This session is devoted to the design of schemes for the large-scale dissemination of renewable energy technologies in developing countries. Market-based mechanisms overcome partly the limits of donor aid-projects. They build on public-private partnerships where a network of local entrepreneurs contributes to the maintenance of systems.
The example of solar home systems will be explained. Even if there are in many instances in parity with fossil fuels, small photovoltaic systems remain unaffordable for the majority of rural inhabitants without proper financial support mechanisms. But in the most active countries, the number of systems disseminated is now in the range of several ten thousands to several hundred thousands systems, thanks to the implementation of rural energy services companies.
Recent technological innovation could contribute to the acceleration of the diffusion of solar photovoltaic. The innovation introduced by the massive diffusion of mobile phones in developing countries tends simultaneously to create new markets for small photovoltaic systems and could improve the conditions for the diffusion of these systems by facilitating the daily management of these systems by rural energy services companies. Furthermore, Light Emitting Diodes (LED) technology opens new perspectives of self-sustained market diffusion.
The implementation of small rural energy services companies can also help to disseminate a wider range of products: LPG, cookstoves, biodigesters... New practices from rural energy providers tend to target more precisely the demand of end-users by combining the offer of photovoltaic systems with a variety of technologies to satisfy other energy needs than basic lighting in rural areas.
Concrete case studies from the dissemination of different renewable energy technologies in developing countries will be presented, notably in Zambia, South Africa, Bangladesh, China...
It will conclude with the institutional and regulatory framework that needs to be implemented to help rural energy services companies to thrive even in the most remote areas of developing countries.
Off-Grid Rural Electrification with Renewable Energies
1. (Off-Grid) Rural Electrification
with Renewable Energies in Developing Countries
Leonardo Webinar 1st December 2011
Dr Xavier LEMAIRE, Research Associate
Sustainable Energy Regulation Network - REEEP
University College London – Energy Institute
2. Summary
1. Status of rural electrification in developing
countries
2. Various RE technologies for rural
electrification
3. Emerging forms of rural decentralised
electrification
4. Main features of an off-grid framework
3. Part 1. Current status
1. Status of rural electrification in developing
countries
2. RE technologies for rural electrification
3. Emerging forms of rural decentralised
electrification
4. Main features of an off-grid framework
4. High disparity of non-electrification rate (2008)
Source: UNDP/WHO, 2009
5. Large part of the world in the dark
“The amount of electricity consumed in one day in all sub-Saharan
Africa, minus South Africa, is about equal to that consumed in New
York City” (Fatih Birol, IEA's chief economist)
6. Number of people without electricity will remain high…
Source: IEA/OCDE,2009
7. Why rural electrification is lagging in some part of the
world?
(1) Historical reasons
Ex-colonies – colonizer not interested in rural electrification
(2) Demographic impact
(3) Lack of financial resources
(4) Lack of “political commitment”
Rural inhabitants far from decision-makers!
Bias in favour of limited extension of the grid
Priority to urban areas
Remote areas with low density: too costly/uncertain benefits
8. Vicious circle linked to financial situation of utilities
4. Priority 5. Lack of investment
power generation in urban areas in network and rural areas
Consumption subsidised Poor maintenance
1. Poor quality of service/pricing
3. Lack of financial return for electric companies Lack of control
Increase of consumption = increase of financial gap
2. Unauthorised
Connection
/
Low energy tariff
=
Non efficient energy appliances
9. Self-perpetuating logic
Utilities tend “naturally” to focus on electrification of areas with high
density/high income where they can sale electricity produced with
conventional energy sources
Utilities tend to ignore areas difficult to reach, where income can be very low
and electricity has to be produced by decentralised systems
High operating costs / logistic difficulties
Systems with RET out of their field of knowledge
(Poor) regulation/ (weak) institutions and policies for centralised system
ignore small decentralised generation anyway
Rural inhabitants “in the dark”
OR unregulated electrification of remote areas by small private investors
Privatisation/unbundling/transparency/tariff
de-politicisation of the electricity sector?
BUT economic barrier remains = rural electrification costly – private investors?
10. Rural electrification?
Necessity:
of a rural electrification policy !
of a central institution to promote this policy & channel
funding
of an (adapted) regulatory framework
No fatalism
Some countries have made spectacular progress in few
decades
Mexico, Thailand, Bangladesh, Tunisia, China, South
Africa,…
11. Part 2. RE technologies in rural areas
1. Status of rural electrification in developing
countries
2. RE technologies for rural electrification
3. Emerging forms of rural decentralised
electrification & case studies
4. Main features of an off-grid framework
12. Hydro Power
The technically feasible potential of hydro-electricity developing
part of the world:
less than 7% in Africa exploited
Around 22% in Asia exploited
and 33% in Latin America exploited
(World Atlas of Hydropower and Dams, 2002).
Furthermore, funding for hydro-electricity goes mainly, if not
exclusively, for large hydro-electricity.
Class Station Capacity
Micro Hydro Up to 100 KW
Mini Hydro From 100 KW to 2 MW
Small Hydro From 2 MW to 25 MW
15. Wind power
Large generators (0.750 MW to 5 MW)
Big players – emerging countries
India: 14,5 GW installed in March 2011
China: 40+ GW installed end 2010
“Small” players in emerging/developing world
Turkey, Brazil, Mexico, Egypt, Morocco, South Africa,
Small generators (0.5 kW to 300 KW)
Electricity with hybrid system (wind + hydro, wind + diesel)
Or wind pump for water
18. Small wind generator in developing countries
200kW in Sri Lanka Wind pump in Guatemala
19. Biogas generation
Produces gas
Cooking/Heating
China, India, Nepal,…
+ Generator = Electricity 0.4 kW to 700 KW
Help to remove waste
Reduce Green House Gas emissions
23. Solar generation
The Watt Power output of a Solar module is the number of Watts
Output when it is illuminated under standard conditions of 1000
Watts/meter2 intensity, 25°C ambient temperature and a spectrum
that relates to sunlight that has passed through the atmosphere (AM
or Air Mass 1.5).
A 1 kWp system will produce 1 kW under ideal conditions
Typical Solar Home System
in Europe – 1 kW peak to several kW peak for households
With 2kWp = 50% of electricity of an household in the UK (10+ K£)
In a developing country :
10 Watt peak to 150 Watt peak – light / TV
Around 200 W peak – solar fridge
Water pump one to several kW peak
24. PVGIS copyright European Commission 2001-2008 and HelioClim-1
copyright Mines ParisTech / Armines 2001-2008. Source:
/
http://www.soda-is.com/eng/map
26. Particular interest of solar
Reduction of the cost / Wp of more than 80% since early 1980s of the solar
panels from the manufacturers to 2004, stable for few years then since
2008 another 60%.
Current long-term growth rate of the photovoltaic market + 40%/year
BUT photovoltaic panels only part of the cost (40/50%)
against batteries (20%)
and installation costs (40%)
Cost decreasing but still quite high initial investment (350-1000 US$ for a 50
Wp system) if it has to be borne by end-users.
Solar interesting in remote areas/scattered houses for low loads compared
to:
Candles, paraffin - quality of light with PV is superior
Diesel generators - mechanical parts and cost of fuel
Connection to the grid - high costs of substation
27. How rural areas could benefit from new technologies?
Paradox of solar energy: in rural areas of developing countries
where it could be useful – solar remains expensive
Source: REN 21
28. Part 3. Emerging forms of decentralised
electrification
1. Status of rural electrification in developing
countries
2. RE technologies for rural electrification
3. Emerging forms of rural decentralised
electrification
4. Main features of an off-grid framework
29. Main barriers for rural electrification with RET?
Diffusion of a new but now mature technology
Technology-driven not sufficient Needs a context
Institutions and people
Financing scheme
Companies
End-users
Training / Knowledge scheme
Companies / Utilities / Decision-makers
End-users
Financial institutions
Sustainable market
Market-driven Stable & adapted regulatory framework
30. Toward a new generation of RET projects?
1) First generation of projects funded by aid
transfer of technology passivity of receptors
Renewable systems were given
Not maintained by local beneficiaries of aid
2) New generation of projects
Energy just a technical problem?
Social needs (not just kWh!)
To provide a service (not just to sell & install a product)
Maintenance of systems even if the cost is low has to be borne by the
end-users
Clients selected according to their purchasing power
Selection of local entrepreneurs
Market-driven (and not just donor or technology-driven)
Far larger scale than previous projects
Economies of scale and density
31. How to design a rural electrification scheme…
New actors for public-private partnership,
private entrepreneurs, NGOs, cooperatives,…
Overcome barriers of up-front costs
Rural electrification subsidies
Access to diversified sources of funding
Innovative financial scheme
Reduce costs of installation & maintenance
Local manufacturing
Clear definition of who is responsible of systems and monitoring
Find good combination conventional & new technologies
Integrated energy services and not just promotion of one technology
Long-term commitment of public authorities
Stable regulatory framework
33. Part 4. Main features of an off-grid framework
1. Status of rural electrification in developing
countries
2. RE technologies for rural electrification
3. Emerging forms of rural decentralised
electrification
4. Main features of an off-grid framework
34. A robust institutional framework
FUNCTIONS Regulation by the national electricity
regulator with a specialised
Defines rules for Function of department
competition: tariff for RE; OR
(integrated planning);
independent
Regulation by the government entity
standards regulator that provides installation subsidies
Operational measures
(energy surveys) and
funding/bundling (loans,
Rural electrification
grants) notably CDM
Control agency / fund
standards
Install, collect fees AND
guarantee functioning of and tariffs Control standards and
sustainable energy tariffs
systems
complaints
Variety of approach possible
for institutional design. But all
ESCOs ESCOs ESCOs
functions needs to be
covered and clear definition Same entity (or linked entities)
of who is responsible of what responsible for installation AND
Delegation / sub-contracting maintenance of a system
x x x x xxx x x xx x x x x xx xxx xx x xxx x xx end-users
35. Clear repartition of roles
Functions/roles to be fulfilled
<> creation of new departments not always needed.
Reduction of costs for end-users and funding agencies
Off-grid regulation
Regulation can be sub-contracted to rural electrification agency
(expertise)
Rural electrification plan and strategy
Organisations capable of evaluating local needs
Sub-contracted to NGOs/close supervision of rural electrification
agency
Evaluation & feed-back
Need to monitor and evaluate the scheme ex-post
Delegated/subcontracted to consultants
End-users can nominate a delegate
36. Appropriate regulation for off-grid
Light-handed approach
Protection of consumer
Adapted standards
Importance of correct tariff setting
37. Light-handed regulation?
Regulation often adapted first and foremost to
conventional utilities
Avoid over-regulation:
Regulation of small utilities <> large utilities
Licensing procedures & control shall be adapted to small
operators
Over-regulation = no regulation (illegality)
Protect small operators against encroachment
/expansion of grid by large utilities or give them
financial compensation
38. Case of Bolivia: Recognition of the impossibility of
implementing conventional regulation*
Before 2000, all operators of isolated village mini-grids above 300kW installed generating capacity
were required to acquire concessions
BUT
Concessions could only be granted to entities that were shareholder companies /
2/3 of mini-grids operated by cooperatives
The reporting requirement and technical standards were too costly to satisfy by small
cooperatives
Better to have light regulation than to have multiple unlicensed operators (safety,…)
Partial intermediate solution
Raise the threshold of regulation to 500 kW peak demand
Allow cooperatives to maintain their legal status for an initial period of 7 years
Discussion to lower reporting and technical requirements for all mini-grids with less than 2,000 users.
Proposed final regulation
Systems above 1 MW
Regulated as before
Systems between 300kW and 1 MW
Fewer reporting requirement and less stringent service standards
Systems under 300 kW
No obligation for operators except to register themselves and provide a yearly update of basic information
* Working paper from ESMAP/World Bank, 2006.
39. Role of regulator – protection of consumer
Communication / public awareness
Control of level of expectations of end-users
What RE can do and cannot do
Energy efficiency measures
RE implies energy efficiency
Complaints of end-users
In rural areas, end-users are isolated
Channel of information?
Rural companies can abuse their power
Revoke license?
40. Role of regulators - standards
Standards have a cost
High standards = high costs
Compromise - what is really needed
Regulators can refer to already existing standards for materials in other countries:
photovoltaic
solar heater installations
Regulation of the market has a tremendous impact for limited cost
Avoid sub-standards products or installation
Guarantee consumer satisfaction
Important to monitor / regulate effectively the market
Periodic control
Staff specialised on rural electrification
Specialised department of the regulatory body
Or can be left to the rural electrification agency
Or subcontracted (regulation by contract)
Awareness and training are fundamental part
Regulators, technicians, end-users
Get local institutions involved (universities, NGOs,…)
41. Role of regulator: tariff setting
Kind of tariff
Flat tariff for individual systems
Metering systems when connected to collective central system
Offer: importance of cost recovery for sustainability of business
Operating costs of utilities
Needs to be covered ! public subsidies for investment costs only !
Importance of creation of provision/batteries fund for solar
Part of capital costs?
If tariff covers part of capital cost, utilities can expand to new customers
If not, continuous public subsidies are needed for expansion
Subsidies = the ones given for grid-connection
Demand: tariff that can be afforded by end-users
Survey of structure of incomes
% of the inhabitants of an area to be reached
Procedure for annual revision
High inflation rate in some countries
Rate of exchange / US dollar (imported components)
Capacity of payment of end-users
42. Central role of rural electrification agency
Integrated planning
Energy surveys
Socio-economic comparisons
(Regulation)
Tariff
Standards and codes of practices
Funding
Interlocutor of international agencies
Bundling small scale projects (Clean Development Mechanisms)
Monitoring and evaluation
Rural agencies
Central interlocutor of local utilities (and end-users)
Importance of permanent trained and dedicated staff
Importance of financial resources – own budget
Operating autonomy with rural electrification as primary objective
43. Appropriate planning & design system
Design local generation and distribution system
Comparisons
Cost RE technology
Cost hybrid system
Cost connection to the grid
Least cost planning (not just energy supply)
Energy efficiency and demand-side management
Lifetime of the project: 20/30 years
Rising operating costs and risk linked to conventional energies
Increase of the demand
Demography
Future extension of the grid?
What is planned by the utility
44. Technology neutral:
combination of various technologies
Technology neutral with an “optimal” combination of:
Centralised systems – grid / Decentralised / mini-grid systems / Individual systems
Market open to new entrants with new technologies Not just one source of energy, but a combination of
energies
* Electricity
When available: small hydro / wind / biomass / geothermal
Otherwise solar photovoltaic
Intensity of solar radiation (5-6 kWh/m2)
Low density of population in some areas
Flexibility of the investment
+ diesel generation as a complement (for productive use) and not necessarily main source:
High operational costs / difficulty of supply of fuel and repair mechanical parts in remote areas
Rising costs of energy & risk
* Heat / cooking
LPG, biomass, SWH, solar cooking,…
Individual needs / productive use – precise evaluation of energy needs
fees and income generated locally, spatial location of energy needs
SHS ideal for basic needs: light, radio, TV, mobile phone
Solar for use with low loads: solar pump, schools, health centres…
Other energies / small grid for productive use
45. Combination of mini-grid & individual systems
Minimum costs
= mini grid for
78 HH and
individual solar
home systems
for 22 HH
Source: WordPower, 2000
46. Long term comparison of total costs (case PV)
High
investment
costs
High operating costs
Low investment $
costs = genset
Low operating costs
$
batteries
Long-term integrated comparisons
Life cycle costing
N+20 or even N+30 N+20 or even N+30
Diesel systems Solar Home Systems
47. Implement institutions to solve the questions of high
investment costs in rural areas and long-term maintenance
1. Support mechanisms to reduce
$
up-front costs / creation of rural
funding agencies (subsidies,
integrated planning) Reduction of up front
2. Creation of organisations to costs of RET
spread the up-front costs and
maintain systems
Spread RET up front
- “Banks”: Micro-credit / revolving costs
credit / loan
- Utilities: Fee for service / ESCOs,…
N+20
48. Rural energy service companies
Deliver an energy service
Electricity (SHS or hybrid)
Heat/cooking (LPG – Liquefied Petroleum Gas, biogas)
May diversify to other services / products
Water? Solar water heaters
But then increase complexity of management
Existing structure or new enterprises?
Add activities to consolidate electrification business
Synergies: LPG, Solar water heaters,…
Specialisation on core activities
Long-term financial sustainability
Branch of a major company
Independent enterprise
49. Elements of conclusion
New institutions / new way of thinking
Market-driven (and not just donor-driven)
Training is crucial (at every level)
Focusing on sustainability in the long term of delivery of energy services (and not just kWh)
Appropriate level of financing of the operators
Maintenance of the energy systems
Long-term homogenous & stable regulatory framework
… with regulation adapted to new actors
Adapted to small companies = introduce new actors
Limit the power market of existing utilities
Rural electrification depoliticised (independence and transparency)
… framed by a real energy strategy/policy
Long-term commitment of the government
Energy + industrial policy + local development
Nurse a market = create jobs locally and nationally + local expertise
50. References to go further
Electrification and Regulation: Principles and a Model Law Discussion
Paper No. 18 by Kilian Reiche, Bernard Tenenbaum, and Clemencia Torres
de Mästle. World Bank, Energy and Mining Sector Board, July 2006. World
Bank
http://siteresources.worldbank.org/INTENERGY/Resources/EnergyPaper18.
pdf
Comparative Study on Rural Electrification Policies in Emerging countries,
Keys to Successful Policies, by Alexandra Niez, OECD, 2010.
Rural Electrification in the Developing World: A Summary of Lessons from
Successful Programs, by Douglas Barnes and Gerard Foley, Esmap –
World Bank, 2004.
Douglas B. (Ed.), 2007. The Challenge of Rural Electrification – Strategies
for Developing Countries, Resources for the Future – ESMAP.
51. Contact
University College London -Energy Institute. Central House - 14
Upper Woburn Place London WC1H 0NN United Kingdom
Xavier.Lemaire@reeep.org
REEEP - Sustainable Energy Regulation Network
http://www.reeep.org/830/sern.htm