Electricity Infrastructure

Given the high costs and slow pace of centralised grid infrastructure expansion, off-grid infrastructure has become increasingly popular as countries strive to reach their electrification goals (ESMAP 2022). By avoiding the need to wait for the grid to expand – typically from urban and peri-urban regions to rural and then the most remote areas - electrification can be prioritised to reach remote areas sooner with off-grid technologies and infrastructure. Off-grid electricity encompasses everything from very small sources of household electricity like pico-solar and solar home systems to large, utility-scale mini- and micro-grids. While home solar units are an energy source for many very remote households across the globe, this review includes only studies focused on mini- and micro-grids as these more clearly rise to the level of being considered infrastructure. In general, these refer to relatively small-scale, independently managed electricity networks that are designed to serve either one community or a small number of communities that do not have access to grid electricity. Power is generated, distributed, and managed locally, usually using solar or hydropower (though wind is also possible).

Mini-grids already provide electricity to an estimated 47 million people around the world, and they are expected to account for 45% of new electricity connections in rural areas by 2030 (ESMAP 2022). While they are actively filling an important gap in electrification efforts, the research on the causal impacts of electrification via mini-grids remains limited in quantity and mixed in their findings.

For multiple reasons, the causal effects of electrification via mini-grids may differ from those of the centralised grid. First, as mentioned above, the generation capacities of mini-grids can be of various sizes and those with smaller capacities may not be sufficiently sized to power manufacturing or a substantial number of households and their appliances (Meeks et al. 2025). Consumers (both potential future and current) may perceive mini-grids as inferior to electricity via the centralised grid (Burgess et al. 2025).

Second, mini-grids often target rural and quite remote communities, which present additional operational challenges. Mini-grid providers may face difficulties operating, maintaining, and repairing the generation and distribution systems (that differ from the centralised grid) due to constraints on accessing equipment for repairs and human capital with the appropriate skills. Repairs may require long travel distances, time, and costs, resulting in long-duration outages. Local residents can be trained with the appropriate mini-grid related skills and knowledge, but rural communities can face difficulties in retaining those individuals once they have these technical skills.

Third, mini-grids construction in rural locations, particularly those with previously unelectrified households, often results in low demand for electricity services. These locations often have fewer businesses and poorer households. As is true with any electricity system, a sufficient and consistent load is required for the system to run well and mini-grids are no exception. Low demand can cause technical issues with the system itself.

The impacts of electrification via mini-grids on businesses and manufacturing

Interventions could potentially increase demand and improve load management, however, causal evidence of interventions to increase demand are still needed. Anecdotal evidence suggests the importance of “anchor” customers (e.g. businesses that could include mills, cell towers, manufacturers) to ensure consistent load particularly throughout the day when residential demand is low. Industrial and commercial customers that use electricity for productive uses could both benefit from the mini-grids’ electricity provision and help ensure regular revenue collection, which is crucial to ensure mini-grid financial viability and maintenance. This symbiotic relationship, however, is not ensured (Pueyo and DeMartino 2018).

The evidence on the causal effects on businesses and manufacturing is limited. Meeks et al. (2025) study micro-hydro mini-grids in Nepal, where there was a substantial increase in the number of micro-hydro plants and their associated mini-grids since the early 2000s. They find that the electrification of communities led to a small increase in the number of formal manufacturing establishments and a shift in labour from agriculture and (often informal) self-employment to salary and wage work. The system’s generation capacity appears to matter: micro-hydro systems with above median generation capacities frequently had significantly larger effects on labour activities (relative to the smaller generation capacity systems), suggesting enterprises may need a certain quantity of electricity supplied in order to translate electricity access into productive uses.

The impacts of electrification via mini-grids on households

When interpreting results from studies on the impacts of electricity access via mini-grids on household outcomes, low demand is an important consideration. Many residential mini-grid customers only use electricity for phone charging and lighting, which is not sufficient in terms of ensuring the long-term financial viability of the system. Some descriptive studies find modest benefits of mini/micro-grid access (i.e. increased lighting hours). For example, Karumba and Muchapondwa (2018) document lower kerosene and cell-phone charging expenditures per month among households connected to micro-hydro schemes in Kenya (relative to unconnected households), but these benefits did not translate into better educational outcomes for children.

The quasi-experimental and experimental evidence on the effects of mini-grids on household outcomes is mixed and adds nuance. Aklin et al. (2017) study the randomised placement of mini-grid installations in rural Indian communities. These systems are small-scale, providing households with approximately five hours of electricity per day which was sufficient to power two light sources and charge a phone. Among treated households, there was a decrease in household expenditure on kerosene and a relatively small increase in the hours of electricity access. Otherwise, they find no notable socioeconomic benefits (i.e. no impact on households’ savings, spending, or time spent working or studying).

Building upon their work, Petrusevich (2025) uses the staggered rollout of mini-grids over time across rural India to study the effects on human capital. The mini-grids do lead to an increase in energy access (as measured by night-time lights) as well as children’s educational outcomes. This design allows for the study of mini-grid installations of varying sizes, including larger capacity systems (than those studied in Aklin et al. 2017). These impacts are driven by larger mini-grid installations, also lending support to that the generation capacity of the mini-grid has an important relationship with the causal effects.

When mini-grids meet the grid

Despite some similarities between grid and off-grid infrastructure in terms of the impacts, it is also important to understand the role of mini-grids in places where centralised grid infrastructure is also present (or expected to be in the near future). Some evidence from India suggests that households prefer the grid, when they believe its arrival is imminent (Fowlie et al. 2018). Households may be more willing to connect to mini-grids if the central grid electricity is unreliable. Often as national grids expand to places where mini-grids have been built, the goal is to integrate mini-grids into the centralised grid network. However, legal and regulatory frameworks to advise how this process should work are limited (Comello et al. 2017). This is particularly important because grid electricity, once it arrives, is generally cheaper (often due to subsidies) than the electricity generated by mini-grids, which raises further concerns about the financial viability of mini-grids in the long run.

Burgess et al. (2025) conducted a randomised experiment in rural India over multiple years to understand the demand for solar in locations where the central electricity grid was expanding over time (and these solar mini-grids were not being interconnected with the grid). They find that solar is an essential stopgap, helping households prior to the grid arrival. When both are available to them, however, households prefer electricity that comes from grid and value grid electrification 6.6 times more than the off-grid sources. This preference for the grid is due both to the grid’s capacity to power appliances with higher loads as well as its highly-subsidised prices.

Evidence gaps and future research on off-grid electricity

Despite a growing body of evidence on mini-grids, there are a number of opportunities for future research, many of which overlap with the research still needed on the impacts of centralised grid infrastructure. Studies on longer-run effects of mini-grids as well as efforts to introduce more experiments related to mini-grid placement or modular expansion, while challenging, could enrich our understanding of the impacts.

While there is certainly still more research needed to understand how to motivate sufficient demand from mini-grids, there should be learnings taken from the grid expansion literature. For example, emerging literature on the importance of complementary interventions and investments (i.e. roads) as grid infrastructure expands could map nicely onto future mini-grid research. Meeks et al. (2025) find some evidence that market access may play an important role in determining the magnitude of impacts on employment; however more research is needed.

There is also research needed to understand how mini-grids can be designed to meet not just current, but growing future electricity demand in cases where mini-grids are being actively used. As discussed in earlier sections, demand is projected to grow extensively, which can introduce new complexities for grid infrastructure. While the challenges might be slightly different, it is also true that growing demand brings new challenges to mini-grids. Existing studies (Meeks et al. 2025, Petrusevich 2025) find that impacts are dependent on capacity, yet there is no evidence on how capacity constraints might interact with long-term growth in demand.

As mini-grids play an ever-growing role in rural electrification strategies, addressing these research gaps will be critical to understanding the benefits and limitations of mini-grids, and will enrich our understanding of where impacts of grid versus off-grid electricity access might diverge.

For full reference list see the end of the conclusion chapter.