for maintenance and operation by the responsible government institution in the province where the project is situate.

However, it is not realistic for the Grants mechanism to operate in isolation. Off-grid RE projects need different financing models. Furthermore, the provision of grants is very much subject to the economic policies and the economic environment in general. Scarcity of mini-grid developers thus remains a dominant challenge in our context for as long as there is economic and political uncertainty which in turn influences the functionality of policies and regulations.[31]

For private investors mini-grid development in rural areas is a high risk investment owing to the reduced financial capacity of the residents to pay for power thus compromising the return on their investment. This is mostly true as rural communities often rely on subsistence farming, which leaves very little in the form of capital funds. However, there can be ways of coming around this problem for some communities such as Mashaba. Some of the consumers are known to be farmers who grow and sell their produce beyond their own area. Electricity is thus needed for known farming activities which is both an economic and social activity. Based on their profits it is feasible to gauge their capacity to pay for consumption even after considering fluctuation in income. The REA itself has always focused its initiatives on centres of economic and social activities, that is, business centres, schools, health centres and irrigation schemes. Private investors can follow suit so as to ensure a bankable project.

It is good to note that the NREP is alive to this factor as it states that “the tariff set for these programmes shall consider the paying capacity of the customers.”[32]  Pay-as-you-go solar systems are one such example. A company known as Zonful Energy has partnered with several rural district councils such as Guruve, Mhondoro-Ngezi, Chivi, Bikita, Mhondoro-Mubaiwa, to bring access to electricity at a reduced cost. They offer unique payment solutions that are tailor-made to individual customers. In this instance, a private sector player is assisting rural district councils and government as a whole, give access to electricity outside of the national grid by offering unique and cutting edge solutions which work within the context of rural Zimbabwe.

Although inadequate local skills and capacities has been cited as a challenge in developing mini-grids in other jurisdictions, this does not seem to be a challenge within the Zimbabwean context.[33] The country has a lot of skilled people as can be seen in the Mashaba case. Furthermore, the government through ZERA and the specific project implementers offer the necessary training to enhance the existing local skills and capacities.[34]

In conclusion rural electrification through renewable energy mini-grids is a viable and faster way of deploying electricity to those areas which are isolated from the national grid in Zimbabwe. The government needs to invest more into this possibility and partner private players and the international donor community in the initiative to give access to electricity to these disadvantaged communities. The REF has already done the groundwork of identifying such areas. Feasible business models need to be tailor made to fit the cluster of individual communities which intend to be served by the proposed mini-grids. In so doing all factors working against possible models ought to be addressed. In addition, the government needs to take the lead in operating and maintaining the infrastructure as opposed to leaving this to the communities in order to ensure their preservation. Community participation must be factored in the use of existing skills and capacities. The mini-grids also need to be designed in such a way that when the national grid finally extends to formerly distant areas, the power can be integrated into the main grid.

[1] National Renewable Energy Policy, Republic of Zimbabwe, Ministry of Energy and Power Development

[2] Data.worldbank.org

[3] Hivos International,” Zimbabwe Energy Profile” accessed at https://knowledge.hivos.org/sites/default/files/zimbabwe_profile.pdf

[4] International Energy Agency (IEA), Sustainable Development Goal #7, available at https://www.iea.org/sdg/electricity

[5] Government of Zimbabwe, “Towards an upper middle income economy”, New dispensation coree values,19 April 2018, Washington DC.

[6] Sustainable Energy For ALL accessed at https://www.seforall.org/

[7] NREP, 5

[8] Ibid, 6

[9] Louie pg14 H. Louie,’Off grid electrical systems in Developing countries’, Springer International Publishing AG, part of Springer Nature 2018 pg.3;14

[10] Ibid,4

[11]Ibid

[12] C Zajicek, “How solar mini-grids can bring cheap, green electricity too rural Africa,24 January 2019, Overseas Development Institute accessed at https://www.odi.org/blogs/10730-how-solar-mini-grids-can-bring-cheap-green-electricity-rural-africa

[13] ibid

[14] J. Ellsmoor,’Mini-Grids are ready to change the world (Again), accessed at https://www.forbes.com/sites/jamesellsmoor/2019/07/17/mini-grids-are-ready-to-change-the-world-again/#4d01797fa164

[15] Louie (supra) 22

[16]F Wang, H Yin, S Li,” China’s Renewable Energy Policy: Commitments and Challenges”, Energy Policy, Elsevier, Vol 38 Issue 4, April 2010, 1872

[17] Chapter 13:20

[18] https://www.parlzim.gov.zw/about-parliament/publications/rural-electrification-programme-today-i-was

[19] Section 27 of the Electricity Act [Chapter 13:19]

[20] G Munyoro, L Makurumure & Y Dzapasi “The Significance of Rural Electrificiation in Zimbabwe: A Case Study of Mudzi District, Mashonaland East Province, Zimbabwe” Research Journal of Public Policy, Vol 3 2016, 7

[21] https://www.youtube.com/watch?v=XZWrhttps://www.zera.co.zw/trainings/dxhSN48;https://snv.org/project/sustainable-energy-rural-communitiesmashaba-solar-mini-grid

[22] E.Bellini,’Renewable mini-grids need good policy frameworks’,2 November 2018,accessible at https://www.pv-magazine.com/2018/11/02/renewables-mini-grids-need-good-policy-frameworks/

[23] ibid

[24] ibid

[25] A Scott etal, “Accelerating access to electricity in Africa with off-grid solar”, January 2016,Overseas Development Institute, 5 accessed at https://www.odi.org/publications/10200-accelerating-access-electricity-africa-grid-solar

[26] A.Burger,’Zimbabweans turn to Mini-grids in Droves amid chronic blackouts, Sept 2,2019

[27] J Peters, M Sievert, MA Toman,” Rural Electrification through mini-grids: Challenges ahead, Energy Policy 132 (2019) 27-31,28

[28] Peters 28

[29] Bellini (supra)

[30] A Burger (supra)

[31]Practical Action Consulting Southern Africa, “Metering and payment technologies for mini-grids: An Analysis of the Market in Zimbabwe”, ,1

[32] NREP, 37

[33] F Wang (supra)

[34] https://www.zera.co.zw/trainings/;https://www.zera.co.zw/trainings/