Solar PV Leads Global Mini-Grid Installations With 59% Share

The International Solar Alliance (ISA) reports that solar PV now accounts for 59% of global mini-grid installations, up from 14% in 2018 and 52% in 2023. It attributes this growth to steep declines in solar panel costs and advances in related technologies like inverters, batteries, and smart meters.  

Since 2010, solar panel prices have decreased by over 90% and battery storage prices are also expected to drop by 40% to 60% by the end of this decade, according to the ISA. This makes solar power and battery storage more economically viable, it says, especially for mini-grid applications.  

The growing viability and adoption of solar are bringing down the use of harmful diesel in mini-grid installations. Its share came down from 31% in 2023 to 29% in 2024.

Presenting a comparison of the levelized cost of electricity (LCOE) for solar mini-grids across leading regions, the ISA says it ranged from $0.55 to $0.60/kWh in Africa between 2019 and 2022, higher than other leading markets in this space. But the same is projected to drop to $0.22/kWh by 2030. 

In contrast, in 2024, the US’ LCOE was $0.037/kWh, which is projected to drop to $0.024/kWh by the end of 2030. European solar mini-grids had an LCOE of $0.025/kWh in 2024, which is forecast to drop to $0.020/kWh by 2030. Both these regions enjoy the lowest costs for solar mini-grids due to greater access to financing and a mature market environment with further cost reductions expected.

India, on the other hand, has a higher LCOE for solar mini-grids than Europe and the US, but lower than Africa, due to better-established supply chains and more developed infrastructure. India’s LCOE in 2023 was $0.057/kWh, which is likely to decline to $0.045/kWh by the end of this decade. 

“The construction and operational expenses for solar mini-grids are currently the most expensive in Africa compared to other regions being evaluated. However, these costs are projected to decrease by over 50% by the year 2030, due to expected advancements in technology, economies of scale and increased competition,” explains the ISA. 

Investment in solar mini-grids is also expanding as funding for this segment exceeded $2.5 billion in 2023. Private investment is also growing, experiencing a 6-fold growth from less than $100 million in 2015 to $600 million in 2022. 

According to the ISA, “The cost of electricity from solar mini grids has dropped significantly, making them the least-cost solution for offgrid electrification.” Along with bringing energy independence, solar PV mini-grids can be expanded from a few kWs to several MWs, based on community needs, reducing their reliance on centralized utilities. These can be used to power commercial infrastructures like telecom towers. 

Going forward, the ISA stresses the need for an enabling policy and regulatory framework as a ‘necessary pre-condition’ to address investment risks, scale up deployment, and ensure long-term and reliable operation of mini-grids. 

Ease and access to affordable financing will also boost uptake, as the ISA bats for support for OpEx financial models like PAYGo and rentals to improve access to credit. 

Technological progress is crucial for improving solar mini-grid efficiency, smart integration, and cost reduction, stress the analysts. They add that the continuing trend of falling costs for solar PV and battery storage systems is crucial for future advancements. 

It also emphasizes training programs for local communities and community engagement across all stages of mini-grids as equally important.