Overcoming Financial and Capacity Barriers to Empower Small‑Scale Enterprises in South Africa

Annex G. Microgrid case studies

Case study 1 – South Africa: Eskom’s microgrid pilot initiative, Free State

Context

In 2015, Eskom launched a microgrid pilot in Ficksburg, Free State, comprising an 11kV microgrid with 32 kWp solar PV capacity and 90 kWh lithium battery storage for about 120 residents in 14 households plus an office/training centre. The microgrid was commissioned in August 2017, providing around-the-clock electricity to the previously unelectrified community, the training centre and a produce packing plant. Real‑time load management allows for a balancing of generation and storage capacity, and two diesel gensets could provide backup power, yet have never been used. Average consumption levels are about 45 kWh per month and per household, which does not leverage the full potential of the microgrid. There is no dedicated microgrid tariff defined, so Eskom’s Ruraflex tariff applies (Eskom, 2026[1]). The Free Basic Electricity (FBE) allowance is not applicable to end-users connected through the microgrid.

Eskom’s modular, containerised solar PV plants and microgrid can be deployed in remote areas to power households, schools and medical clinics as well as small businesses, but can also operate as a grid‑tied solution. The technical design allows for a rapid and modular deployment of microgrid solutions, can host different renewable generation technologies such as solar PV or wind, and adheres to Eskom engineering specifications and national standards (NRS). Eskom’s microgrids are currently deployed with capacities between 32 kW-150kW, but capacities can reach 2MW for larger service needs. They typically provide intermediate service levels (LSM 1-3), delivering between 1 and 3 kWh/day per household and enable lighting, phone charging, kettle and running a TV, with capacity to power productive, small‑scale businesses where needed.

Financing and business model

The initiative aims to contribute to the achievement of universal access to electricity by providing access to reliable and affordable energy. It leverages funding from INEP to address South Africa’s electrification backlog far to reach and sparsely populated communities, combined with funding through Eskom.

The containerised micro-grid is a modular and quickly deployable solution at relatively low costs, demonstrating smart grid technology and controls. It is a standardised “energy in a box” solution that is locally assembled at Komati power station in Mpumalanga province. The Komati assembly line includes welding and spraying of components, construction of mechanical structures, electrical assembly, container assembly and storage of materials and equipment. Local residents are trained on energy utilisation and form part of scheduled maintenance for serviceable items, such as the cleaning of solar panels or vegetation management to avoid interferences.

Grid operation is managed through a control system balancing supply and demand in near real-time, which allows for remote monitoring and engineering, as well as security and alarm features. The system is linked to a control centre that uses artificial intelligence and machine learning to forecast factors that could impact electricity generation, including weather, irradiation or disturbances like fires. Each plant creates a communication network with the users, which can be leveraged for internet access and communications.

Figure A G.1. Solar PV arrays and microgrid in Ficksburg, Free State, South Africa

Source: OECD Secretariat, OECD-DFFE-Eskom field mission, February 2026.

Lessons learned

• Electricity is a catalyst for economic reform, yet access to energy alone does not automatically lead to economic activities and growth but can require specific knowledge and access to funding to create and sustain new businesses.

• Grant funding is crucial to start-up businesses, while knowledge transfer and experience are necessary to sustain business activities.

• Community engagement and ownership models are crucial for success. Suitable community structures need to be created that are based on strong leadership and resilient business models to ensure long-term economic sustainability.

• Pilot projects and demonstrable use cases can serve to validate the model, but also to leverage policy reform and the determination of dedicated off-grid tariffs.

• Training and education of the community are critical success factors to ensure the necessary level of technical understanding of the capabilities of the microgrid and ensure high quality operation and maintenance (OECD, 2025[2]).

• Partnerships with other public sector entities are essential to leverage the potential of energy as a catalyst to the sustainable economic and social development of the involved communities (OECD, 2025[2]).

• The definition of cost-reflective microgrid tariffs combined with measures for low-income households to ensure affordability could help improve the economic viability of microgrids.

• Community-owned enterprises need to be established based on entrepreneurial principles and business plans to ensure their long-term sustainability and ability to manage external shocks (e.g. vandalism, unexpected equipment damage) and pay for equipment replacement. Failing to set aside enough savings could result in unexpected and longer-term business interruptions, threatening livelihoods of the community members.

Source: Information was collected during a field mission to Ficksburg, conducted together with DFFE and Eskom in February 2026.

Case study 2 – South Africa: Upper Blinkwater Microgrid, Eastern Cape

Context

The Upper Blinkwater smart, renewable hybrid minigrid pilot was developed in a collaboration between the Eastern Cape Province, the German federal state of Lower Saxony and Germany’s bilateral co-operation agency GIZ.

The Upper Blinkwater community is located in rough and environmentally sensitive terrain, has low electricity demand and low population density hindering grid extension. Approximately 90% of the population relies on social grants as a primary source of income (GIZ, 2020[3]).The project aimed to electrify the geographically isolated community with 67 households and a primary school in Raymond Mhlaba Municipality ten years ahead of plan, to contribute to better livelihoods of the community and to demonstrate a new institutional model for rural electrification.

Figure A G.2. Location of Upper Blinkwater

Source: (Mahali Elizabeth Lesala, 2024[4]).

Financing and business model

The overall project took five years from the initial conception in 2015 to the construction and commissioning. The community’s acceptance of the microgrid, and the accurate estimation of the future load profile were identified as key success factors for the project. This was addressed through stakeholder consultations and a household survey to determine the community’s energy requirements and consumption patterns, income structures and available budget for electricity services, as well as interests and training needs of the community. Tier 4 energy supply level was chosen, which is equivalent to a minimum power capacity of 800W per household, and a minimum consumption of 3.4 kWh per day for at least 16 hours per day (GIZ, 2020[3]).

The project was funded through grants and financial contributions from the Federal State of Lower Saxony in Germany and other partners32F1 as well as contributions from the province and municipality, while multiple technical partners contributed to project implementation.

The microgrid consists of a hybrid microgrid with 75 kWp solar PV, 130 kWh battery storage and a 40 kW diesel genset, plus three 20 kW converters. A wind power component was added at a later stage to reduce power variability. Each household was equipped with a smart meter linked to a cloud-based portal to monitor consumption, detect fraud and better manage load and curtailments.

In the absence of microgrid regulations, two licences had to be obtained: 1) a distribution licence through NERSA, which also acts as a tariff licence, and 2) a water usage licence from the Department of Water and Sanitation for the installation of wooden electricity poles in the wetlands.

A community project steering committee was set up with elected community leaders, a community liaison officer, social facilitator and a ward councillor to represent the community interests throughout project implementation. This social facilitation from the first community engagement to ensuring realistic expectations and community buy-in proved crucial for project implementation. The contractor responsible for construction of the microgrid remained responsible for operation and maintenance (O&M) for 1.5 years, which allowed for continuous community engagement and knowledge transfer to the municipal electrical department, which then took over operation and maintenance of the grid.

Lessons learned

• The electricity demand and load profiles were determined through a survey by analysing total energy demand from different sources. This resulted in different strategies for the various energy uses, for instance gas-based cooking to not overload the microgrid.

• Based on learnings from previously unsuccessful microgrid projects, the project put a strong focus on achieving local acceptance by enhancing community awareness and knowledge and by working with existing community structures.

• The involvement of the local community in the decision-making process significantly contributed to the effectiveness of the project. The presence of a dedicated social facilitator with social and engineering skills helped in the communication between involved actors (GIZ, 2020[3]).

• Knowledge transfer, including on operation and maintenance, to the local community owning the microgrid, was a crucial success factor for continued operation of the minigrid.

• Existing strong partnerships between the institutions involved in the project helped in ensuring commitment of all parties and better co‑ordination.

• The existence of different financing partners with different reporting and other requirements complicated procurement processes, oversight and handover (e.g. separate terms of reference for the owner’s engineer, engineering, procurement and construction (EPC) contractors and social facilitators), which lengthened the implementation timeframe.

• The project did not specifically consider productive uses of electricity, or any support measures to promote entrepreneurial activities of the community.

Case study 3 – India: Climate-smart villages initiative by Schneider Electric

Context

Schneider Electric developed the climate-smart village initiative as part of its corporate social responsibility portfolio to support rural livelihoods in India and many other countries by providing access to reliable renewable electricity to rural communities.

The initiative was deployed in the villages of Sehal and Chatti in the rural area of Gumla District in Jharkhand, where agricultural activities were dependent on rainfall and expensive diesel-based equipment to grow and process crops. The systems feature 40kW (Sehal) and 45 kW (Chatti) solar PV arrays equipped with IoT-enabled smart power management, which dynamically allocates electricity based on real-time demand to ensure optimal power utilization (Schneider Electric, 2026[5]).

In collaboration with the local NGO PRADAN, community engagement served to determine the community’s energy needs and willingness to pay. A local Women’s Farmer Producer Organisation (FPO) was already in place and investigated opportunities to expand and optimise agricultural activities, which helped in the transition to a renewable-powered microgrid and in creating the village-run utility (Schneider Electric, 2026[5]).

Financing model and outcomes

The initiative leverages solar PV to power multiple agricultural loads and private households. The 40kW microgrid in Sehal provides around 8-10 hours of electricity per day to households in the community for lighting and mobile phone charging, as well as streetlighting. A smart power management system prioritises different loads, channelling three-phase power directly to larger agro‑processing equipment without the need for battery back-up. Households and small appliances are supplied through the regular micro-grid solution.

This approach allowed a 30% reduction in CAPEX compared to conventional systems while ensuring 95% reliability of power supply. After installation, ownership of the microgrid solution was transferred to the local community, with the FPO being responsible to operate and maintain the village grid. Twenty local youths were trained for two months in the operation and maintenance of the grid (OECD, 2025[2]). The local NGO supported the establishment of the village-run utility, the definition of household electricity tariffs and separate fees for solar pumping and agri-processing services. A community payment scheme was developed with manual collection of the electricity tariffs for households as well as agricultural processing and irrigation.

This approach allowed producers from other villages to bring their crops for agri-processing while paying the same tariffs as core members of the community.

Figure A G.3. Schematic design of the microgrid in Sehal, India

Source: (Schneider Electric, 2026[5]).

Initial financing for initiative was mobilised through the SE India Foundation and Bank of America to prove the concept, while also mobilising community equity (OECD, 2025[2]). Additional funding partners were brought in for electrifying further villages. By early 2026, four villages in India were electrified, and four additional systems were under construction.

The project achieved around-the-clock access to electricity for 110 households in the pilot village. The initiative doubled annual household incomes and tripled crop yield while adding value to existing agricultural businesses by enabling the processing of agricultural produce and thereby achieving higher prices in the market. As an important socio-economic and environmental impact, the project reduced migration from the region from 54% to 17%, and reduced CO₂ emissions by 60 000 kg (OECD, 2025[2]).

Lessons learned

• The collaboration with a local NGO that already had established ties with the village community allowed for a profound understanding of the local context and community needs. The NGO’s capability to help set up and manage community ownership of the minigrid solution was another success factor.

• System design needs to be aligned with the community’s actual energy needs, while the design of electricity tariffs needs to take account of affordability for the community and willingness to pay for the desired service level.

• The community enterprise responsible for operation and maintenance of the technical installations needs to be set up and managed as a business. This includes an entrepreneurial and sustainable approach to defining appropriate shares of revenue to directly benefit the community members, to be used for regular operation and maintenance expenses, and which share is to be saved and reinvested for repairs, battery replacement and unexpected costs.

• The innovative, scalable design of the solar PV-based system enabled significant cost reductions compared to conventional solutions.

• The system and tariff design allowed farmers from outside the community to access the services provided against a service fee, which increased revenue generation

• Digital solutions like real-time monitoring and management of loads, here through the so-called EcoStruxure platform, can maximise the use of solar PV capacity, reduce CAPEX and ensure better management of long-term O&M

• The technical design of the minigrid solution is particularly relevant for capacities up to 1 MW. Total projects costs to implement the minigrid solution for 110 households plus a productive use facility with solar water pumping range between 1USD 00 000 and USD 120 000.

• System makes sense for less than 1MW mini-grids, but can be scalable; hybrid models are possible e.g. ProdUse hubs: all productive loads plus charging station (mobile lighting and charging) in the hub, rest electrified with SHS; could decrease costs by 30-40%;

• Scaling the model to electrify additional villages requires unlocking capital to finance the CAPEX and strong local partners to adequately address local community priorities and ensure community buy-in.

• Setting up sustainable and robust community structures and community enterprises requires knowledge of the respective community needs and dynamics, but also a considerable amount of time and technical assistance. This can pose limits to the speed and scale of rolling out national electrification plans but can create lasting socio-economic benefits.

• Limited ability and willingness to pay for electricity services impacts the technical design and service level provided to end users. The dual design of the village solution and payment scheme mitigates this by allowing households to pay lower electricity tariffs for basic services (lighting and phone charging), while higher tariffs are charged for electricity used by agri-processing equipment.

Case study 4 – Indonesia: Muara Enggelam, East Kalimantan

Context

Muara Enggelam Village is one of the villages in Kutai Kartanegara Regency, East Kalimantan, and is topographically located on the edge of Lake Melintang, on the island of Borneo in Indonesia. The floating village is home to approximately 170 households, or around 700 residents. Due to its remote geographical condition, limited transportation access available only via rivers and lakes, minimal infrastructure, and its distance from the service area of Indonesia’s state-owned electric utility company PT PLN (Persero), the village has faced difficulties in accessing basic public services, particularly electricity.

Prior to the development of the communal Solar Power Plant (PLTS Komunal), electricity was available for only six hours per day, from 6.00 pm to midnight, generated by diesel generators. Access to electricity was also limited to households that could afford the high cost, with residents required to pay IDR 30 000 per day (~USD 1.80) for six hours of electricity use (Climate Policy Initiative, 2024[6]).

While Indonesia’s National Energy Policy and Enhanced NDC reflect the importance of inclusive energy reforms, high unit costs, high interest rates, perceived investment risks and the limited availability of de‑risking instruments pose barriers to investment in small-scale, decentralised renewable energy projects (Climate Policy Initiative, 2024[6]).

Financing and business model

Between 2011-2014, the local government submitted a request to the central government for the construction of a communal solar power plant and conducted the site verification. Between 2014 and 2015, a solar PV system was built behind the village office with an initial capacity of 30 kWp, later expanded to 42.1 kWp (MEMR, 2021[7]). The total investment cost reached IDR 3.25 billion (roughly USD 194 300), funded through the national budget of the Ministry of Energy and Mineral Resources (MEMR), for the installation of 150 solar panels and 114 battery units. The capacity expansion (12 kWp) with total cost of IDR 600 million (about USD 35 900) was built and funded by the village fund and village-owned enterprise (VOE) BUMDes, in collaboration with private company Gerbank Multiindo Nusantara (GMN) (MEMR, 2021[7]).

The communal solar power plant has been managed by the village-owned enterprise, namely BUMDes Bersinar Desaku, since its establishment in 2015. The solar-powered microgrid enabled the community to increase economic activities across several sectors, including fisheries, tourism, village markets, swallow’s nest and swiftlet farming (Barsei and Saptohadi, 2022[8]). In collaboration with the provincial government, Deutsche Gesellschaft fuer Internationale Zusammenarbeit (GIZ) provided technical assistance on entrepreneurship and community empowerment.

By May 2023, the BUMDes had generated village revenue amounting to IDR 1.2 billion (USD 71 700). This revenue was derived from the operation of the communal solar PV plant supplying electricity to households and several public facilities, with each household receiving an electric capacity allocation ranging from 350 to 900 watts.

The implementation of the communal solar power plant has fully electrified Muara Enggelam village from a baseline 60% electrification rate. Residents now enjoy 24-hour electricity supply at a significantly lower cost, ranging from IDR 3,000 to IDR 7,500 per day (USD 0.17 to 0.44). For low-income households, tariffs are set at IDR 9 per watt of electricity consumed. Revenue collected from electricity tariffs is used to cover operational and maintenance costs, pay the salaries of operators and technicians, and build reserves for the replacement of damaged equipment, such as batteries.

The operation of the communal solar power plant is governed by a set of rules and regulations, including sanctions for electricity theft and non-paying customers, and subsidies for low-income households. These rules were jointly agreed by the village community and BUMDes Bersinar Desaku as the system operator, with the aim of ensuring the long-term sustainability and reliability of the communal solar grid (Climate Policy Initiative, 2024[6]).

Lessons learned

• Beyond improving electricity access, the communal solar PV system has had a significant impact on the local economy. The availability of reliable electricity has enabled the development of home‑based enterprises and village business units, which had previously been constrained by limited energy access.

• Community participation and empowerment through the management of the communal solar power plant by the village-owned enterprise BUMDes Bersinar Desaku has created employment opportunities through the operation of various BUMDes sub-business units.

• The village-owned enterprise was well established before the construction of the microgrid and could expand its activities to swallow’s nest farming thanks to gaining electricity access (Climate Policy Initiative, 2024[6]).

• The VOE uses revenues from operating the communal solar grid to cross-subsidise O&M costs, and the reserves built by the village-owned enterprise and the village fund were used to pay for the capacity expansion, strengthening the community’s stake in the project and ensuring financial sustainability.

• Effective communication and shared commitment between all involved actors at village, sub‑district, provincial and central government level proved essential to foster collaboration (Barsei and Saptohadi, 2022[8]).

• While the initial project was fully funded by the Government of Indonesia, the capacity expansion was paid through reserves from the VOE and village fund. Establishing and running a VOE as a successful business with the ability to cover OPEX, build strategic reserves and reinvest in the minigrid and other strategic community areas requires entrepreneurial skillsets and a solid set-up that is based on a deep understanding of the community. Without a pre-existing village enterprise, village fund or other established and accepted community structures, a significant amount of time and resources in the form of technical assistance on community empowerment and entrepreneurship support might be required to achieve similar results.

Case study 5 – Brazil: RevoluSolar Solar Cooperative, Rio de Janeiro

Context

Over 1.2 million people in Brazil live without access to electricity, 990 000 of which are located in the Amazon region. Nearly half of Brazilians (46%) spend more than 30% of their income on electricity and gas – well above the 10% income threshold that defines energy poverty (RevoluSolar, 2025[9]). Low‑income regions additionally face low service quality of electricity supply: outages and voltage fluctuations occur four times more frequently, disproportionately affecting women and black populations in favelas and rural areas. Residents of favelas represent around one quarter of Rio de Janeiro’s population yet have historically been marginalised from access to essential public services including electricity (RevoluSolar, 2025[9]). About 43% of households in Rio’s favelas do not have an electricity meter, and 30% of those with a formal grid connection face energy poverty33F2 (Dialogue Earth, 2025[10]).

Co‑operatives for distributed and grid-connected energy were authorised by the Brazilian law in 2015, which catalysed investment in small-scale solar generation. The non-profit RevoluSolar was established in the same year in Rio de Janeiro by unionised workers and volunteer solar energy technicians and engineers. It supports area-based community associations to move away from illegal electricity connections and reduce high electricity costs, frequent outages and slow repairs (PCC, 2024[11]).

In 2021, the NGO created the first solar co‑operative in the Babilônia favela in Rio de Janeiro. The rooftop solar plant was installed on the Babilonia Residents Association building by volunteer residents, and the 34‑households of the co‑operative were trained in its operation and maintenance. RevoluSolar provides electricity services, promotes active community involvement in all project stages and professional training, which helped to create local jobs and improve incomes. RevoluSolar’s working methodology, called “solar cycle”, ensures that solar PV systems are installed, operated and maintained by residents trained by the NGO. Additional environmental education programmes for children aim to create a better understanding for the value of renewable energy (Dialogue Earth, 2025[10]).

Financing and business model

The NGO relies on a hybrid financing model that blends impact investment, philanthropy and development finance. For the first project, RevoluSolar received philanthropic funding from the Institute for Climate and Society and provided a 100% grant for the microgrid project (PCC, 2024[11]). Members can join the co-operative at no costs.

The microgrid is grid-tied, and net metering schemes ensure reduced electricity bills: Electricity generated by the co‑operative’s solar system is fed into the grid and converted into credits that reduce electricity bills of its members. Under Brazilian regulations, PV systems below 5 MW are eligible for net metering tariffs, which are compensated at the electricity retail rate (PCC, 2024[11]). Community members are actively involved in the initiative through ongoing training and education programmes, providing a more stable electricity service (IEA, 2024[12]). Community governance of the system ensures ownership and accountability of community members. Part of the savings flow into the co-operative fund to help finance the initiative further.

Since 2021, the co‑operative expanded from 35 households to more than 60 families, four businesses and two schools (Dialogue Earth, 2025[10]).

The co‑operative model has been replicated across Brazil, reaching over 15 000 people and creating more than 100 training opportunities by 2025. Communities’ income from microgrid operation exceeded BRL 500 000 (~ USD 95 000) across five Brazilian states in the same year (RevoluSolar, 2025[9]).

Lessons learned

• Trust-based community engagement throughout the whole project cycle, institutional credibility of the NGO and multi-level partnerships to leverage institutional strengths proved as critical success factors.

• Training of community members in technical installation, and support for the establishment of the co‑operative proved helpful.

• Multi-year governance, finance and regulatory frameworks allow for continuous support and higher impact of the initiative.

• The fact that PV systems below 5 MW will remain eligible for net metering tariffs until 2045 improves economic outcomes for community members and long-term financial sustainability. Despite a grid fee for prosumers that entered into effect in 2023, attractiveness of rooftop PV and small solar parks is still expected to remain high (PCC, 2024[11]).

• Public and private sector co‑operation, including in the form of blended finance instruments, is essential to expand financing for distributed renewable generation projects of social interest such as the solar co‑operatives.

References

[8] Barsei, A. and J. Saptohadi (2022), “Stakeholder Analysis in Renewable Energy Development: Case study of a solar power plant in Muara Enggelam Village”, Vol. 20/1, pp. 41-54, https://doi.org/10.33626/inovasi.v20i1.641.

[6] Climate Policy Initiative (2024), Electrifying the Last Mile: Community-based Renewable Energy for Eastern Indonesia, https://www.climatepolicyinitiative.org/electrifying-the-last-mile-community-based-renewable-energy-for-eastern-indonesia/.

[10] Dialogue Earth (2025), Community solar lights up homes and businesses in Rio’s favelas, https://dialogue.earth/en/energy/community-solar-lights-up-homes-and-businesses-in-rios-favelas/.

[1] Eskom (2026), Tariffs and charges, https://www.eskom.co.za/distribution/tariffs-and-charges/ (accessed on 28 May 2026).

[3] GIZ (2020), The Upper Blinkwater Minigrid, Project Summary and Lessons Learned, GIZ, https://www.giz.de/de/downloads/UpperBlinkwaterMinigrid_Brochure_web.pdf.

[12] IEA (2024), Bottom up energy transitions: Managing the rise of energy communities in Latin America, https://www.iea.org/commentaries/bottom-up-energy-transitions-managing-the-rise-of-energy-communities-in-latin-america.

[4] Mahali Elizabeth Lesala, G. (2024), Exploring Off-Grid Energy Choices: Household Decisions in Upper Blinkwater, South Africa, https://doi.org/10.3390/en17143556.

[7] MEMR (2021), A Brief Summary of Good Practices and Challenges on Renewable Energy Development, https://www.esdm.go.id/assets/media/content/content-brief-summary-sstc-renewable-energy-1.pdf.

[2] OECD (2025), Unlocking community-based financing for clean energy and green small-scale enterprises in emerging markets, https://www.oecd-events.org/e/cop30/session/54194926-18a1-f011-b485-6045bd941168/unlocking-community-based-financing-for-clean-energy-and-green-small-scale-enterprises-in-emerging-markets.

[11] PCC (2024), Social Ownership Models in the Energy Transition, Presidential Climate Commission, https://www.climatecommission.org.za/publications/social-ownership-models-in-the-energy-transition.

[9] RevoluSolar (2025), RevoluSolar, https://www.revolusolar.org.br/en/sobre.

[5] Schneider Electric (2026), Advancing rural India with the climate smart village initiative, https://www.se.com/ww/en/insights/sustainability/access-to-the-future/advancing-rural-india-with-the-climate-smart-village-initiative/.

Notes

← 1.  Financial partners included the German Federal Ministry for Economic Cooperation and Development (BMZ), Department of Economic Development, Environmental Affairs and Tourism, Province of Eastern Cape (DEDEAT) and the Eastern Cape Rural Development Agency (ECRDA).

← 2.  Defined as monthly electricity costs above 10% of their income.