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Solar mini-grid installations are boosting economic development in rural areas, one village at a time.

Despite Prime Minister Narendra Modi’s push to electrify all of India’s villages, results have been mixed, leaving many rural areas with spotty service. Non-profits, NGOs and energy companies are filling the gaps with solar mini-grids, which are having an impact beyond lighting up homes. Mlinda, a non-profit focused on climate change, is installing decentralised, village-level mini-grids throughout rural India to power local agricultural businesses.

There is some scepticism towards mini-grids, mainly amongst public officials, who argue that the expense is insufficient to justify the cost. Mini-grids can be expensive, but they are less expensive than using kerosene and diesel. More importantly, the broader goal of Mlinda and other mini-grid operators is not only to meet existing demand for electricity, but to further economic development. Toward this end, they also advise villagers on how to operate their farms profitably and sustainably.

Mlinda’s Vijay Bhaskar explains, “Bringing energy is the easy part. The hard part is finding productive ways to make use of it.” The World Bank points out that microfinance and vocational training may be essential. Businesses do not spring to life when the power is switched on; rather, people need to be taught how to turn it into commerce.

This understanding is gaining prevalence across rural South Asia and Africa. As one British expert put it, “Mini-grid operators are not sellers of kilowatt-hours; they are stimulators of rural development.” Jaideep Mukherjee, CEO of Smart Power India, an NGO, says their job is to “demonstrate the benefits, train and then propagate.”

In Africa, several big European energy companies are testing mini-grids. French multinational Engie, for example, has a mini-grid project called PowerCorner, which supplies 3,500 clients through eight mini-grids in Tanzania. The company also provides soft loans for energy-efficient machinery, and trains people to use it. Juan Garcia Montes, PowerCorner’s Managing Director, says that his customers are using mini-grids not to start new businesses, but to make existing ones such as carpentry and milling more competitive.

African countries have tended to focus on expanding national electricity networks, but some are prioritising mini-grids. Along with Tanzania, these include Togo and Nigeria, which after India has the second-largest population of people without electricity. With support from the World Bank, Nigeria is launching a major programme to encourage companies to build mini-grids. Kenya is also a promising market.

The mini-grid industry is nascent, and at this point systems are being set up at a rate of just 100 or so per year, from Myanmar to Mozambique, The Economist reports. But it is picking up. The International Energy Agency (IEA) forecasts that, with favourable policies and about $300 billion in investment, hundreds of thousands of them could connect 440 million people by 2030.

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