The customer’s business can change the mini-grid’s business

A workshop, mill or cold-storage user may consume electricity differently from a household. That can make productive use an important part of a mini-grid’s commercial planning.

It also adds another business case to examine: the customer’s.

The World Bank’s account of Nigerian mini-grid support includes work around developers and appliance suppliers. That provides context for thinking about how reliable energy and productive equipment can interact.

Demand needs a route into operation

A business owner may want to use more power but lack the equipment, working capital or customer orders needed to do so. A developer should distinguish present consumption from demand that depends on further investment.

Where productive use is central to the revenue forecast, identify what must happen for the customer to start operating and paying. Equipment availability, financing and the market for the customer’s output can all matter.

Coordinate without assuming away risk

Partnerships between energy providers, equipment suppliers and financiers may help address the gap. The responsibilities, cost and customer obligations need to remain clear.

A developer should also consider concentration. One large productive customer can support utilisation while creating exposure if its business slows or closes. The model needs to recognise that possibility.

The commercial opportunity is compelling where a reliable service supports viable activity and the resulting demand can pay for that service. It is weaker where forecasts rely mainly on the hope that electricity will automatically create a profitable customer.

B&A’s perspective is to examine the two businesses together, while keeping their risks distinct. Better power creates capacity for production; the customer still needs a market and a workable operating model.