Benchmarking of Mini-Grids Regulations for Kenya, Lesotho and Mozambique

Abstract

This article presents a benchmarking exercise to comparatively analyse the nascent mini-grids regulations of Kenya (The Energy (Mini-Grid) Regulations, March 2022), Lesotho (Mini-grid Power Generation, Distribution and Supply Regulations, January 2021) and Mozambique (Regulations on Access to Energy in Off-Grid Areas, December 2021) using a simplified empirical assessment of attributes and elements of regulatory substance to determine their relative potential effectiveness to fulfil their intended objectives. The results indicate that the overall effectiveness and fulfilment rates of the newly developed mini-grids regulations towards attracting and retaining private sector investments and facilitating universal access, have been determined to be 84% for Kenya, 72% for Lesotho and 80% for Mozambique. Nevertheless, the growth of mini-grids will likely remain limited because encroachment by the main grid remains a serious risk to private mini-grid investors in terms of uncertain security of tenure and possibility of stranded assets. The benchmarked regulations appear to offer some promise to mini-grid investors through co-existence, interconnection or asset transfer, but they simply do not provide any solid and assuring process on how to arrive at a fair compensation or purchase price for the mini-grids business in the case of forced exit, except for Kenya which proposes the depreciated value of the mini-grid assets.