An operator considering new software has a reasonable question: what will improve, and how will we know? A subscription gives the supplier predictable revenue. A performance fee ties some payment to an agreed result. Either can work; the choice depends on what the supplier controls and whether the outcome can be measured fairly.
For a mini-grid fleet, shared savings may suit a bounded dispatch-improvement service. It is less straightforward for tasks whose value is readiness or compliance rather than a measurable reduction in cost.
This is a proposal for structuring an agreement, not a published Gen318 tariff or a promise of a free pilot. Scope, fees and responsibilities need to be agreed for each engagement.
Define the outcome before choosing the price
Three arrangements are often grouped together even though they allocate risk differently.
| Arrangement | What the customer pays for | What must be clear |
|---|---|---|
| Subscription or service fee | Access, support and defined work | Scope, service standard and termination terms |
| Shared savings | An agreed share of verified avoided cost | Baseline, adjustments, measurement and attribution |
| Performance guarantee | A service with a remedy for specified shortfalls | Covered assets, exclusions, remedy and limits |
The IEA's overview of energy service companies describes performance-contracting approaches. Omnidian offers solar performance assurance. Neither establishes that all performance providers operate solely on savings fees, or that revenue growth proves a particular pricing formula.
A hybrid may be appropriate: a fixed fee for essential monitoring and support, with a separate payment for a measured improvement. A pure savings fee shifts more measurement and cash-flow risk to the supplier. The contract should price that work openly.
Measure a diesel saving that both parties can defend
The SEforALL mini-grid cost study is useful background for understanding costs, but a sector average is not a baseline for an individual site.
Before starting, agree the measurement boundary and period. Record the services delivered, generator fuel use, solar conditions, battery operation, outages and material equipment changes. The baseline should estimate fuel under comparable conditions without the intervention. A before-and-after difference alone can reward lower customer demand, better weather or reduced service.
Use actual fuel measurement with a stated method and uncertainty. Generator runtime may help explain the result but is not, by itself, a fuel invoice. Review both the proportion of expected data delivered and the quality of what arrived. Poor coverage can make a precise-looking saving unreviewable.
An illustrative agreement
Every number below is an assumption to explain the calculation, not a Gen318 offer or measured result.
| Item | Example term |
|---|---|
| Scope | Dispatch advisory at one hybrid site for a defined reporting month |
| Service condition | The agreed load and minimum service requirements must be met |
| Adjusted baseline fuel | 1,000 litres, established using the agreed method |
| Actual measured fuel | 850 litres |
| Verified avoided fuel | 150 litres, subject to review and uncertainty |
| Agreed price basis | ₦1,500 per litre for valuing the saving |
| Gross avoided cost | ₦225,000 |
| Supplier share | 20% of verified avoided cost: ₦45,000 |
| Operator share before other costs | ₦180,000 |
The agreement must separately say who pays for measurement equipment, installation, verification and any fixed service fee. If these cost more than the expected saving, a shared-savings contract may not be economical at that site.
Price movements should not masquerade as operating improvements. State whether savings are valued at an agreed reference price or the period's evidenced delivered fuel price, and use the same convention throughout.
Deal with exceptions before they happen
Missing or unreliable data: suspend the performance calculation for the affected period or apply a pre-agreed reconciliation method. Do not convert uncertainty into an assumed saving. A separately contracted fixed service fee may still apply.
Changes to the site: new loads, battery replacement, outages and changes in service hours may require an adjustment or a new baseline. Record who can approve it.
Recommendations not followed: log the recommendation and the operator's decision. Do not bill for a theoretical saving that was never achieved. Agree whether persistent non-implementation ends the trial or changes the scope.
A disputed result: provide the underlying records, calculation version and adjustment log. Set a review period and an independent-review route proportionate to the amount at stake. The supplier should not be the sole judge of its own fee.
Negative or negligible savings: define whether the fee is zero, whether losses carry forward and how either party can terminate. Protect service quality so that reducing fuel at the expense of electricity delivered cannot count as success.
Reporting is a different obligation
DARES is a useful example of evidence-linked funding, but a grant milestone and an operational saving are not the same measurement problem. The REA mini-grid component sets programme conditions; the operator's current award and assigned claim determine its obligations.
A reporting service can be paid for producing a complete, reviewable submission against an agreed standard. It should not promise to control the verifier's decision or the date money reaches the operator. Distinguish preparation time, acceptance of the evidence and actual disbursement in both the contract and the report.
Start with a bounded trial
Choose a site with enough usable history and a controllable source of cost. Agree the baseline, service floor, evidence rules and exit terms before collecting the result. Set the trial length around the site's operating pattern; ninety days is not automatically enough to establish a seasonal baseline.
The question for a finance lead is whether the fee tracks an improvement that both parties can verify. If it does, performance pricing can align incentives. If it does not, a clear service contract may be more honest and less costly to administer.
Editorial note
Revised 4 September 2026. Removed blanket claims about subscription vendors and unsupported market economics. Distinguished guarantees from shared savings and added an assumption-based fee example, measurement costs, exceptions and a dispute process.