Standardized Risk Management Procedure (SRMP) for Mini Grids Case Study: Mini-Grid Sunderbans, West Bengal, India

Rural electrification by using mini-grids has been the objective of many development policies over the past years. Most mini-grid projects turned out as failures because of poor suitability to user needs, local conditions and expectations of investors and several other risks. In order to shed light on the principles and processes involved in determining a mini-grid risk rating this paper develops and elaborates a risk rating model based on a standardized risk management procedure (SRMP). Five key criteria were outlined and explained in detail using an empirical case study on a mini-grid located in India. Ultimately, this paper aims to have shown how a methodology to achieve a risk rating for a mini-grid could be structured. In this sense a mini-grid rating is a decision supporting tool to enable sound investment decisions for debtholders and shareholders in a mini-grid and to contribute for de-risking renewable energy investments. The proposed standardized risk management procedure (SRMP) for mini grids should be considered as an educated, systematic attempt at measuring current and future development of a mini-grid's capability to fulfill future payment obligations and profitability expectations.