Responsible Financial support
At present there are several capital support mechanisms or investment schemes in Kenya that, although not specific to mini-grids, may apply to the sector. There are also donor-led interventions specific to mini-grids, although currently operating at a pilot stage. There is no established mechanism to support private sector mini-grids in a systematic way.
The GMG Facility will provide grant support to mini-grid project developers aiming at developing, financing and operating eligible GMG projects.
Two types of grants will be provided:
- Output-based grants: cash grants paid once specific electrification metrics are met – for example once household or productive power connections are verified.
- Milestone investment grants: cash payments to mini-grid developers at agreed milestones of implementation, meant to partially cover the costs of development and initial investment.
- Technical Assistance Support
The GMG Facility will provide assistance primarily to GMG Facility Recipients on the basis of eligible GMG project reviews. Sector technical assistance will also be provided to support the development of a sustainable mini-grid market.
- Technical and engineering support
Through a pool of experts, assistance will consist of mini-grid technical and engineering support to include but not limited to, assistance in carrying out feasibility studies, engineering design in terms of power generation, distribution, connection and metering.
- Business and financial planning support
The GMG Facility will provide business and financial planning support, such as developing business plans, financial models, corporate structuring, financial management procedures, pre-finance advice and preparation.
- Legal and compliance support
The GMG Facility will provide legal and compliance support. Support will be provided towards negotiating with the central government, county government and regulators’ requirements including accessing permits, licenses, approvals and no-objections. Additionally, the GMG Facility will advocate for clear and consistent policy and regulatory framework to support the development of the private sector.
Kenyan law requires that Greenfield mini-grid projects, regardless of their size, obtain approval of the Environmental Impact Assessment by the National Environment Management Authority (NEMA). This is granted through an established licensing process that includes an environmental impact assessment. Consultants will provide Environmental and Social Impact Assessment (ESIA) support as a key element of the TA facility. ESIA will be a prerequisite for funding under the program.
The GMG Facility also provides social impact assessments for the sector and GMG Facility Recipients. Support may include social inclusion and gender mainstreaming in design, development and management of mini-grids. In addition, the impact on communities in regards to the integration of productive use of electricity, and the benefits in providing electrification to social establishments such as schools and clinics, will be assessed. Community engagement models for mini-grid management and the impact on livelihood and community development will also be considered.
- Sector Technical Assistance
Market assessment and market development support will be provided in the form of pre-feasibility market information dissemination at the sector level. Support will be provided to specific developers in implementing investment grade market assessments that will provide information on sizing of current and future demand. Several developers also highlighted the need for assistance with structuring community engagement, including access to land (for generation and distribution way leaves), establishing community trusts that represent the community’s interests (financial and otherwise), and working with local leaders (cultural, political and business).