MCC's $391 million Benin Power Compact tripled the nation's grid capacity and is projected to benefit more than 11 million people over the next 20 years.
MCC''s $391 million Benin Power Compact (2017-2023) supported access to electricity through the $31 million Off-Grid Electricity Access Project. The project provided financing for off-grid electrification through the Off-Grid Clean Energy Facility, together with funding for policy reform and institutional strengthening in the off-grid sector. Project activities aimed to increase the hours of operations for businesses and institutions, reduce reliance on costlier energy sources, reduce losses of products and perishable goods, and improve electricity users'' productivity.
By March 2023, the Off-Grid Clean Energy Facility had facilitated electricity connections for over 36,000 residences, businesses, and facilities, primarily through solar home systems. However, these achievements fall far short of the 66,000 connections targeted with the gap primarily attributed to underperformance of mini-grid projects. By compact close, 3 out of 7 agreements with mini-grid developers had been cancelled, and these cancellations reduced the number of planned mini-grids by a half.
The Facility co-financed off-grid electrification efforts. Under a performance-based grants design, all up-front risk was originally placed on the private sector including start-up costs, staffing, site selection and customer identification, securing regulatory approvals, and purchasing of equipment. Challenges with site selection and customer identification, delays in regulatory approvals, and market disruptions meant that many developers invested years in the project prior to receiving funds from the Facility.
Milestone revisions were later made to better distribute risk and ensure full disbursement of funding prior to compact close. For some mini-grids, full disbursement of funding would occur prior to work completion, and only 40 percent of mini-grids were anticipated to be completed by compact close in mid-2023.
Milestone adjustments were slow to process, often leaving developers waiting for several months to assess the viability of their projects. Unclear and delayed communication was a core frustration for many developers, and one respondent noted that if milestones had initially been structured differently, fewer developers would have left the project.
However, the sector faces challenges for expansion including market saturation, reduction in the number of viable mini-grid locations, and rising prices. Future growth in the sector will require a renewed commitment to off-grid solutions and careful planning for grid expansion and off-grid integration in the future.
This interim evaluation is a pre-post performance evaluation. It makes use of program monitoring data and documentation, as well as primary data collected by the evaluation team. Primary data was collected from March-May 2023 and includes:
As Benin seeks to both increase and diversify its electric power generation capacity, opportunities in thermal, solar, wind, and other generation could be attractive to investors. Benin''s government is pursuing independent power producer (IPP) investment, as well as using domestic revenue and donor resources to fund the construction of additional power generation capacity to meet expected industrial, commercial, and residential demand during the next decade.
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