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Proceedings of the International Workshop on Replication and Scaling-up of off-grid

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OASYS SOUTH ASIA Workshop

11th

July, 2013

Proceedings of the

International Workshop on

Replication and Scaling-up of

Decentralised Off-grid Electrification

in Developing Countries

Hugh Aston Building, Room 0.08

De Montfort University,

Leicester, LE1 9BH, UK


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Compiled and Edited by:

Prof. Subhes C. Bhattacharyya

Institute of Energy and Sustainable Development,


Leicester LE1 9BH

United Kingdom

Published on 20th

July 2013


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Table of Contents

Introduction ................................................................................................................................ 4

Brief summary of events ............................................................................................................ 4

Key note Speech ........................................................................................................................ 9

Technical Options and Challenges Facing Scaling-Up and Replication of Rural Micro Grids

with Renewable Energy Generation ........................................................................................ 29

Mini-Grids for Off-Grid Energy Supply – Global Potential for Rural Electrification and

Islands ...................................................................................................................................... 53

Financing decentralised mini-grid electrification .................................................................... 73

Development of Solar Energy in Africa .................................................................................. 81

Mini-grid experiences in developing countries, with a focus on hybrid systems and Africa .. 94

Scale-up and Replication of Off-Grid Energy Project: TERI’s experiences in India ............ 111

Annex 1: Workshop Agenda .................................................................................................. 124

Annex 2: Workshop participants ........................................................................................... 126


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Introduction

As part of the Oasys South Asia project activities, an international workshop, sixth in the

series, was held on 11th

July 2013 at Leicester, UK. In line with the project activities, the

focus of this workshop was on replication and scaling-up of off-grid electrification in

developing countries. A number of guest speakers from various parts of Europe and beyond

spoke at the workshop and shared their experience and expertise with the participants. More

than 30 participants from academia, business, and NGO community participated in the

workshop.

Photo: Participants at the Workshop

The workshop allowed a high level of interaction with participants asking various questions

and offering alternative viewpoints. The participants found the workshop very interesting.

One commented that it was really an “excellent event – the best presentations I have heard for

some time”. Another participant found it “very instructive for a new comer to the challenge”.

This document provides a brief summary of the event followed by a collection of the

presentations along with a brief description of the talk prepared by the presenters themselves.

The agenda of the workshop and the list of participants are appended as Annex 1 and 2

respectively.

Brief summary of events

The registration opened at 9AM and the workshop started at 9.30. Prof. Andy Collop, Pro-

Vice Chancellor of De Montfort University in charge of Research and Innovation, welcomed

the participants and highlighted that DMU strongly believes in the public goods dimension of


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the universities activities (research and teaching) and this workshop and the project

underneath are a great example to highlight this feature. He also highlighted the role of IESD

in sustainability research in DMU and suggested that the participants take this opportunity to

network and collaborate with DMU.

The Key Note speech was delivered by Mr. Florian Peter Iwinjak of UNIDO (Brussels). The

theme of his talk was Sustainable Energy for All (SE4ALL) Initiative and UNIDO’s role in

scaling up. He presented the global context of the energy challenge and provided an overview

and current status of SE4ALL initiative. He highlighted that as an UN initiative, SE4ALL has

received global support from governments to the private sector and it now needs to sustain

the momentum to deliver the outcomes. He also offered a number of case examples where

UNIDO was involved in supporting scaling-up of decentralised solutions.

Photo: Mr. Iwinjak delivering the key-note address.

The talk generated a lively discussion. One participant asked about the role of politics in

energy and the global commitment to the SE4ALL initiative. This comment was sparked by

the fact that while 4/5 countries with access deficit have opted-in SE4ALL, a substantially

lower number has opted-in for the renewable energy and energy efficiency targets. However,

while these countries might not (yet) have opted-in officially, they are making clear efforts to

move towards a more sustainable energy agenda (e.g. under the Clean Energy Ministerial).

Another participant asked about the specific challenges faced in the Cuban project mentioned

by the speaker. A third question was about the UNIDO support in Ukraine.

The workshop was divided into two parts. The pre-lunch session was devoted to macro-level

issues of replication and scaling-up while the post-lunch session focussed on country

experiences. Both the sessions were chaired by Prof. Bhattacharyya.


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Dr. Xavier Vallve of TTA (Spain), a small consulting firm working on rural electrification

since 1980s, made an excellent presentation. He told that the issue of rural electricity supply,

particularly through off-grid mode, is a challenge of managing the supply and demand very

closely in the context of limited supply. While in grid connected areas, there are many

generators and consumers supply to and consuming from a large pool, in the case of an

decentralised system, only limited supply sources are available to meet the needs. Unless this

can be managed adequately, the system cannot work. This requires a careful demand

estimation, resource analysis and system configuration. He elaborated an innovative concept

they use – Daily Energy Allowance for consumers which is used to tariff purposes and for

managing the demand. Users consuming below their allowance can draw more energy when

surplus is available in the system. The supply will be cut off when the allowance is exceeded.

He provided examples of successful mini-grids from various parts of the world and suggested

that replication is possible although he is somewhat sceptical about scaling-up because of the

natural size of the villages which cannot be changed easily.

Photo: Dr. Xavier Vallvé giving his talk

The bread of coverage of Dr. Vallvés talk was very much appreciated by the participants.

One asked about the currency of the levelised cost data he presented, suggesting that

renewable energy-based electricity generation cost has significantly fallen in recent times. A

discussion on AC/DC coupling of mini-grid systems also followed with participants

expressing their views on the options. Participants also sought clarifications on the energy

daily allowance concept elaborated by the speaker.

Mr. Philipp Blechinger of Reiner Lemoine Institut of Germany presented an academic study

of the global potential of mini-grids. He noted that there are diesel grids worldwide and given

their environmental damage, it is possible to develop hybrid systems where renewable

energies can complement electricity from diesel generation. The study considered the cost of


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supply and ranked countries in terms of pay-back periods and found that in many regions in

Africa, Australia and South America, attractive payback periods of 5-7 years can be reached

and in very remote areas, even lower payback periods (less than 4 years) can be achieved.

However, the country ranking would change if the market potential is combined with the

political and financial factors that affect businesses. Philipp presented a list of 20 countries

which offer great promise. He also considered the case of islands and suggested that islands

are very attractive markets for renewable energies and there are 2000 islands which can be

considered for mini-grids.

A number of clarifications and questions followed this presentation. The definition of

mini/micro systems received attention in the discussion. The debate over the size of systems

in each definition and the heterogeneity in the definitions used by different organisations

became clear. A participant clarified that the difference is essentially a linguistic one having

origins in Latin, Greek and English backgrounds. A participant working on a mini-grid

system for an island made some comments and observations. The possibility of considering

electric mobility was also raised, although the general view was that a too futuristic design

may not be appropriate for resolving the energy access issue at hand. The weights used in the

country ranking and possibility of using different factors were also raised. The diesel price

and discount rate used in the analysis was also queried.

Mr. Tim Young of Practical Action, an NGO, presented the financial challenges facing off-

grid electrification. $9.1 billion were invested in 2009 for energy access and SE$ALL

estimated $48 billion per year up to 2030 to ensure sustainable energy for all. Electrification

would require $602 billion and $12.2 billion will be required per year for mini-grids.

Although the energy industry has invests trillions of dollars every year, the challenge of

mobilising funds for mini-grids cannot be underestimated. He then considered various

sources of funding including grants, government funding, loans and equity capital and carbon

credits. Although each of these options would have to be considered, the local government

and the private sector would have to play a crucial role. This then ties up with better

governance and regulatory regimes, which may not always be conducive for private

investments.

In the post-lunch session, Dr. Ben Muok of African Centre for Technology Studies, Kenya

highlighted how solar energy is becoming popular in Africa and discussed various

approaches being used to promote solar home systems. He also indicated community-based

mini-grids and battery charging centres are being piloted. However, he remarked that

everything depends on the institutional framework with clear policies and regulatory

arrangements.

Mr. Carlos Miro of Alliance for Rural Electrification, Brussels indicated that the rural energy

market has a big potential but it is a challenging market. He presented a brief overview of

technologies, business models, and financial models used to provide renewable energy-based

electricity and suggested a stronger involvement of the public sector in resolving the problem.

He suggested that the public sector has to go beyond project sponsoring and would need to

get involved in project development, feasibility studies, training and awareness creation, and


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in creating an appropriate regulatory arrangement. He then provided a number of examples of

mini-grids from the Association members and suggested that upscaling and replication of

these activities would need a solid public-private partnership, a smart regulatory framework,

risk mitigation mechanisms, training and awareness building schemes and more market/

feasibility studies.

Finally, Mr. Rahul Sharma of TERI shared the experience from India. India has experienced

a number of large-scale off-grid initiatives and lessons can be learnt from such successful and

not-so-successful initiatives. He considered a few examples and considered technology,

finance, institutions and economic linkages as four dimensions to identify relevant lessons.

He identified that factors like appropriate policy framework, adequate training, customised

technology configuration and synergies with other development initiatives are required for a

successful project/ programme. From the above he inquired about replication and scaling-up

issues and suggested that each dimension would provide guidance for deciding whether to

scale-up or replicate.

The purpose of the workshop was to consider various challenges to replication and scaling-up

issues in off-grid electrification. Clearly, through the SE4ALL initiative, the agenda is

receiving global attention but sustaining the enthusiasm and delivering the promises in time

remain important tasks. Various presentations in this workshop confirmed that there are

successful examples of individual solutions and collective (min-grids) solutions. However, a

significant effort will be required to take them to all other non-electrified areas. While

village-level schemes can be designed and the expertise exists in this regard, each scheme

may be different due to local conditions (social and economic as well as resource-wise).

Moreover, as villages stand as they are, systems have to fit in, which in turn may limit the

potential for scale-up. While the possibility for some linking can be explored, the costs and

benefits of linked systems need to be considered. Similarly, not all elements of the activity

chain may be prone to scale-up or replication. Therefore, identifying factors influencing the

replication and scale-up remain an important task.

Clearly, mobilising finances for the off-grid replication and scale-up as well as for running

the systems will remain a major challenge. Despite the commitment of various international

agencies and private sector support for the SE4ALL cause, the local governments and local

private enterprises would have to play an important role. Whether and to what extent this will

be available and sustainable is not clear. The private investment would need a better business

environment but improving the environment for doing business and making things happen is

a long drawn process. Hence, everybody needs to join in the global energy challenge to bring

about the next energy revolution.


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Key note Speech

by Mr. Florian Peter Iwinjak, UNIDO Brussels Office

[email protected]

mailto:[email protected]


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Technical Options and Challenges Facing Scaling-Up and Replication of Rural Micro Grids

with Renewable Energy Generation

Xavier Vallvé, Trama TecnoAmbiental (TTA), Barcelona, Spain - [email protected]

1. SUMMARY of the presentation

Rural electrification with Renewable Energy

Grid extension is often highly costly or is unlikely to be accomplished within the medium

term in many rural areas of the world. In such situations, multi source (hybrid) individual

plants and rural micro grids based on renewable energy (RE) generation is the most cost

effective technology to electrify households and local businesses in remote villages. Some

sources of energy can be very site specific like small hydro, wind, biomass and others more

universal like solar. Often these plants are combined with conventional diesel gensets. If

coupled to a low voltage (LV) distribution grid these multi user solar hybrid grids (MSG)

provide autonomous 24 hours of, equivalent to grid or better, AC service to multiple users in

a village.

The drop in PV prices in recent years has influenced the design in such a way that many

plants are engineered to operate with a very high fraction of RE generation (75% to 99%) and

the diesel genset is used only as back up. The energy requirements also have shifted from 6 to

11 hours per day, especially for illumination, to 24 hrs/day AC service that includes also

communications, community services, productive uses, water pumping, street lighting, etc

and, thus, the engineering aspects of the micro power plants become more critical.

State of the art and lessons learnt

The deployment of RE rural electrification pilot projects around the world that included

follow up and monitoring has provided insights on key system design issues that must be

considered to successfully replicate at large scale or scale-up in capacity. Implementing

sustainable RE micro grids (typically < 100 kW) involves complex technical, financial and

organizational issues which must address the end-users and their needs, capacity building and

training, tariff and subsidy setting, and institutional strength.

Organizational Issues. Several business models have been tested according to local social and

economic conditions.

The community-based model has been tried out with varying success, depending mostly on

the level of involvement of the beneficiaries. The community has to be involved as soon and

as much as possible through financial or in-kind participation and through the constitution of

a social structure active in the implementation and the O&M&M of the project.

Another approach is based on a private operator, whose participation is only realistic if a

project is profitable and therefore attractive. Output–based aid and long-term concession,



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when well designed, can be attractive schemes to increase private sector participation. This

approach also requires community involvement and a proactive private sector development

component to build demand for electricity services.

The utility-based model is another option which has been widely used around the world.

Utilities generally have more experience, financial resources, and technical capabilities to

carry out rural electrification projects but many of them are also inefficient and lack

commitment at the local level. Utilities could have a role to play in the future; however,

partnering with private sector and community-based organizations will allow them to avoid

the barriers linked to their centralized management structure and size.

Financial sustainability and legal framework. Issues such as operations and maintenance, the

role of the private sector, tariffs and subsidies are essential to consider when developing rural

electrification programmes.

A well engineered facility, if properly maintained and managed can run for over 20 years and

this should be the target of every new implementation. Therefore O&M&M have to be

carefully integrated in the project business planning right from the inception stage in order to

foresee a cash flow sufficient to cover these costs. The ownership and the role of each

stakeholder also must be clear.

Tariffs have to be determined in advance and flat-fees with tiers adapted to different users are

usually a good option. Setting appropriate tariffs and subsidies is probably the most important

factor to ensure project sustainability. The tariff structure must at least cover the running and

replacement costs by creating a “reserve” of funds for future expenses, and provide the

opportunity for profit to attract private operators.Tariffs must compromise between

commercial feasibility and consumers’ willingness to pay.

The legal framework is another incentive or barrier to the large scale roll out. It needs to be

light and flexible for small power producers in terms of standards and tariffs, and at the same

time, it has to protect rural consumers. Strategic combinations of subsidies and well-designed

tariff structures will attract operators and lead to sustainable project designs. Proper

regulation should be an instrument favouring new projects, as opposed to burdening them.

Technical Issues. Quality has a dramatic influence on the facilities’ lifetime and no

compromises should be made on the quality of components in order to minimise the long

term generation costs. Adequate technology supply capacity should not be a limiting factor

especially if one considers that the trends in industrialized countries towards smart grids with

distributed RE generation is causing a shift of the technology towards more versatility.

Characterization of the needs and standardization, energy efficiency and load management

are very important since they can influence dramatically the energy load, the generation

capacity required and the quality of the service.

Solar photovoltaic (PV) is suitable for almost any location and is comparatively easy to

install, maintain and replicate or scale up. However, other more site specific resources like

wind, hydro and biomass should also be assessed in order to check if costs are competitive.


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Universal access will more likely be happen through large scale replication rather than

scaling up because of the size of the villages. As more services and infrastructures are

depleted in small and medium villages it is less likely that its population needs to migrate to

larger towns.

The battery is a central element for 24 hr/day service and advanced energy management is

required to maximize its lifetime. The use of gensets should be minimized but it is important

to ensure service when the yield of the renewable resources is low or demand is particularly

high. The load needs to be capped to avoid total discharge of the battery.

Micro grid design challenges

The RE power plant is most of the time PV based and can have electrical configurations that

are DC coupled, AC coupled, or combined. This design aspect is well addressed by

components that today’s industry can offer and both types can provide good quality standard

AC service to the loads. However, connecting many users to an autonomous RE plant

requires taking into account additional considerations in order to optimize performance and

reliability. Scaling up (larger size facilities) does not necessarily mean maintaining the same

layout with proportionately larger components but most likely the replication and

interconnection of clustered micro grids.

As a basic pre-requisite for any project, field studies of demand analysis are mandatory. They must include energy efficiency and load management options and establish the aggregate design load including seasonal variations and uncertainty. This directly dictates the required capacity of power generation, the size of components and, eventually, the capital and operating costs. Quality of all components has a dramatic influence on the facilities’ lifetime to reach long term minimum generation costs (LCOE) especially considering that the battery is the central element for 24 hr/day service. Solar photovoltaic generators (PV) are suitable for almost any location and are easy to install, maintain, scale up and hybridize with other RE technologies when their resources are available. If adequately chosen, their location can add value to the project by, for example, providing shade or integrating it into a multifunctional community building. In order to provide standard AC service sinusoidal inverters with good weighted average efficiency are required and modularity that leads to redundancy is often a good choice. The selection of components and the plant design need to consider the compatibility among components keeping in mind the overall efficiency since in rural electrification the load histogram has a very wide operating range. Diesel genset operation should be minimized in remote areas but it is recommended since it plays a backup role when RE resources are low or demand is abnormally high. Over ground distribution grid is cheaper and more flexible but if the village layout is well fixed then underground wiring is safer and, if buried by the beneficiaries, is an interesting opportunity to engage them in the project. Training of local operators and users is essential.


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Innovations in load management of demand

Schemes for metering and invoicing have to be suitable to the cost structure of the RE technology and the concept of Energy Daily Allowance (EDA) is an innovative solution that positively impacts the business model and design requirements of the total project. The concept of EDA caps the individual energy demand while giving a lot of flexibility to the user and introduces certainty thus helping planners, designers, operators and users of rural micro grids. This concept is implemented using a new type of meter called an electricity dispenser that has been implemented and tested in several pilot projects in Africa, Latin America and Europe.

Case studies

The presentation will be illustrated with some case studies from Senegal, Morocco and Cape Verde.


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Mini-Grids for Off-Grid Energy Supply – Global Potential for Rural

Electrification and Islands

P. Blechinger1,a, R. Seguin1, C. Cader1, P. Bertheau1, Ch. Breyer1

1) Reiner Lemoine Institut gGmbH, Ostendstraße 25, 12459 Berlin, Germany

a) [email protected]

Globally 1.3 billion people suffer from lack of electricity supply, while an additional amount

has only insufficient or expensive electricity supply by diesel generators. This situation can

be improved by introducing cost competitive and clean renewable energies, for example

within hybrid mini-grids.

A hybrid mini-grid combines at least two different kinds of technologies for power

generation and distributes the electricity to several consumers through an independent grid.

Thus, the mini-grid is supplied by a mix of renewable energy sources and a genset, generally

fired with diesel, used as a back-up.

To underline the global potential this work targets two main fields of application for mini-

grids: Enabling power supply for non-electrified areas and substitution of diesel-only mini-

grids in off-grid areas or remote islands.

First, the potential for electrification of developing countries via PV-based mini-grids is

evaluated. A worldwide assessment of the local diesel costs - based on transportation costs

and remoteness - and solar irradiation leads to economically optimized PV shares for each

analyzed region. In addition, the socio-economic context of several countries is studied to

identify favorable conditions for rural electrification. The presented study concludes that high

local diesel prices and abundant renewable energy sources in rural areas make hybrid mini-

grids competitive and illustrates their specific location (e.g. in Middle and South Africa,

Middle Latin America, Mountainous Asia, and on Caribbean and Pacific islands). Good

political and financial environment combined with high electrification needs are found

especially in South and East Africa.

Second, the identification of off-grid diesel power plants by geographic information systems

is presented. A rough estimation of the global diesel off-grid capacity of minimum 20 GW is

derived by geo-referencing the power plants of the UDI World Electric Power Plant data base

and comparing them with the existing transmission lines.

Finally islands as an attractive market for renewable energies are illustrated. A simulation

example underlines the competitiveness of hybridization by PV, wind, and battery compared

to diesel-only energy supply. Approximately 2,000 islands between 1,000 and 100,000



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inhabitants are identified, which can be considered as “natural mini-grids”. These islands

alone represent a huge market for hybrid mini-grids.

Despite the huge potential in the presented fields of application, only few hybrid mini-grids

are installed globally and even fewer operate sustainable and profitable. Major challenges of

implementation include identification of market region, optimization of configuration, and

applying the best fitting operating / business model.

Please find out more at: http://www.reiner-lemoine-institut.de/literatur/veroeffentlichungen

http://www.reiner-lemoine-institut.de/literatur/veroeffentlichungen


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Financing decentralised mini-grid electrification

by Mr. Tim Young, Practical Action (UK)

[email protected]



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Development of Solar Energy in Africa

by Dr. Ben Muok, ACTS, Kenya

[email protected]



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Mini-grid experiences in developing countries, with a focus on hybrid

systems and Africa

Carlos Miro, Policy Officer, Alliance for Rural Electrification, Brussels

[email protected]

1. Introduction to the Alliance for Rural Electrification

The Alliance for Rural Electrification is the only international business association promoting

all kinds of off-grid renewable energy solutions to electrify rural areas in developing and

emerging countries. Our main objective is to stimulate the process of rural electrification by

better positioning the private sector and enabling business development as well as serving

as a platform for knowledge exchange, for instance, between the private and public sector.

We are currently representing 70 entities coming from all continents. This gives us access to

intelligence worldwide. Most of our members come from the industry, our focus sector, but

we also represent public actors, NGOs and academia which are associate members of the

Alliance. In order to fulfil our mandate we also partner with international organisations,

projects and initiatives.

2. Rural energy market big potential, but challenging

Currently, 1.1 billion people living in rural areas lack access to energy. The world’s rural

electrification levels remain 25 points lower than urban rates. The regions facing the most

acute levels of energy poverty are Sub-Saharan Africa and Oceania, both regions with

approximately 14% of rural electrification rates. Asia, with heavily populated countries like

India and Bangladesh, is the region that concentrates the highest absolute numbers of

people without electricity access1. In many countries, rural electrification remains a very

slow process due to the technical and financial challenges that characterise nascent

markets.

a. Rural demand:

Remains unaware of the opportunities offered by renewable energies;

Access to highly dispersed end-users remains difficult;

End-users have often low capacity to pay and an irregular income (e.g. fishers or farmers); and

Rural households have normally low demand needs thereby making it difficult to make a strong business case for rural electrification.

1 ESMAP, WB and IEA, “SE4ALL - Global Tracking Framework – Data Annex”, 2013



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b. Rural supply:

Generally, due to low local content, any intervention must normally be accompanied by training and capacity building for project/business partners in rural areas and, in many cases, there is no industry that can produce the necessary power equipment for the systems which makes it necessary to import it;

There is a lack of market knowledge (demand and resource potential) which poses a problem when it comes to evaluating the potential of a given area;

There is often poor access to finance, as commercial banks evaluate these areas as too risky and donors and finance institutions are rather focused on large scale and grid connected projects; and

There are few private investors willing to operate in rural areas due to the lack of risk mitigation mechanisms.

3. Off-grid RETs essential to tackle energy poverty

In the past, there was a focus on providing electricity services to rural areas via grid

extension and installation of new on-grid generation. These actions could actually serve for

example to improve the conditions of the billion people that remain and under-electrified in

urban areas and those that remain un-electrified in peri-urban areas2.

However, as countries advance towards the 100% electrification target, connection

distances increase and population density decreases and, as a result, grid extension

becomes more costly. The costs per connection increase from USD 580 at a rate of 5-100

connections km to USD 6 960 at a rate of less than three connections per km3.

Thus, rural areas are often unsuitable for grid extension at reasonable costs. In these cases,

off-grid solutions represent the alternative. According to the Energy Access Practitioner

Network, 60% of the additional generation capacity needed to reach universal access to

electricity by 2030 will be off-grid4.

One of the key advantages of the provision of decentralised electricity services is the fact

that supply can be tailored to specific demand needs resulting in high energy efficiency and

economic savings. The proximity between generation and consumption also contributes to

reduce technical and commercial losses. As a side effect, decentralised electricity services

contribute to stimulate growth in the rural economic sector by creating jobs.

Two main categories of off-grid systems can be identified:

Individual systems are used for isolated household electrification which provide basic electricity services.

2 IEA/OECD , “Energy For All – Financing Access for the poor”, World Energy Outlook, October 2011

3 NORAD, “NORPLAN Study: Cost Competitiveness of Rural Electrification Solutions”, Policy Brief 1, 2012, p.2

4 United Nations Foundation, Energy Access Practitioner Network, “Towards Achieving Universal Energy Access by 2030”,

June 2012, p. 5


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Mini-grids are used to electrify isolated communities with a certain population density through a low voltage line providing advanced electricity services.

While off-grid systems are predominantly powered with thermal generation units, the

remoteness of the areas makes it generally difficult to ensure regularity in fuel delivery due

to remoteness and fuel transport costs increase substantially the system’s OPEX.

Although renewable energy systems have higher upfront costs than diesel, their costs after

installation remain very low. The share of upfront investments for wind and PV mini-grids

and individual systems remain above 80% of their Levelised Costs of Energy (LCOE).

However, in the case of PV or Wind powered mini-grids, it is estimated that, if properly

maintained and operated, they will reach break-even point with diesel after 9 to 13 years of

operation. Small hydropower, being the most mature technology, can reach break-even in

less than two years5.

4. Hybrid mini-grids:

a. Technologies

Mini-grid systems can be divided into the three following sections:

Production which consists in the renewable energy generator, the batteries and the genset (for backup); power components and management system; as well as the bus bar connecting all parts.

Distribution which is composed by a low voltage line that can be AC or DC, single- or three-phased.

Demand (end-user) subsystem: meter, internal wiring, grounding and electronic devices.

This differentiation between the parts of the systems can actually be very useful while

developing business models (please refer to b. Hybrid Model)

The share of renewable energy generation in hybrid mini-grids ranges from 75% and 99% of

the total supply. Different renewable energy technologies can be used:

Small Hydropower remains the cheapest and most mature and efficient technology, but is the most site dependent.

Solar is suitable for almost any location. It is easy to install, maintain and scale-up. Initial investments costs are generally higher than for other technologies, but prices have dropped sharply over the last decade.

Small wind is site specific, cheaper than solar, but remains difficult to predict.

Biomass remains the most widely used energy source in rural areas and can be used to produce electricity as well as for cooking.

5 Pol Aranz-Piera, “Benefits and Limitations of Renewable Energy Based Stand-Alone Systems for Rural Electrification”,

October 2012, Universitat Politècnica de Catalunya funded by Europeaid & Alliance for Rural Electrification, “Hybrid mini-grids for rural electrification: Lessons learned”, financed by USAID, p. 17


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Batteries remain a core part of the system and help ensure reliability in electricity services

and reduce costs over life-time. The diesel genset remains to be important as back-up.

b. Business models

Three pure business models can be identified:

Community model: Involving the communities that will be electrified. It requires strong involvement and ownership from beneficiaries, as they will own the system as well as operate and maintain the system. This model needs long preparation period and intensive capacity building for the community.

Private model: Needs output-based aid and a long term concession in order to attract private investment. It will require a shorter preparation period, if the private sector is in charge of the management and operations and maintenance. This model will however require higher tariffs in order to allow for incentives, but can result more easily in replication.

Public model: The model can take advantage of the utility’s expertise and financial resources as well as its large scale operations and easier access to financing. Utility operations have however traditionally lacked efficiency in rural areas.

In practice, aspects of each of the above mentioned models are generally combined in a

hybrid model. For instance, a private entity can be in charge of generation and distribution

can be managed by the utility or the local distributor. The legal relationship between

generator and distributor is established via a Power Purchase Agreement (PPA). Any of the

above mentioned systems requires a partnership with the public sector, particularly with

the regulator, in order to fix tariff levels which will often require subsidisation. A certain

degree of involvement from the community to be electrified will be required in any model.

c. Financial models

The most important part of the financial model is the tariff. In order to grant sustainability

to the project, the tariff has to be reflective and affordable.

It has to make the project economically viable covering for all costs, including repairmen of equipment;

Commercially viable thereby being adjusted to the capacity to pay for end-users;

It contributes to make the project financially viable by granting returns for private investors and financiers.

Electrifying rural areas, particularly with off-grid RET solutions is more expensive than

connecting urban people to the grid. Meanwhile, people living in rural areas often have

lower income levels than urban population. In order to solve this dilemma and also

incentivise investment in these areas, public authorities use some kind of subsidization:

One-off subsidies for capital investment (initial equipment and replacements) ;

Transitional and ongoing subsidies to cover running costs.


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In order to improve the financial viability of projects, public authorities also offer other kinds

of services aimed at reducing the real and perceived risks of operators and financiers.

Separating project aspects with high risk from those that have reasonable risk levels can make them bankable. For instance, usually public authorities hire system designers and constructors via EPC or turnkey contracts that limit the risks of the contracting party to the construction and performance of the plant.

IFIs and development banks can also provide finance at lower interest rates.

Additionally, IFIs can also provide training and technical assistance to commercial banks so that they develop financing instruments that fit the needs of the sector.

Project developers can also make the project more suitable for finance by reducing some

risks. For instance, combining residential, productive and community connections can help

increase the electricity demand levels and decrease the impact on the business model of the

irregularity in household income. Implementing measures that improve demand

management of end-users such as pre-paid billing, selling electricity in blocks, metering

systems and implementing models such as the one of energy daily allowance of TTA can also

contribute to reduce the risk of non-payment by end-users.

d. Need for strong involvement from the public sector

Initiatives such as UN Sustainable Energy for All (SE4LL), jointly with numerous campaigns

launched by non-state stakeholders, have contributed to raise the profile of energy access

on the international development agenda. The inclusion of energy as a primary target of the

SDG post-2015 process represents a milestone in this regard. There are currently many

donors and developing countries working on mini-grids preparing/implementing RET mini-

grid programmes. Current activity on mini-grids will certainly have a multiplier effect in the

future.

Public involvement in rural electrification is key, as the public sector usually plays a role that

goes beyond (co-)financing. For instance, public actors are the project sponsors and take an

essential part in setting-up project partnerships. Public actors can help stimulate rural

electrification via the creation of feasibility and market studies that help tackle the lack of

information; the coordination and financing of training and awareness creation programmes

that stimulate supply and demand; as well as the creation of a smart regulation and

provision of additional incentives such as low import duties for RET equipment or tax

exemptions.

5. Case studies from ARE members

ARE has gathered information from 14 case studies, most of them developed by some

system integrators as ARE members. ARE has processed information about 14 projects with

a total installed capacity of about 1.2 MW.


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The projects included in the database have been implemented on all continents (3 Latin

America, 9 Africa and 2 in Asia and the Pacific) in two different types of zones: 4 projects in

Islands and 10 projects onshore in rural areas. The systems were installed for different

purposes: residential, community and productive (agriculture, desalination).

A wide variety of technologies and combinations of the latter have been used mini-grids: PV,

Wind, Hydro and Biomass with different types of combinations. There is also one research

project with CPV. The size of the systems ranges from 3,3 Kw to 330 Kw. In some cases,

mini-grids were combined with individual systems. Most of them follow the community

model.

The projects were financed by a wide variety of actors, from local actors from EU countries,

the EU and UN Agencies such as UNIDO, US and replicated in areas nearby with similar local

conditions with additional grants or via public finance such as GEF.

6. Towards upscaling and replication

Based on what we have previously seen, there are several key interventions that could

stimulate mini-grid development:

Solid Public-Private Partnerships

Smart regulatory framework (e.g. specifically tailored subsidies)

Risk mitigation mechanisms and credit lines

Training and awareness creation schemes

Market and feasibility studies

One of the key aspects mentioned by practitioners is the lack of proper funding

mechanisms. This argument goes beyond the assumption about the need for adequate risk

mitigation mechanisms and credit lines.

As it was previously mentioned, many donors and countries have or are in the process of

creating mini-grid programmes that normally include funds to develop infrastructure.

Nonetheless, these funds often focus on piloting projects. One recent exception was the

third call of the ACP-EU Energy Facility by the European Commission which exclusively

focused on replicating existing mini-grid projects.

Although the initiative was well received in the sector, the European Commission did not

consult with the potential applicants before or after the launch of the call and gave a very

short time for preparation of the final applications, including feasibility studies for projects

with a threshold that had been set well above the one of the previous calls. Although a

number of companies applied submitted their applications for the call, many potential

applicants decided not to apply because they perceived too many risks.

One of the issues shared by many actors in the sector is that higher project thresholds set by

donors will not necessarily lead to increased numbers of electrified people. In fact,


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increasing the budget threshold of project applications might also impede the participation

in the call from SMEs, which form the core of the off-grid sector. Bigger bids attract big

intermediaries which sometimes with no clear skills on operational issues that will then

subcontract operations to engineering SMEs. Seemingly, the attraction of additional funds

for energy development will not automatically lead to more projects on the ground.

There is increasing pressure on the private sector to present financial models that combine

grants and finance. Paradoxically, there is poor access to credit lines and risk mitigation, as

off-grid RET is perceived as highly risky. It is technically difficult to create project portfolios

of small scale projects that help to increase the project budget in order to proportionally

reduce transaction costs, as in practice, each project will have to be individually evaluated.

IFIs have also started developing programmes that support commercial banks in the

evaluation of RET projects. However, these interventions often target large scale. IFIs

recognise that small-scale is not their priority and that their structure is not adapted to this

type of projects management.

7. Future ARE activities on mini-grids

a. Key topics: Upscaling and replication, Access to finance and Hybridisation

b. Technology-focussed Campaigns:

2nd Semester 2014: Power components and hybridisation

2nd Semester 2015: Mini-grids

c. Publications:

Review of hybrid mini-grid publication

Review of ARE members case studies

d. Projects:

Mini-grid policy toolkit (EUEI PDF & REN21)

Financing for mini-grids (UNEP)

e. Communications and events

September & October Newsletter

PV Hybrid and Mini-grids Conference in 2014 (OTTI)


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Scale-up and Replication of Off-Grid Energy Project: TERI’s

experiences in India

K Rahul Sharma, TERI

[email protected]

Introduction: India’s Energy Access Problem

Energy poverty defined as the lack of access to modern energy services such as

electricity and clean cooking facilities (IEA, 2013) is one of the most pressing social

issues today posing a global challenge. The problem is particularly severe in

developing Asian and African countries, which constitute around 96% of the

population without electricity access. Around 97% of the population in these regions

is dependent on traditional biomass fuels for cooking. In India, 67.2% of households

have an electricity connection as per the Census 2011 and the rest which translates to

approx. 81 million households (i.e. 400 million people) have no access to electricity.

Recognizing this problem, several players, including Governments, NGOs, private

developers and International Bilateral and Multilateral organizations have initiated

work on electrification of areas without access to electricity through different

projects and programmes, each with its own models for technology and finance.

Although some of these efforts have translated into scaled initiatives, many have

remained pilots, either because of the way in which the objectives were set at the

beginning of the initiative, or because of certain barriers to scaling up.

Scaling Up

Creating self- propelling, demand-driven, sustainable business models for energy

access is often fraught with challenges. After the successful operation of an energy

access project for a few years (Pilot and demonstration stage), most struggle to make

the transition to the next phase, i.e. moving beyond the pilot to cover a larger group

of end-users or replicating the success in different geographical regions, which is

often referred to as Scaling up and replication in the development parlance. Barring a

few, many such projects end up becoming “best practices” without the potential to

deliver impact at a larger scale. This is simply because most of the interventions are

not linear in which more output can be obtained by merely increasing inputs (eg.

‘more project funding leads to more people connected’). On the contrary, most

projects have a natural tendency to saturate at a certain level of impact, determined

primarily by the institutional capacity of a project, regardless of the input in terms of

project funding. It is therefore important to understand the nuances of scaling up for

energy access interventions- what can be scaled up, replicated and how.



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Scale up and replication are terms that are very often used in tandem with each

other. There is a significant body of literature and a number of definitions for

‘Scaling up’ and ‘replication’, put forth by different organizations and researchers.

The International Institute for Sustainable Development (IISD) refers to replication

or scale out as the ‘transfer to a different location of a tested concept, a pilot project, a

small enterprise, and so forth, in order to repeat success elsewhere’, while scale up is

viewed as ‘taking a tested concept, pilot project, initiative, enterprise and expanding

it, in terms of people served, revenues generated, or other targets’ (IISD, 2008). The

2004 Shanghai Conference on scaling up noted that “Scaling up means expanding,

adapting and sustaining successful policies, programs and projects in different

places and over time to reach a greater number of people” (Quoted in Hartmann and

Linn, 2008). According to the United Nations Development Programme (UNDP),

scaling up refers to the process of broadening the project to reach more beneficiaries

at the same geographic location; or ‘replicating’, a ‘horizontal’ project expansion to a

different geographic location. The paper by Rogers defines the dimensions of

scaling up in Energy access as –Going out, deep and across, where going out refers

to reaching people over wider areas, going deep refers to reaching increasingly

poorer people while going across refers to satisfying a greater range of energy needs.

Most of the literature on scaling up has focused on agriculture and rural

development (Rogers et al, 2006).

The crux which emerges here is that scaling up refers to the expansion of coverage of

an intervention in terms of end-users and replicating refers to taking the business

model to a different geography (state, country or region).

TERI’s Experience in Scaling Up and Replication

TERI initiated activities in the energy access domain at a scale with the launch of the

Lighting a Billion Lives (LaBL) Programme, initiated in 2008. Even before this, TERI

has been designing and implementing systems for off-grid areas using a wide

variety of technologies and by partnering with stakeholders from the Government

and NGOs.

Using TERI’s work as background, this presentation will explore the various

components of off-grid energy projects, such as technology, finance, institutions and

business models and highlight the components that have led to scaling up of certain

projects and in other cases, components that need to be scaled up individually first,

before leading to project scale up.

The three initiatives that will be looked at are the Lighting a Billion Lives (LaBL)

Programme, the Solar DC Micro grid Initiative and the Solar Multi Utility (SMUs)

initiative for promoting livelihood generating activities in rural areas.

For each of these programmes, the presentation will look at the four components

mentioned and examine which components have led to successful scale up and the


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reasons behind this. In some cases, this has been a direct result of the programme

design from inception and in other cases, scale has been reached as a result of factors

that played an important role at a later stage, especially with respect to finance.

The key questions we will be asking are:

• What was the objective of the project / programme?

• Who are the actors involved in scaling up and what should their roles be?

• Are these actors appropriately placed for scale up?

• Are there any missing actors? (Mid-level institutions)

• The importance of the right partnerships and contracts. How do we organize

this?

• Institutions might be of various types, but expected outputs need to be clearly

defined. What is required for this?

The presentation will conclude that with most programmes, there is no clear

distinction between scale up and replication. These characteristics of the programme

are dependent on the type of service being provided (simple lighting or productive

applications) and the kinds of institutions being established for operating the

projects. Replication is a sub-set of scaling up and it is of value in certain kinds of

projects to continue to replicate elements of the projects, especially when it concerns

specific design of interventions for productive use. However, for other components

of the project such as finance and the rules and contracts that institutions must

follow, standardization, leading to scale up is an essential step to taking the project

from the pilot to the programmatic stage.


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Annex 1: Workshop Agenda

Agenda

9 AM – Registration

9.30: Workshop Opening Speech by Prof. Andrew Collop, Pro-Vice Chancellor and Dean of

Faculty of Technology, De Montfort University

9.40: Key note address: The SE4ALL Initiative and UNIDO’s role in scaling up sustainable

energy

By Mr. Florian Peter Iwinjak, UNIDO, Brussels

Session 1: Macro-level perspectives on replication and scaling-up of off-

grid electrification

Chair: Prof. Subhes Bhattacharyya, DMU

10.15: Technical Options and Challenges facing Scaling-up and replication, Dr. Xavier

Vallve, Director, Trama Techno Ambiental, Barcelona, Spain

11.00-11.15 Tea/Coffee break

11.15 Mini-Grids for Off-Grid Energy Supply – Global Potential for Rural Electrification and

Islands, Mr. Philipp Blechinger, Reiner Lemoine Institute, Germany

12.00 Funding challenges and options for replication and scale-up, Mr. Tim Young, Practical

Action.

12.45 – 1.30 Lunch break and networking


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Session 2: Country perspectives and case studies

Chair: Prof. Subhes Bhattacharyya, DMU

1.45-2.30: Development of Solar Energy in Africa – Dr. Ben Mouk, Director, African Centre

for Technology Studies, Nairobi, Kenya

2.45-3.30 Mini-grid experiences in developing countries, with a focus on hybrid systems and

Africa – Mr. Luis-Carlos Miró Baz, Policy Officer, Alliance for Rural Electrification,

Brussels.

3.30-3.45 Tea/Coffee break

3.45-4.30 Bottom-up Energy Solutions in India: Experiences and Challenges in Scaling Up -

K Rahul Sharma, TERI

4.30 Closing remarks and vote of thanks


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Annex 2: Workshop participants Name Organisation Email

1 Prof. Andrew Collop

DMU, Pro-Vice

Chancellor and Dean of

Faculty of Technology [email protected]

2 Prof. Subhes Bhattacharyya IESD [email protected]

3 Dr. Najib Altawell IESD [email protected]

4 Dr. Peter Boait IESD [email protected]

5 Mr. Debajit Palit TERI [email protected]

6 K Rahul Sharma TERI [email protected]

7 Prof. Tariq Muneer

Edinburgh Napier

University [email protected]

8 Mr. Florian Peter Iwinjak UNIDO, Brussels [email protected]

9 Dr. Xavier Vallve TTA Barcelona, Spain [email protected]

10 Mr. Philipp Blechinger

Rene Lemoine Institute,

Germany [email protected]

11 Mr Tim Young Practical Action [email protected]

12 Luis-Carlos Miro Baz ARE, Brussels [email protected]

13 Dr. Ben Muok ACTS, Nairobi [email protected]

14 Dr. Andrew Wright IESD [email protected]

15 Dr. John Holmes

EASAC Energy

Programme, Germany [email protected]

16 Mr. Abhishek Jain

Cambride University

(MSc Student)

[email protected]

17 Dr. Rick Greenough IESD [email protected]

18 Mr. Majbaul Alam IESD PhD student [email protected]

19 Molly Hurley Depret [email protected]

20 Paolo Matelloni

University of

Nottingham [email protected]

21 Jeff Hebden NSN [email protected]

22 Yueh-Hsiao Lin Nottingham University [email protected]

23 Dr. John Ebohon

School of Architecture,

DMU [email protected]

24 Dr. Leticia Ozawa-Meida IESD [email protected]

25 Dr. Michael Coleman IESD [email protected]

26 Dr. Hobina Rajakaruna Mechanical Engg, DMU [email protected]

27 Dr. Debadayita Raha Nottingham University [email protected]

28 Mr. Collen Zalengera

Loughborrough

University [email protected]

29 Mr. Zbigniew Chmiel

Green Energy Student,

DMU [email protected]

30 Prof. Mark Lemon IESD [email protected]

31 John Hibbs [email protected]

32 Manish Teli [email protected]


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Acknowledgement

The activities reported in this report are funded by an EPSRC/ DfID research grant (EP/G063826/2)

from the RCUK Energy Programme. The Energy Programme is a RCUK cross-council initiative led by

EPSRC and contributed to by ESRC, NERC, BBSRC and STFC.

Disclaimer

The views expressed in this report are those of the authors and do not necessarily represent the

views of the institutions they are affiliated to or the funding agencies.


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OASYS South Asia project

The Off-grid Access Systems for South Asia (or OASYS South Asia) is a research project

funded by the Engineering and Physical Sciences Research Council of UK and the

Department for International Development, UK. This research is investigating off-grid

electrification in South Asia from a multi-dimensional perspective, considering techno-

economic, governance, socio-political and environmental dimensions. A consortium of

universities and research institutes led by De Montfort University (originally by University of

Dundee until end of August 2012) is carrying out this research. The partner teams include

Edinburgh Napier University, University of Manchester, the Energy and Resources Institute

(TERI) and TERI University (India).

The project has carried out a detailed review of status of off-grid electrification in the region

and around the world. It has also considered the financial challenges, participatory models

and governance issues. Based on these, an edited book titled “Rural Electrification through

Decentralised Off-grid Systems in Developing Countries” was published in 2013 (Springer-

Verlag, UK). As opposed to individual systems for off-grid electrification, such as solar home

systems, the research under this project is focusing on enabling income generating activities

through electrification and accordingly, investing decentralised mini-grids as a solution.

Various local level solutions for the region have been looked into, including husk-based

power, micro-hydro, solar PV-based mini-grids and hybrid systems. The project is also

carrying out demonstration projects using alternative business models (community-based,

private led and local government led) and technologies to develop a better understanding of

the challenges. It is also looking at replication and scale-up challenges and options and will

provide policy recommendations based on the research.

More details about the project and its outputs can be obtained from

www.oasyssouthasia.dmu.ac.uk or by contacting the principal investigator Prof. Subhes

Bhattacharyya ([email protected]).

OASYS South Asia Project

Institute of Energy and Sustainable Development,


The Gateway, Leicester LE1 9BH, UK

Tel: 44(0) 116 257 7975

http://www.oasyssouthasia.dmu.ac.uk/


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