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/)

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