Financial Analysis of a Solar Mini Grid Power Plant Deployment in Kavumu, DRC: A FINPLAN-Based Approach

This report assesses a proposed 30 MW solar mini-grid in Kavumu, DRC using the financial model FINPLAN. The goal was to test project least profitability under varying conditions. The base case uses the current SNEL tariff (194.4 CDF/kWh), assumes production of 125 GWh per year, an exchange rate of 2840 CDF per USD, a discount rate of 17% and an interest rate of 5%.

Key results show that high utilization is essential: if output drops below ~80% of capacity, the net present value turns negative. Under base assumptions, the project only becomes profitable at ~80% utilization and above. However, even with moderate tariff adjustments (e.g. 10% price cuts), the project remains viable if demand stays high. Financing conditions matter too: the model indicates viability only if discount rates stay below about 17%; higher financing costs would make the NPV negative.

Crucially, the analysis highlights currency risk. With DRC’s double-digit inflation, fixed CDF pricing would increase profitability risks. Our findings show that a small franc devaluation (1%) makes the project financial unviable if the tariff is in CDF. By pricing or indexing the tariff in USD, however, the project’s revenue stream becomes stable to local inflation and exchange shift.

In summary, the solar mini-grid can help expand affordable electricity access in the region, but its financial success depends on robust utilization capacity and smart risk management. Allowing USD-indexed tariffs and supporting productive electricity uses are key policy steps to make this renewable energy investment attractive and sustainable.