Due diligence of mini-grid site selection in support of an investment by a social impact investor Situation

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Situation

A social impact investor and worldwide organization providing funding in financial inclusion, agriculture, and renewable energy sectors was in discussions with a potential investee in the renewable energy sector. This was in connection with an assessment of site selection, best practices, and enterprise development efforts concerning the mini-grid developments in East Africa’s Lake Victoria islands. The client required an expert review of the site selection approach, methodology, and process.

Industries
Project Developer & Investor Support
Electric Power & Clean Energy
Capital Raising & Impact Investing
Engagement

The client engaged ORI to conduct a detailed review of proposed mini-grid sites, based on materials provided. In delivering the engagement, ORI deployed its expertise in economic growth, rural development, renewable energy, enterprise development, and agribusiness sectors across rural and urban contexts of East Africa and the Lake Victoria region.

Specifically, ORI:

  • Analyzed a wide range of documents and materials that were provided by the client.
  • Conducted a deep review of the project development manual, and provided views and insights into key sections, including: (a) Approach to identification of potential new countries, and objective scoring; (b) Feasibility analysis comprising preliminary analysis and site identification; (c) Site mapping and satellite map analysis.
  • Conducted a detailed review of the community engagement manual, including the rigor in local stakeholder engagement, e.g., women and youth, refugees, etc.
  • Reviewed the productive use of renewable energy model. This included validation of load growth projections and stress testing of the business case of the model, as it relates to the potential to increase electricity demand and lower LCOE and the tariff, while improving its business resilience.
  • Reviewed site scoring sheet, specifically essential aspects of the site, especially as it relates to physical aspects on location, based on the five highlighted factors – Site location, Alignment with EP’s strategy, Site characteristics, Current energy situation, and Productive Use potential.
  • Provided key findings, insights and recommendations for deepening and strengthening site selection outcomes.
Outcomes

The client and investee company applied the recommendations of the work to:

  • Embed a consistent practice of conducting rapid opportunity scans for new sites/clusters.
  • Identify, assess, and prioritize attractive value chains as part of a productive use of solar energy hub.
  • Build goal-based output market services to complete the business development services already being offered on the input market side.
  • Embed a gender and social inclusion consultation as a requirement, beginning at the earliest possible engagement with stakeholders, communities, etc.