How solar-powered minigrids boost livelihoods while becoming more economically viable
By Oluwanifemi Blessing Ojo, Saneliso Makhanya, Aran Eales, Ayodeji Ojo, Maria Knodt, and Sascha Flesch
Alia Umoru, a 40-year-old mother of eight, has spent years gutting and smoking her husband’s catch of croaker, tilapia, and catfish by night to sell in the market. Despite being one of 300 families benefiting from reliable electricity from a solar minigrid in Kiguna, Nasarawa State, Nigeria, the absence of a refrigerator limits her ability to preserve fish. Without proper storage, Alia’s income remains constrained, as she must either sell much of the fish quickly, or smoke it, or risk spoilage. However, the traditional fish-smoking process exposes her to health risks, including headaches and persistent respiratory issues such as coughing and shortness of breath.
According to the World Health Organization, 98,000 Nigerian women die annually from the use of firewood, contributing to long-term health complications and fatalities, including 3.8 million deaths linked to household smoke produced by dirty stoves and fuels. Rural fish smokers, in particular, have an increased risk of respiratory symptoms and reduced pulmonary function. Furthermore, despite contributing to 80% of the nation’s total fish production, artisanal fishers in Nigeria lose nearly half of their catch to spoilage due to lack of storage facilities.
These problems reflect broader struggles faced by many people, predominantly women, in Alia’s community who balance domestic responsibilities with productive work. They underscore why providing a minigrid alone is insufficient; there must be financing options for acquiring productive-use appliances. This would subsequently extend the shelf life of their products, increase the fishers’ income, avoid health risks associated with smoking fish, reduce post-harvest losses, and help them access larger markets. However, not only the fish value chain, but also other agricultural and service value chains can be positively influenced by the productive use of energy (PUE).
The Energizing Agriculture Programme (EAP), implemented by the Nigerian Rural Electrification Agency (REA) and RMI stepped in to address this need by introducing a solar minigrid-tied cold room pilot. This cold room allows local fishers and traders to either store their fish or sell it to Coldbox Store, which, supported by EAP, purchases up to 3,000 kilograms of fish weekly and distributes it to nearby cities, ensuring a stable market. Coldbox Store, in turn, pays Husk Power Systems, the operator of minigrids in these communities, for the energy consumed. This solar-powered cold storage reduces the need for traditional smoking, lowers health risks from emissions, improves air quality and enhances environmental sustainability. While this approach alone won’t eliminate poverty, it is a crucial element in efforts to improve livelihoods and bolster economic prosperity.
| Info BOX #1: – The Africa Minigrids Program (AMP) is partnering with the EAP to scale such initiatives that are anchored on productive uses and target inefficiencies within key agricultural value chains to improve quality of life for people who previously lacked energy access. The AMP is a UNDP-led technical assistance program implemented in collaboration with Rocky Mountain Institute (RMI) and the African Development Bank (AfDB), and funded by the Global Environment Facility (GEF), focused on enhancing the financial viability of renewable energy minigrids to stimulate increased commercial investment in the sector throughout Africa. AMP is set to invest in viable projects identified by the EAP to scale relevant PUE initiatives in Nigeria. The intervention focuses on bolstering economic prosperity in rural areas by improving energy access for activities such as agricultural production, post-processing, storage, and transport. |
What is the Productive Use of Energy?
Rural economies are typically characterized by agricultural activities such as small-scale farming, milling and processing, livestock rearing, and fishing. Other crucial parts of the economy are local grocery stores, small-scale manufacturing, and artisanal crafts like pottery, weaving, and home-based textile production. Each economic activity requires energy and when this energy is provided through renewable electricity it is often called productive use of energy (PUE). PUE involves energy use that generates economic value, such as increased productivity, income, job creation, or reduced hardship. While meeting residential energy needs, such as lighting, powering televisions, and phone charging, is important, the real transformative power of energy lies in enabling economic activities and improving livelihoods for rural communities through PUE.
Why is PUE so important?
Many agricultural activities have historically relied on manual labor or, more recently, mechanization to scale processing and production. Despite this evolution, the sector remains underdeveloped due to limited adoption of electrically powered PUE appliances and equipment. Most rural agricultural machinery used today runs on fossil fuels, leading to high energy costs and significant inefficiencies. In addition, these machines contribute to environmental issues, including harmful emissions and noise pollution. Transitioning to solar-powered equipment supported by a minigrid can reduce emissions and noise pollution while bridging the energy access gap. Furthermore, PUE can:
- reduce the burden of manual labor through mechanization of productive (i.e., agricultural) and domestic/consumptive activities (e.g., fetching drinking water), which is particularly beneficial for women who disproportionately bear the double burden of drudgery associated with manual labour in both agriculture and domestic activities.
- enhance rural micro, small, and medium enterprise (MSME) profitability through greater returns on investment associated with PUE equipment.
From an economic standpoint, the integration of PUE in minigrids offers a win-win-win situation for the productive users, the residential customers, and the minigrid operator. A recent study across 17 minigrids in Nigeria showed that minigrids that increase the number of PUE customers can reduce electricity production cost by up to 25 percent on average compared to minigrids serving predominantly residential customers. Reduced costs stem from the increased electricity demand, which allows minigrid operators to spread electricity unit production costs over more units of consumed electricity, therefore reducing the tariff required to operate with adequate returns. PUE applications can thereby increase the return on investment for rural MSMEs. Although the PUE equipment requires higher up-front investment, the savings in fuel and lower maintenance cost and down times outweigh the increased up-front investment. In addition, PUE loads, especially during the daytime, provide minigrid operators with increased revenue from users, ensuring economic sustainability of the assets.
Therefore, intentionally integrating PUE into minigrids can reduce electricity costs for rural communities, enhance returns for rural MSMEs, and increase revenues for the minigrid operator.
Fit-for-purpose business models enable scaling of PUE applications
However, even with the numerous transformative impacts and economic benefits associated with PUE, the deployment of PUE is happening at a snail’s pace. This is due to multiple barriers that exist in the nascent PUE markets across sub-Saharan Africa including:
- a lack of expertise of commercial electricity stakeholders, including minigrid developers
- challenging access to finance for the initial high up-front investment for PUE equipment and appliances for end users
- limited availability of quality PUE equipment and appliances and associated maintenance service
PUE business models, if designed well, address these challenges resulting in high quality equipment, operating at an affordable cost, and driving local economic development in communities. These PUE business models define who owns the PUE equipment, the source of financing, who operates, who maintains, who procures the resulting product and how money, goods, and information flow between the different actors involved. A selection of proven PUE business models applied today includes the facilitator model, the processing center model, the off-taker model, and the “key-maker model”. The choice of model is defined by the PUE application, presence and capacity of actors required, financial means, and underlying availability of the required PUE equipment.
To illustrate the extent to which PUE and Minigrid business models can be integrated, the info BOX-#2 outlines the “key-maker model” (also known as the rural industrialization model). A business model which exemplifies a wholistic approach where the primary objective is to produce marketable products through minigrid powered PUE.
Info BOX #2 – The “key-maker model” adds significant economic value by addressing the needs of local entrepreneurs, rural communities, and minigrid developers or operators. In this model, a minigrid operator establishes a manufacturing and processing center to produce goods, sourcing raw materials (mainly agricultural products from the local community) for processing, which are then sold to an off-taker. This strategy capitalizes on cost and operational efficiencies by integrating minigrid and processing facilities. Implementing this model requires a willing minigrid developer interested in a supplementary yet complementary business line, a financier, and a dependable off-taker or market for the produced goods. This approach paves the way for the sustainable industrialization of rural areas, linking them to broader, formal markets.  Jumeme, a minigrid developer in Tanzania, is an example of a key-maker model in practice. Jumeme sources fish from local fishers along Lake Victoria’s shores on Ukara Island. Jumeme processes the fish and utilizes its minigrid electricity for deep freezing on site. Subsequently, the processed fish is bought and transported to urban centres by Jumeme’s partner. The “key maker model” approach taken by Jumeme, serves a community of 1500 inhabitants with electricity, secures livelihoods along the tilapia value chain by ensuring market linkage and promotes local MSMEs through access to finance for PUE equipment purchases. |
AMP collaborates with national and local partners to unlock PUE sectors in Eswatini and Malawi
Recognizing the transformative potential of PUE in rural communities, AMP’s technical experts promote the effective deployment of PUE applications by making it integral to every minigrid deployed, promoting the establishment of rural MSMEs contributing to food security, resiliency, and local economic development. Among other innovations, AMP facilitates the implementation of a PUE Overlay, which upgrades existing minigrids with enhanced productivity and utilization, as is the case in Burkina Faso, Malawi, and Eswatini.
Case Study: AMP Eswatini’s Productive Use of Energy (PUE) Pilot Project  Sithembile Khumalo at the Mvundla solar minigrid that supplies power to her community Background AMP Eswatini launched a PUE pilot project to support community-driven economic development in Eswatini. Two communities were selected for the initiative: Mvundla in the Manzini Region and Bulimeni in the Shiselweni Region of southern Eswatini. The project focuses on fostering sustainable business opportunities powered by renewable energy solutions. To enhance project efficiency and leverage local expertise, AMP Eswatini partnered with the Small Enterprises Development Company (SEDCO) and signed a Memorandum of Understanding to formalize the collaboration. SEDCO’s role includes providing business development support to the selected communities, facilitating stakeholder engagement, conducting market research, and collecting data to guide project implementation. Implementation in Mvundla (Pilot 1) Under Pilot 1 in Mvundla, SEDCO carried out several critical activities, such as conducting a feasibility analysis. SEDCO assessed community-preferred business concepts by analyzing capitalization needs, cash flow projections, and stocking requirements. The organization also provided training on business model structures, focusing on key aspects such as setup costs, technical requirements, and operational risks. These efforts aim to equip the community with the knowledge and tools to establish and manage sustainable businesses powered by renewable energy. Expansion to Bulimeni (Pilot 2) Building on its work in Mvundla, SEDCO is replicating similar activities in Bulimeni under Pilot 2. These preparatory steps are being undertaken before a minigrid is installed in the area. The focus remains on conducting feasibility studies and capacity-building exercises to ensure local businesses are well-prepared for operation. Micro, Small and Medium Enterprises (MSME) Activities Following a series of community consultations on the business models to consider for the overlaying of the Mvundla minigrid, four PUE applications will be set up for the Mvundla minigrid. These include a hammer mill, a hair salon, a bakery and a sewing business. The community selected the PUE applications as needed based on the availability of requisite skills to run the businesses. The first PUE application is a hammermill targeted at servicing the Mvundla and surrounding communities with mealie mill grinding services, since mealie meals are in high demand in the area as the country’s staple food. At present, community members have to travel for many kilometers to a hammermill across the crocodile-infested Ngwempisi River for mealie grinding services. Therefore, setting up a hammermill business in Mvundla as a cooperative business will be strategically convenient. AMP Eswatini will apply a leasing finance model across all four PUE applications for Pilot 1. As such, AMP Eswatini will acquire productive use equipment upfront for the community, which includes an electric miller, a bag sealer and an electric scale. With a site for the hammermill having already been identified, AMP Eswatini will assist in the preparatory work that has to be done for the structure, which includes Environmental Impact Assessments (EIA) and drawing up of the construction plan through the technical expertise of its strategic partners which are part of its Technical Advisory Team. After that, it will finance the construction of the hammermill. A hair salon will also be set up where the saloon operators will rent a structure whilst AMP Eswatini will purchase the required equipment, which includes hair dryers, hot combs, salon storage racks, chairs, towels, mirrors, hair curlers and combs, amongst other salon needed items. The minigrid will also power baking activities where the baker will prepare buns and fat cakes for sale, a delicacy for locals popularly known as masithandane and magwinya. In this scenario, the baker will also have to rent a structure for their baking activities, whilst the AMP will co-finance the required equipment, which includes a baking oven, measuring tools, rolling pins, baking pans and sheets and a fryer. Furthermore, a sewing business will also be established, primarily to provide sewing services for local schools and churches by sewing uniforms for them. As is the case with baking, the sewer will rent the premises for the business, and AMP Eswatini will finance the required equipment. This includes electric sewing machines, irons, tracing tools and cutting equipment, amongst other sewing tools. AMP Eswatini is picking momentum for the setting up the PUE applications with a target to have all four PUE applications at Pilot 1 set up and fully functional by April 2025. This is set to enhance socio-economic development in the area and improve livelihoods. Future Plans A set of PUE applications will also be set up at Bulimeni following the construction of the minigrid at the pilot site. On the other hand, SEDCO, the AMP’s implementing partner for the program, plans to continue supporting both communities (Mvundla and Bulimeni) by walking them through their early business management cycles once the foundational work for their MSME activities is complete. This ongoing involvement will underscore SEDCO’s critical role as a partner in AMP Eswatini’s mission to promote economic growth through energy access for last-mile communities such as Mvundla and Bulimeni. This case study highlights how strategic partnerships and community-focused interventions can drive sustainable development in underserved regions. |
Case Study: AMP Malawi’s Productive Use of Energy (PUE) Pilot Project  12 kWp containerized minigrid in the village of Mthembanji in the Dedza district of Malawi The University of Strathclyde’s Rural Energy Access via Social Enterprise and Decentralisation (EASE) project in collaboration with local partner Self Help Africa and AMP Malawi recognizes PUE as essential for sustainable business models and concludes that inclusive participation leads to positive social and economic impacts. In 2023, AMP pilot sites in the rural villages of Mthembanji and Kudembe, located in the Dedza district of Malawi, serving 110 households, were supported with trainings around business modelling, establishing a social enterprise, and gender mainstreaming, to prepare for providing targeted PUE support. AMP Malawi, in partnership with the University of Strathclyde, implemented PUE activities including the promotion of PUE equipment, provision of micro-financing for electrical appliances, and support for business modelling. This specifically includes an agriculture PUE pilot to be operated on a key-maker model, where the minigrid developer will own the equipment (for example, rice mills and maize huller machinery) and provide milling and hulling services to farmers of the community against a fee. In addition, the pilot offers appliance financing for MSMEs, which involves partnering with local microfinance institutions to offer flexible loans to customers. The early takeaways are that PUE can be encouraged through community engagement (including training and capacity building), technical integration to ensure appliances can function, and monitoring data on technical performance, demand, revenue and social impact to inform interventions. AMP Malawi, EASE, and partners will continue to apply these business model approaches to expand to new minigrid sites. |
Energy Access + PUE = Transformational Change
The transformation of rural economies through renewable energy requires a holistic approach that goes beyond mere electricity provision. The story of Alia Umoru and countless others demonstrates how combining solar minigrids with productive-use appliances and fit-for-purpose business models can create sustainable economic opportunities while addressing critical health and environmental challenges.
The potential is immense — each solar-powered cold room, each efficiently run minigrid, is a step towards reimagining rural economic potential.
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