The informality-energy innovation-finance nexus: Sustainable business models for microgrid-based off-grid urban energy access

Abstract

This paper proposes the concept of the informality- energy innovation- finance nexus, as a theoretical framework to analyse micro-grid based urban off-grid energy access. The provision of energy access in urban informal settlements has received increased attention by scholars working on informality and energy in recent years. Recently, scholars have looked at the off-grid-urban informality nexus and have argued for the integration of off-grid electrification technologies in South Africa's informal settlements. Concurrently scholars have argued for more user centric business models for off-grid contexts. Off-grid technologies like micro-grids and stand-alone solar home systems have become an integral part of the energy landscape of energy access in Sub-Saharan Africa and can fill a key gap for unelectrified urban informal settlements. However, there remains a gap in the literature linking user-centric off-grid business, financing models and urban informality. This paper fills this gap and argues for greater contextual embeddedness and attention to the local context when implementing off-grid business models in settings of urban informality. This paper draws on the findings of the Umbane project, a pilot study on solar powered refrigeration for women owned enterprises connected a micro-grid in an informal settlement Qandu-Qandu in Cape Town, Khayelitsha. This paper uses mixed research methods, including semi-structured interviews with entrepreneurship project participants and a survey. This paper offers key insights from our practice-based work on implementing solar micro-grids in settings of informality and the contextual factors and drivers that shape the informality, energy-innovation and finance nexus.