Tuesday, October 21, 2014

"Luz en Casa" (Light at home) programme: Innovative business model for energy access through solar energy

In Latin America around 34.5 million people are excluded from the electricity service. The majority of them are living in poor, rural and isolated communities, such as the indigenous populations. They are not only excluded from access to the electric service, but also from future plans of grid extension, because of their low energy needs, the dispersion and difficult access of their dwellings, etc.

Within this framework, the Luz en Casa (Light at Home) Programme was started in Peru to demonstrate that rural electrification through renewable energy is technically feasible, economically sustainable, and affordable to users. Nowadays, another programme called Luz en Casa Oaxaca has been started in Mexico, driven by an innovative development partnership which actively involves authorities and the private initiative.


Luz en Casa operates in isolated and scattered communities of the Northern Mountains of Cajamarca, on the Andes. This programme demonstrates the success of rural electrification by means of photovoltaic technology. It uses a delivery model based on the installation and operation of Solar Home Systems (SHS), with a project management that involves the beneficiaries and the collection of a service- fee. This model has been implemented since 2009 by the non-profit company ACCIONA Microenergia Peru (AMP) (1)

AMP is a regulated electricity provider that supplies basic electricity services to low-income people, within a regulatory framework that allows affordability for those users. In Peru there is a solidarity fund that finances access to electricity for people of little or no income. Therefore this fund allows Luz en Casa ’s beneficiaries to pay only a monthly fee of S/.10 (around 3.5 US$) for operation and maintenance services, as well as AMP to access to the revenues, around S/.30 (or 10.5 US$) by each user, making it economically sustainable, being their current operational cost of 3,000 SHS.

Providing electricity to these communities prevents health hazards that arise from the use of candles and kerosene, such as lung and eye disorders, and safety risks like fires- It also favours the extension of the working day for educational or productive purposes. Those SHS give four hours of efficient lighting and access to electronic devices, such as TV or radio. Their purchase and installation had been financed through ACCIONA Corporation’s donations (1,300 systems in 2010 and 2012), and a BID-FOMIN’s long-term credit (1,700 systems in 2013).

However, beneficiary engagement is the cornerstone of the development of the Luz en Casa Programme. It is the user who makes the decision to participate in the programme, paying for the offered service and being trained to use and maintain the SHS appropriately. Beneficiaries also participate as members in the Photovoltaic Electrification Committees, the community body in charge of communicating with AMP, collecting fees, and maintaining preventively the SHS.

Furthermore, beneficiaries’ engagement has made possible the start of new related projects, such as electrification of community centres (schools, churches…), at the communities’ request in the localities where the programme operates, or training beneficiary people to become local technicians in installation and maintenance of PV systems. In short, capacity building has been developed in the communities involved.


The Luz en Casa Oaxaca Programme started in 2012 in order to give access to electricity basic services to 9,500 households of Oaxaca. Oaxaca is one of the Mexican States with a severe lack of access to basic services, having more than 800 communities with less than 100 inhabitants without access to electricity and without plans to be electrified.

The Huatulco Biosphere Reserve and some World Heritage properties, such as the Historic Centre of Oaxaca and Archaeological Site of Monte Alban, and the Prehistoric Caves of Yagul and Mitla in the Central Valley of Oaxaca, are in the Mexican scope of action of this programme.

The delivery model of Luz en Casa Oaxaca is different from the first Luz en Casa programme. In this case the programme is driven by a Development Public-Private Partnership (DPPP), an innovative collaboration involving the Government of the State of Oaxaca, the Spanish Agency forInternational Development Cooperation (AECID) and ACCIONA Microenergia Mexico(AMM) (1), which also implements the programme on-site.

Furthermore, the PV systems supplied by AMM are Small Solar Home Systems (SSHS), more technologically advanced and more environmentally friendly than SHS, and with similar performances. SSHS are bought by the beneficiaries at an affordable cost thanks to a 50% DPPP subsidy and 40% through micro-credits from financing institutions. This electricity service is expected to benefit 25,000 people in Oaxaca by 2016.

Lessons learned and replicability

Luz en Casa has reached 3,000 poor households in isolated and scattered communities in mountain areas, giving them access to lighting through clean energy. The programme has therefore achieved its original objective to demonstrate the feasibility, sustainability, and affordability of rural electrification with the use of photovoltaic energy.

Replicability of this project has already been shown. The development of Luz en Casa has been divided into different phases, which replicate and extend the previous ones, within the Cajamarca region: 10 systems were put into operation in 2009, 600 in 2010, 700 in 2012, and 1,700 in 2013.

Luz en Casa Oaxaca, on the other hand, is starting the development of a new delivery model which involves a new technological model, a new economic model, and a new management model. This programme is expected to show as well the feasibility of rural electrification with renewable energy.

In conclusion, involvement of all stakeholders is essential for the success of this kind of initiatives. The support of authorities and private companies, as well as the engagement of the involved communities, is fundamental to achieve the objectives.

(1) Both AMP and AMM are social micro-enterprises created by Fundación ACCIONA Microenergía (http://www.accioname.org/)

The Distributed Generation Funding Facility

CrossBoundary (1) has recently formed the Distributed Generation Funding Facility, an independent investment platform to invest into medium scale renewable distributed generation in East Africa.

Many businesses in Africa generate a significant portion of their own electricity through inside-the-fence diesel generation. Due to the cost of diesel, it would be economically and environmentally optimal for these businesses to switch to renewable generation through solar and other alternatives. However, businesses are ill equipped to take the financial and technical risk to finance a conversion to renewable inside-the-fence generation. At the same time, capital lacks a standardized platform to access these profitable but relatively small transactions.

To address this finance gap, CrossBoundary has created the Distributed Generation Funding Facility, a platform to aggregate finance for medium scale renewable self-generation. The Facility will finance renewable generation projects (.5MW-5MW) that serve commercial customers in Africa such as off-grid light manufacturing, cell towers, farms, remote hospitals, eco-lodges and beverage bottlers. The goal is to enable the delivery of energy-as-service and assist to unlock the latent opportunity for renewable own-generation in Africa.

(1) CrossBoundary LLC provides investment and economic development services in frontier markets and conflict zones. Their clients include governments, development finance institutions, private equity firms, Fortune 100 companies, and research institutions. 

Monday, October 20, 2014

Mini-grids versus other Rural Electrification strategies

EUEI PDF (1), REN21 (2) and ARE (3) have recently launched the Mini-grid Policy Toolkit (4) This guide aims to help policy makers on going over the rural electrification project design process and covers in detail the following aspects:

  • Mini-grid operator models;
  • The economics of mini-grids;
  • Policy and regulation
Although the document provides many interesting topics to discuss about, I wanted to start bringing today one topic that has been widely discussed in this blog: what criteria should lead us to the most suitable solution for each rural electrification project? I have tried to give an answer to that question in previous posts (see references 5 to 8 at the bottom), but I have found some interesting information in the Mini-grid Toolkit that should help us to have a better picture.

As explained in the Toolkit (check also reference 5 below), there are three main alternatives for providing electricity access in rural areas: national grid extension, micro/mini-grids and stand-alone systems. Before going further, let me clarify a few points:
  • Micro-grids are equivalent to mini-grids but its generation capacity is below 100kW (according to IEC62257
  • Mini-grids would cover the range from 100 kW to 10 MW.
  • For the purpose of this article, the definition of stand-alone system includes: small diesel generators, solar/wind home systems and Pico-PV systems. 

In general terms, grid extensión is recommended only where it is the most cost-effective solution; mini-grids should be implemented at village scale where the cost of grid extension is not affordable; and stand-alone systems are suitable for remote areas with very low demand potential and scattered loads.

On the other hand, according to IEA’s Energy for All (2011) report (4)(6), only 30% of the world’s rural populations currently without access to electricity are best served by extending the main grid. The remaining 70% are better served either through mini-grids (in total 52.5%) or stand-alone systems (remaining 17.5%) These figures demonstrate the huge need for investment in rural electrification in general, and the predominant role expected from mini-grids.

In terms of choosing the Least Cost Option (7), and in order to provide additional information (8) about the estimate retail cost for each one of the RE estrategies, some figures are shown below (4):
  • Grid-based retail electricity tariffs in African countries range from less than 0.04 EUR/kWh (subsidised tariffs) to over 0.23 EUR/kWh (non-subsidised tariffs) (IMF, 2008)
  • The prices for SHS vary widely - between 1.21 EUR/kWh and 1.52 EUR/kWh (on LCOE basis)
  • Typical mini-grid retail tariffs in Africa may encompass a wide range from 0.10 EUR/kWh to 1.20 EUR/kWh, depending on the technology, the operator model, the regulatory framework and financial mechanisms.

For a better illustration of the above, the next graph (4)(9) describes the "Mini-grid Space" from a qualitative point of view. This qualitative approach aims to explain how the cost of the three RE strategies mentioned above is influenced to different degrees by various conditions, as explained in the Toolkit: the size of the community, the density of the population, the distance to the existing national grid, the topography and general socio-economic factors such as energy demand and economic growth potential. In this context, such “Mini-grid Space” is found where mini-grids have the lowest cost (unsubsidised electricity retail cost on site in EUR/kWh) compared to grid extension and stand-alone systems.

Additional resources and sources:
(5) Further information on the different strategies, with a special focus on Micro-grids, can be found in the presentation I prepared for the RE Learning Conference held in Nepal in December 2012 (Available in my Linkedin profile: Smart Energy Access: The Role of Micro-grids)
(6) Micro-grids and Sustainable Energy Markets
(7) Choosing the least-cost option
(8) Some additional background about the cost of different technologies and potential of mini-grids is available in this other post: Mini-grids, feed-in-tariff and grid parity.
(9) Source: Inensus (http://www.inensus.de/)

Saturday, October 18, 2014

Enlightening the Future of Rural Communities: Smart Hydro Power in Perú

Rural Electrification is all about the creation of opportunities: jobs, education and business, among others. In order to provide rural communities with such opportunities, a continuous power supply is necessary. Having this in mind, Smart Hydro Power (1) has developed a pilot project for the installation of a renewable energy based hybrid power plant in the Peruvian village of "Marisol".

Through their motivation and hard work, the people of “Marisol” are developing a business model based on their cocoa plantation that could provide a future for coming generations of the community. However, without access to reliable and cost-effective power supply, their opportunities are very limited. In this context, the aim of this implementation is to show the effectiveness of hybrid system energy solutions and to empower communities such as Marisol so they can develop a sustainable business model, allowing them to be productive and economically autonomous. This will serve as a reference for spreading this solution to other rural communities. 

In order to bring this renewable energy system to the village and to enable this villagers to improve their life-quality, Smart Hydro Power launched anIndiegogo campaign (2), with the goal to collect 35'000,00€.  

The project shall consist of a combined photovoltaic and a river turbine (3) for primary generation, an electrical cabinet for power management and distribution, and a backup generator. These three sources will complement each other, ensuring reliable electricity generation year-round. Once installed, the system will provide the villagers with clean and constant energy, enabling them to work longer hours in the workshop and increase their cacao production in the rainy seasons.

A breakdown of costs for this pilot project is detailed below:

Breaking it down in more detail:
Photovoltaic system incl. batteries
 5,150 €
SMART Turbine incl. electrical-System
 10,500 €
Back up diesel generator
 2,850 €
Transport of equipment
 6,500 €
Electrical installation
 4,500 €
Turbine and solar panels installation
 3,000 €
Travel expenses of the engineers to Peru
 2,500 €
 35,000 €

(1) Smart Hydro Power is a start-up located in Germany acting worldwide. Their goal is to achieve sustainable development, empowering people so that they can define their own choices and shape their own lives.

(2) Enlightening the Future of Rural Communities is a registered member of the Energy Access Practitioner Network, supported by the United Nations Foundation. The Network serves as a platform for all energy access organizations that contribute to the United Nations's 2030 goal of sustainable energy for all."

(3) The Smart Hydro Power turbine has been developed to produce a maximum amount of electrical power with the kinetic energy of flowing waters. Because it is powered by kinetic energy and not with potential energy it is known as a so called “zero-head” or “in-stream” turbine. As such, no dams and/or head differential are necessary for the operation of this device; the course of a river remains in its natural state and no high investments in infrastructure are required. Because the amount of kinetic energy (velocity) varies from river to river, the capacity of the turbine ranges from a minimum of a few watts to a maximum of 5000 watts.

Monday, October 6, 2014

Unleashing the Commercial Potential of Mini Grids in Africa

The Africa Mini-Grids Summit will be held next November in Nairobi (Kenya) with the support of: Alliance for Rural Electrification (ARE), African Sustainable Energy Association (AFSEA), ECREEE, Tanzania Renewable Energy Association (TAREA) and ANSOLE.

Source: http://roelofventer.blogspot.jp
As previously mentioned in this blog, the IEA estimates that in order to achieve universal electricity access by 2030, mini grids will have to provide more than 40% of the new capacity needed, which translates to a market potential for mini-grids of about US$4 billion per year. The pressing need for off-grid electrification along with the rising costs of using expensive, polluting fossil fuel solutions such as diesel generators, calls for successful ground level implementation of RET and hybrid mini grids in the region, as it can be observed in the chart below (source: the organization)

Kenya - Rural Electrification Master Plan identified 33 new sites to be established as mini grids with Bill in parliament to open way for private distributors in mini grids. Currently 15 mini grids operated by KPLC with 1 connected to the grid and 10 more currently being developed. 7 have been made hybrid with 2 plants utilising wind and another 6 using solar. There are also private mini grids operated by rural communities.
Tanzania - REA have 90+ projects in the pipeline and the country has the most advanced policy and regulatory framework for small power projects supplying both the main grid and off grid mini grids in the SADC region. 5 small IPPs (2-5 MW) connected to the main grid. TANESCO running 21 diesel based off grid stations supplying isolated mini-grids with capacities ranging from 400KW to 12 MW. 13 sites proposed for hydro mini grids.
Malawi - 2 diesel mini-grids by ESCOM and a few hydro-based mini grids run by private developers or communities. 6 hybrid solar/wind mini-grids (20-24 kW) operated by communities
Rwanda - MININFRA is planning to privatise all publicly funded micro-hydropower plants. 3 private micro-hydro plants are operational (1 mW combined) with 6 more projects currently being planned. Rwanda will be privatizing 20+ public micro hydroplants. Feed in tariffs, partial regulatory framework and basic financial instruments are in place.
Mozambique - 69 diesel mini grids implemented by FUNAE but managed by local management communities. Many stopped operating due to lack of funds for maintenance. Hydro most promising renewable source with 53 identified SHP potential sites with 15 SHP projects under construction or planned by the government. GIZ has implemented 7 micro hydro plants. 3 solar hybrid mini grids by FUNAE(Korean loan) with few smaller solar mini grids by donors and NGOs without FUNAE involvement. One 300 kW wind turbine installed but not connected to grid as there is no tariff.
Uganda - 3 diesel based mini grid, 2 micro-hydro mini grid and 1 hybrid mini grids run by the Government. MHP feasibility studies started in 2013 under ORIO financing with objectives to construct 10 mini hydro power stations
Democratic Republic of the Congo - Highest hydro potential in Africa. 42 diesel based power plants where 27 are isolated supplying mini grids (39MW) run by both public entities and private IPPs and 4 hydro-based mini grids. Planned electrification projects include 347 centres over 20 years, 3 years action plan to have 11 micro-hydro schemes.
Nigeria - Mini grids in isolated sites and IPP for grid injection operated by oil companies in the South have shown sustainability .Longest most successful project is the hydro mini grid operated by NESCO in Jos region .A green mini grid project using biomass and mini hydro has been identified with UNIDO/GEF.
Mali - Tariffs of EDM national grid are uniform but tariffs of mini-grids by private operators can be adapted to recover operation cost. Most private run mini grids are fuel based and thus have increasing operating costs. EDF has programs implementing mini grids for villages.
Zambia - Planning 3 mini-grid projects after implementing mini grid projects using both hydro and solar.
Senegal - One of the most active countries to implement hybrid technology with 9 hybrid power plants in remote areas with collaboration from Isofoton from Spain. A GIZ and DGIS program has implemented 16 hybrid power plants (5kWp PV, 11kVa diesel) and has plans to add 50 more. ERSEN project aims to electrify 256 villages with solar-diesel hybrid preferred. Recently Inensus is operating a purely private rural electrification project in Senegal with initial support through GIZ under a PPP.

Issues to be addressed at this event will cover:

  • Market Trends
  • Advanced commercial use of mini-grids
  • RET and Hybrid systems
  • Regulation and Policy
  • Financing and Investment
  • Knowledge transfer and Human Capital

The Speakers panel will include, among others, representatives from Rural Electrification Agencies, Private Companies, International Organizations (UNEP, Alliance for Rural Electrification), Financial and Academic sector. 

For further information about the event: