Mini-Grids Power Informal Settlements

At least 10% (4.4 million people) of South Africa's population live in informal urban settlements and approximately 1.5 million people in these settlements are without grid electricity. Energy use in these settlements remains limited to paraffin, wood, plastic, and dangerous illegal connections to the grid, which pose serious health and safety threats to residents. Grid electrification in these areas remains a challenge due to rapid unplanned urban population growth rates in areas unsuitable for habitation, high connection costs, settlements being on private or disputed land, and low spending power hence minimal returns for investors.

Zonke Energy, a South African renewable energy social enterprise, deployed 11 solar microgrids in informal settlements in Cape Town with support from the UK's Energy Catalyst program. Each microgrid consists of 1.2 kWp solar panels mounted on a tower and 5 kWh battery storage. The system uses a unique metering and billing platform that enables affordable pay-as-you-go access to clean electricity. A web-based cloud platform allows operators to remotely monitor the mini-grids to identify and address performance issues, ensuring maximum uptime and low maintenance costs. The Energy Catalyst funding enabled Zonke to improve metering hardware and software, business modeling, and site selection strategies.

The deployment of 11 solar microgrids provided clean, reliable electricity to households in Cape Town informal settlements that previously relied on dangerous and polluting energy sources. Research studies documented that health, children's education, and income savings improved among Zonke Energy customers compared to non-customers. The microgrids enabled energy use autonomy and reliability, with consumers expressing appreciation for the autonomy compared to illegal grid connections. The system demonstrated that it is possible to deliver low-cost and sustainable renewable energy to urban informal settlements through innovative technologies and new business models, addressing a market segment not served by traditional grid infrastructure.

Zonke Energy demonstrates that informal settlements represent a viable market for distributed renewable energy solutions when paired with appropriate business models. The pay-as-you-go metering system and remote monitoring capabilities were critical to making the economics work in low-income communities with disputed land tenure. The case shows how social enterprises can bridge the gap between commercial viability and social impact by using innovative technology platforms to reduce operational costs while serving marginalized populations. This model has implications for the 1.5 million South Africans in informal settlements without electricity and similar populations globally.