UK Parliament
Aid for community-led energy – call for evidence
13th May 2025.
Phillip Stovold, MSc Sustainable Development SOAS, University of London (Distinction).
Managing Director of Kaboni Energy Limited and Kaboni Ltd. These companies (generically referred to as “Kaboni”) develop mini-grids and Independent Power Producers (IPPs) in Sub-Saharan Africa and provide advisory services to energy communities, energy companies and NGOs working in Europe and Africa. Phillip has set up these companies and funded them, he has provided advisory support to NGOs and the EU for European and African energy transition initiatives and energy sector regulatory assessments. Phillip has been responsible for developing projects and securing financing for multiple megawatts (MWs) and many millions of pounds in renewable energy projects, and for setting up mini-grid operations in several countries. Phillip is an expert in community-led energy project design, planning development, permitting and implementation. He has designed and delivered capacity building programmes for entrepreneurs, Kaboni teams and client teams across sub-Saharan Africa. He has supported enabling regulatory development for energy communities and mini-grids in multiple countries and for community energy development in the EU and Africa.
Kaboni Energy is a vertically integrated energy services and mini-grid development company with approximately 30 employees, committed to delivering sustainable and innovative energy and development solutions in Africa. Kaboni is building an electricity services company in Burundi, based mainly on solar PV and lithium (LFP) battery mini-grids. In Burundi, we aim to connect more than 30,000 households and businesses by leveraging our community focused and holistic systems approach, developed over many years working across Africa and Europe. A cornerstone of this is our Community Energy Cooperative (CEC) model, which enables the energy systems and networks we build to be transferred to the people they serve, within a target period of 15 years. We plan productive use of electricity (PUE) business development concurrently with our mini-grid implementation. This includes facilitating and securing funding for e-mobility, electric cookstoves, agriculture and small industry. We connect everyone in our network areas and include all our customers in the CEC.
Phillip is an African Mini-Grid Developers Association (AMDA) M300 working group member.
Community energy generally refers to small home systems (SHS), mesh and mini-grids. This term is now extended to metro-grids and interconnected mini-grids (IMGs) – small utilities.
Mini-grids deliver cost effective and scalable community energy solutions with implementation of centralised electricity generation systems that use equipment that lasts decades, as well as new distribution networks built to grid standards. Usually these involve 10-500kWp solar PV systems, and/or small hydro, and/or wind and combinations of these, combined with LFP batteries. These electricity generation and storage systems provide long term, clean, productive use electricity at an economically and commercially viable cost/kWh. When developed as community projects (almost never in Africa at the moment) these provide a foundation for energy independence and a focal point for community development, inclusiveness and collaboration. They are by far the most environmentally and socially friendly energy development scenario in out-of-city locations in sub-Saharan Africa.
Community led energy initiatives that are more complex than SHS usually need sustained organisational, technical, financial and development support, and funding during and all the way through until the process and construction are finished. Developing community energy projects requires a complex suite of skills, enabling regulations and money at the right time and for long enough to get a project through the stages from inception to the commercial operations date.
A less complex and less suitable solution with serious e-waste and environmental issues, that is socially neutral or negative (due to theft and individually owned systems), SHS has nevertheless been an ODA favoured solution because it is the easiest and quickest approach to getting (apparently) high impact. This focus on numbers of connections=impact, for cost, has resulted in high volume roll-out of equipment that is useless within a few years, creates unnecessary e-waste and does not enable development. Arguably this focus on SHS has held back development because it has used resources, including ODA funds, that could have been used in the development of genuinely impactful, long term, productive use, high quality energy services to deliver low impact, low quality energy services that are only good for consumptive use and very short term. SHS ticks the boxes though, and historically the impact measurement has been on quantity not quality.
The reality is that SHS systems do not deliver productive use quality electricity because they are low voltage DC systems connected to individual low output solar panels. This makes them very expensive per kWh and SHS systems generally don’t last much longer than the payback period of a few years.
It is widely accepted that distributed renewable energy systems (DRE), in the form of mini, metro and mesh grids (together I will refer to this sector as small utilities) are the best scenario for large scale electrification in Africa for at least 150 million people. Equipment costs have reduced dramatically in recent years and the electric mobility transition provides a new income source for these next generation, small utilities. Community driven E-mobility businesses when combined with new energy community focused small utilities, provide the best commercially viable energy development scenario.
• How does the UK’s ODA support decentralised energy initiatives? How effective is this support?
Not at all as far as I am aware. We have been developing mini-grids in Cameroon, Rwanda and Burundi and I don’t think the UK provides any ODA support for energy communities in sub-Saharan Africa. CAMCO under REPP 1 had a very good facility, but this has finished and the new facility under REPP 2 is debt only, which is not providing what the sector needs (as they know). We do not work in the SHS space for the reasons provided above. I think the UK has been active in SHS funding, and respectfully suggest that while there is some space for SHS in remote and isolated places, going for the easy win where mini-grid development could have been supported, has been a wasted opportunity.
UK ODA still often seems to have a focus on providing small isolated electricity systems to schools and healthcare facilities. A lesson that never seems to be learned is that implementing small isolated systems like this without a supporting company present for operations and maintenance, results in failed projects, because these systems eventually experience a failure. Whether this is an inverter, a fuse or SPD, a lightning strike or user error, the fix can only be provided by a technician that knows that system, and because they are isolated systems sitting in communities without proper electricity systems, were installed by an EPC that has no long-term presence, the repair does not get done and another facility is left without electricity because one component has failed or tripped out. If these were instead included in a mini-grid that served the community as a whole, as part of a small utility roll out of an area, then technicians are trained within the community, maintenance is ongoing, and economies of scale allow for full time employment and ongoing training of the operations and maintenance functions needed to keep these systems running for decades. It should be noted that installing these systems removes anchor loads from the economics of a mini-grid that could be implemented in a community, and therefore makes financing a community mini-grid harder. These isolated systems hold back development when the investment used for them could instead be leveraged to accelerate it.
The following problems with ODA funding solutions are fairly universal:
a) Competitive tenders for small grants or subsidy programmes developed by consultants without adequate industry and stakeholder engagement result in solutions that do not fit the problem. Funding and initiatives should include intended recipients, representative organisations (like AMDA) and commercial players in their product development process.
b) The opportunity cost of bidding for funding opportunities can kill off many small projects unless they are the lucky winners.
c) Onerous and largely excessive and complicated due diligence (DD) and project documentation requirements, result in very long periods between initial project financing agreements and funding close. The funding close sometimes becomes impossible due to lack of equity, a funder withdrawing from a blended pot, conflicting ODA policy and DD requirements or projects or sponsor companies collapsing due to delays. DD processes designed to reduce (ODA) perceived risk actually increase risk, periods of more than 18 months are usual; funders ignore one critical component of any funding – timing.
d) There is no equity at all in the sector at the moment. ODA like to talk about crowding in private equity when the sector is not yet commercially investible. Sponsors are left searching for equity investors that do not exist, community energy projects and businesses fail again and again because what they are tasked with producing or sourcing is impossible. Cofinancing is not always possible, sometimes it is impossible. Local banks will not fund these projects, there are not equity investors, and there are not funders in the sub $7m space. Technically they are there but they need to spend $500k upwards on their DD so in fact they will not really engage unless the project is big enough.
e) Because of (d) scaling a small utility is virtually impossible at the moment, hence the sector has been stalled for several years.
f) Support requires detailed reporting and funders treat timelines as though recipients do not depend on the funding, whilst concurrently requiring additionality – which means a recipient has to evidence the project cannot proceed without the funding. It is a classic catch-22.
g) Funding is always project based, to move the sector to economic viability it needs to (eventually) scale rapidly and secure commercial funding, this in turn needs corporate (development) funding. The energy communities and small utilities businesses need funding themselves and not only project funding.
• How are development finance institutions engaging with the potential of community energy?
From my experience they are not.
• Can you provide examples of successful programmes or initiatives that have enhanced access to clean, affordable and inclusive energy systems? Or, on the opposite, are there examples of energy programmes where UK aid could have been used better?
How is success measured? UK AID would be best used to develop a holistic and comprehensive support package for small utility developers that ensures they are supported from their first site build to commercial viability or validation point without and gaps in continuity of funding.
The problem with UK and international ODA approach generally is that it is using global north, commercial funding approaches with the usual debt, equity split, ROI’s based on commercial assumptions, for energy development in a space and time where everyone knows the customers need more time to develop after receiving electricity, and for demand to increase. The approach to funding being used to build out first stage electricity systems has not worked anywhere else and it was not how the UK, US or Europe developed their electricity systems. The sector needs to scale rapidly to achieve financial viability and the sector participants should be able to spend their time delivering the roll-out objectives rather than seeking, competing, securing, contracting and reporting for funding that is never enough and usually restrictive.
UK AID would be best used to develop a holistic and comprehensive support package for small utility developers that ensures they are supported from their first site build to commercial viability or validation point without gaps in continuity of funding. Once commercially viability has been reached private sector funding will arrive without needing incentives, regional small utilities with millions of customers will be investment grade, building them is not.
• What are the main challenges facing the deployment of decentralised energy systems in ODA-recipient countries? How could they be overcome?
A fundamental mindset shift is needed. What do we want small utility companies and developers to do? These are usually SMEs with limited management resources. They can spend their time finding and bidding for small pots of limited and restricted money, managing DD processes, managing donors, producing feasibility studies, reporting, drafting tender documents, or they can be implementing scalable small utilities with the work that involves. The community energy sector needs:
a) Continuity of, well timed and constant availability of appropriate funding.
b) Enabling regulatory support.
c) Streamlined tender approaches for mini-grid site allocations without high bar site survey and feasibility study requirements. Site allocations of large and contiguous areas that contain many sites, combined with the funding to develop and implement them, and rapid easy site allocations. Permitting rapid site and connection surveys because detailed survey data is usually fairly useless and out of date by the time implementation starts.
d) Metrics that measure the quality of the power delivered and the broader social and economic impact beyond just connections.
e) Coordination in ODA programmes to ensure the full blend of funding and support requirements are provided as the sector needs them and to align DD requirements to enable rapid application to approval periods.
f) Fast track customs clearance processes for imports.
g) Convertibility facilities or local currency funding.
h) Integration of the relevant private sector in product and initiative design.
• How does the FCDO ensure that the voices and rights of women, older people and marginalised communities are heard and protected in funded energy projects?
This is not my area of expertise. However, small utility owners and developers are working in the communities all the time and have continuous stakeholder engagement programmes. For non-locals working in the area, these engagement programmes are nowadays made a lot easier with AI translation tools, combined with messaging Apps. As a business, we train and employ more than 50% women in our team, supporting gender diversity in the workforce. Some of these team members are in-situ and can facilitate female engagement in the community and on matters of access to electricity.
We have not been a recipient of FCDO funding so we are not as familiar with their approach in this regard.
• How can the value for money of community-led energy projects be evaluated to account for their full environment and social benefits?
a) Cost per connection,
b) Percentage of people connected in the community,
c) Ownership of the energy assets,
d) Quality of electricity provision – is it 220v AC (productive use quality) or less?
e) Gender metrics for connection contract
f) GBP/kWh for electricity units sold
g) GHG emission reductions
h) Anticipated length of service of equipment,
i) Presence of a small utility company or not to ensure the longevity of the systems and networks.