Sizing isolated mini-grids in Kenya: Risk transfer to deal with multidimensional uncertainties and constraints

Abstract

Isolated mini-grids (MG) can be an efficient option for rural electrification worldwide. Nonetheless, a large share of MG fail after a few years and inadequate sizing has been identified as a major risk. Academia, public authorities and funding agencies tend to consider the sizing of mini-grids mostly from a technical and economic angle, looking to optimize performance for MG developers and operators with tools such as HOMER. This paper proposes a different approach. We study the strategies adopted by different MG stakeholders to deal with their own uncertainties and constraints in the sizing process. Based on field work in Kenya, we detail how MG funders and regulators transfer risks to private MG developers and operators. As a result, the latter face risks regarding demand estimation, funding and regulatory aspects when sizing MGs. In turn, they adapt their methods and business models, sometimes transferring risks to end users. While flexible sizing might be a solution, we show that regulatory and funding issues limit MG modularity, leading low-income customers to eventually bear the consequences of ill-suited sizing.