Terms of Reference (ToR) for Energy Finance Specialist for Somalia Mini-grid Program

1. Background

The Ministry of Energy and Water Resources (MoEWR) of Somalia is committed to expanding access to sustainable and reliable energy, particularly in rural areas, through the implementation of mini-grid projects. These mini-grids are designed to serve underserved communities and help address the country's energy challenges. To support the development and financial sustainability of these projects, MoEWR, in collaboration with the UNDP-supported Africa Minigrids Program (AMP), seeks to recruit an Energy Finance Specialist.

The AMP is a technical assistance program aimed at increasing access to electricity by improving the financial viability and promoting commercial investment in renewable energy mini-grids across Africa. The AMP project in Somalia focuses on reducing the cost of mini-grid projects, encouraging hybridization of existing diesel mini-grids, and developing innovative business models to ensure long-term sustainability.

PROJECT DESCRIPTION 

The Africa Minigrids Program (AMP),

The Africa Minigrids Program (AMP) is a country-led regional technical assistance program for minigrids, active in an initial 21 African countries. It is led by the United Nations Development Programme (UNDP) with funding primarily from the Global Environment Facility (GEF) and implemented together with Rocky Mountain Institute (RMI) and the African Development Bank (AfDB), linking up with a wide array of minigrid stakeholders in Africa and beyond.

AMP’s overall objective is to increase access to electricity by improving the financial viability and promoting scaled-up commercial investment in renewable energy minigrids. The program is focused on minigrids cost-reduction, across hardware costs, soft costs, and financing costs, and innovative business models for minigrids. With lower costs, minigrids will be more financially viable, commercial capital flows will increase, and end-users will benefit from lower tariffs and expanded service.

The AMP program has two main elements: a cohort of national projects and a regional project.

1.    An initial 21 national projects each with a common architecture consisting of five components: (i) policy and regulations, (ii) business model innovation with private sector, (iii) innovative finance for minigrids scale-up, and (iv) digital, knowledge management, and (v) M&E.

2.    A regional project acting as the knowledge, advocacy and coordinating platform for AMP. This will be achieved through a suite of knowledge tools, technical and operational expertise and support, communities of practice, and promoting innovative digital approaches for minigrids cost reduction.

The AMP national project in Somalia;

As part of the UNDP-supported, GEF-financed Africa Mini-grids Program (AMP), the AMP in Somalia seeks to “support access to clean energy by increasing the financial viability, and promoting scaled up commercial investment, in low carbon mini-grids in Somalia, with a focus on cost reduction levers and innovative business models”. The baseline situation is characterized by a low electrification rate (35%), the lack of electricity grid infrastructure, and the predominance of and reliance on diesel mini-grid systems, owned and operated by private Electricity Service Providers (ESPs), charging remarkably high tariffs. The project strategy corresponds to the unique nature of the energy sector in Somalia, and the AMP’s concentration on clean energy, by focusing on digital transformation and institutionalization of ongoing initiatives to expand the adoption of solar PV technologies, and promote hybridization of existing diesel minigrid systems as a financially viable path to driving down tariffs and reducing GHG emissions in Somalia.  

This is achieved through supporting the Government on the national and sub-national levels with: (1) operationalizing existing mini-grid policies and regulations through digital transformation, including performing techno-economic analyses, designing tools for tariff calculation, and supporting the institutional capacity building of the mini-grid public sector; (2) implementing pilot project(s) to showcase the benefits of hybridization and remote telemetry of performance monitoring and consumption tracking, as well as establishing and capacitating mini-grid industry associations to encourage and strengthen private operators and developers, and introducing academic programs to build private sector capacity to design, operate, maintain and manage solar and hybrid mini-grids; (3) assessing previous and ongoing financing schemes to develop operational guidance and offer training support to stakeholders in the domestic financial sector; and (4) running an effective M&E, QA and KM systems to oversee and guide project implementation

2. Objectives of the Consultancy

The primary objective of this consultancy is to support the AMP national project team in Somalia by performing a detailed analysis of the current financing mechanisms for mini-grids and recommending ways to improve financial sustainability. This will include conducting a mapping exercise to identify existing and planned mini-grid funding opportunities and analyzing the effectiveness of financing mechanisms developed by other development partners, such as ESRES (FCDO), SEAP (World Bank), and GEEL (USAID), over the past decade.

The consultant will also play a key role in supporting the contextualization of financing mechanisms and incentive schemes for the Somali market, conducting surveys and field missions, and providing critical inputs during data collection and analysis phases.

3. Scope of Work

The Energy Finance Specialist will be responsible for the following key tasks:

1.    Mapping of Existing and Planned Mini-grid Funding Opportunities:

o    Identify all existing and planned national mini-grid funding opportunities in Somalia.

o    Review relevant programs and initiatives such as ESRES, SEAP, and GEEL, and analyze their effectiveness and limitations.

o    Analyze previous and ongoing financing schemes implemented by development partners and assess their success in driving investment into mini-grid projects.

2.    Analysis of Financing Mechanisms:

o    Assess the current state of financing mechanisms available for mini-grid projects in Somalia, focusing on both public and private sector participation.

o    Identify gaps in the availability of financial products (loans, guarantees, grants) for mini-grid projects.

o    Recommend potential improvements or new financing structures that could be introduced to attract more private sector investment.

3.    Contextualization of Financing Mechanisms and Incentive Schemes:

o    Provide insights and recommendations to align proposed financing mechanisms with the local context in Somalia.

o    Support the development of incentive schemes to reduce costs for developers and end-users of mini-grid systems.

o    Identify ways to encourage private sector participation in the financing of mini-grid projects through innovative financing models.

4.    Stakeholder Engagement and Capacity Building:

o    Engage with local financial institutions, development partners, and the private sector to gather input on the financing needs and challenges of mini-grid projects.

o    Conduct consultations with relevant stakeholders, including financial institutions, energy service providers, and government bodies, to inform the design of financing mechanisms.

o    Provide training and capacity building to stakeholders within the domestic financial sector on financing models and risk mitigation for mini-grid projects.

5.    Support to International Consultants and Field Missions:

o    Assist the international team in conducting field missions to assess the on-ground situation and collect relevant data.

o    Work closely with the international team to provide insights and contextual knowledge during the analysis phase.

o    Support the preparation of reports and presentations based on fieldwork and analysis.

4. Deliverables

The Energy Finance Specialist will deliver the following:

1.    Inception Report: Within two weeks of the assignment, outlining the work plan, methodology, and timeline for the study.

2.    Mapping Report: A detailed report on all existing and planned national mini-grid funding opportunities and an analysis of their effectiveness.

3.    Financing Mechanism Report: An assessment of current financing mechanisms, gaps in the system, and recommendations for new or improved structures.

4.    Stakeholder Consultation Report: A summary of consultations with key stakeholders, including feedback on proposed financing mechanisms.

5.    Final Report: A comprehensive report summarizing all findings, including mapping, analysis, stakeholder input, and proposed financing mechanisms and incentive schemes.

5. Duration of the Consultancy

The consultancy will be conducted over a period of four months from the date of contract signing.

Participating countries are organized in 3 cohorts: Cohort 1 - Angola, Burkina Faso, Comoros, Djibouti, Ethiopia, Eswatini, Madagascar, Malawi, Nigeria, Somalia, and Sudan; Cohort 2 - Benin, Chad, Mali, Mauritania, Niger, Sao Tome and Principe, and Zambia; Cohort 3 - Burundi, DRC, and Liberia.

Required Qualifications

The consultant should have the following qualifications:

• Education: Advanced degree in finance, economics, energy policy, or related field.

• Experience:

  • At least 7 years of professional experience in energy finance, renewable energy projects, or development finance, with a specific focus on mini-grid or off-grid energy solutions.

  • Proven experience conducting feasibility studies, financing analysis, and market assessments for energy projects.

  • Familiarity with financing mechanisms and models for mini-grid development, particularly in emerging markets or conflict-affected regions.

• Skills:

  • Strong analytical and financial modeling skills.

  • Ability to engage with diverse stakeholders, including government agencies, development partners, and private sector actors.

  • Excellent written and oral communication skills in English. Knowledge of Somali is a plus.

7. Reporting and Supervision

The Energy Finance Specialist will report to the Director of Energy at Ministry of Energy and Water Resources of Somalia and will work closely with the UNDP AMP Project Manager, the international AMP team. Regular updates and progress reports will be required.

How to apply

 Interested candidates should submit a detailed proposal outlining their key expert’s qualifications, relevant experience, proposed methodology, and preferred payment option(s) to africanminigridproject@gmail.com cc: dg@moewr.gov.so energy@moewr.gov.so by submission deadline of 15th October 2024.

 Confidentiality:

All information provided to the consultant during the course of the consultancy shall be treated as confidential and shall not be disclosed to any third party without prior written consent from MoEWR.