Mini-grid Project Lifecycle

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Introduction

The mini-grid project includes four phases: consultation and planning, construction, operation & maintenance and end use of electricity[1][2]

Consultations and planning

This is the first stage in the mini-grid life cycle where the planning of the mini-grid regarding its site selection, sizing and the customers selection is done. This stage includes the following sub-steps:

Site Selection

This is a critical factor as the sustainability of the mini-grid depends on selecting a good site. There are different factors for selecting a good site such as the location of the site, demand assessment of the potential customers and resources assessment at the site[3].

Demand Assessment of the potential customers is done by looking at the current electricity demand as well as forecasting future demand[4]. Community consultation is key for assessing the demand as precisely as possible.

Resource assessment of renewables is important for sizing the mini-grid technology accordingly. For solar and wind resources, data from satellite and meteorological stations are more readily available. For hydro and biomass, a detailed assessment at the site is necessary[5]. In many cases, the community can also be consulted to look at the resource profile (water tables for MHP or available biomass for biomass based mini-grid) over a period of time.


Business Model + Tariff Definition

There are different business models for mini-grids as highlighted below. The appropriate tariff can also be selected based on the cost of the mini-grid (both fixed and variable) and the willingness to pay for the generated electricity. The biggest challenge is to find a tariff model that will ensure a balance between the financial sustainability of the mini-grid as well as the willingness to pay[2].

Mini-grid business models


Technical System Design

Accurate load assessment and demand forecast is the key to sizing a mini-grid adequately. Lack of this information will result in either an oversized mini-grid with a higher payback time and lower efficiency or an undersized mini-grid system with unreliable supply, resulting in possible blackouts [4].

The mini-gird system should be designed based on the four guiding principles [2]:

  • it should adhere to all safety standards;
  • it should be rightly sized;
  • it should be upscale if there is a demand for it (might not apply for all mini-grids e.g. MHP) and
  • it should deliver the pre-defined quantity and quality of power

Construction

In community owned mini-grids, the whole community is involved in construction providing free labor. In other business models, either the targeted community or external labor can be hired for construction. Nevertheless, involving the local community gives them a sense of ownership and helps to reduce labor cost. Both men and women could be involved in the construction phase[6].

Operation and Maintenance (O&M)

The operator is the key person responsible for keeping the mini-grid running and carrying out all the maintenance duties. For quality O&M of the mini-grid, the operator has to be properly trained[7]. The operation of the mini-grid can be done either in-house or sourced out to an external company [2].

There are also new technologies such as smart metering, mobile payment and remote monitoring that make it easier to manage the mini-grid[8]. The mini-grid management committee has to look at the overall management including legal compliance, financing and resource management, human resource management as well as monitoring and evaluation of the mini-grid [2].

End Use of Electricity

The end use of electricity is the biggest source of income for the mini-grid. When electricity is used for a variety of activities, it stimulates the demand and thus increases the revenue for the mini-grid. There are four different end uses of electricity[8]:

Domestic Use

Rural households use electricity for lighting and running household appliances such as televisions, refrigerators and mobile charging. This demand is usually low and depends on the economic conditions of the household[8].

Community Use

Community centers such as schools and hospitals use electricity for meeting specific needs like running computers or projectors in school as well as running medical appliances in the hospital. This is a recurring electricity demand[8].

Anchor Load

It refers to specific energy intensive customers such as telecom towers and industrial plants. These institutes have specific energy needs and can serve as an anchor load for the mini-grid, providing a sustainable source of revenue[8].

Productive Use of Electricity (PUE):

Individuals and enterprises use electricity for earning an income as well as to increase their work productivity [8]. PUE could be in the agriculture sector (e.g., milling, water pumping, grinding and milk chillers); service sector (e.g. televisions and refrigerators in bars and restaurants and electric razors in barbershops) and in various manufacturing industries (e.g., welding, carpentry and tailoring). PUE also depends on several factors such as climate, culture, types of crops and rainfall patterns[8].

There is no clear distinction between the domestic use of electricity and the PUE and they could overlap each other. An electrified household can use the electricity to carry out household duties as well as run small-cottage industry from home. In this case, access to electricity serves both the domestic and the PUE[9].

Rural areas have low population density as well as low energy consumption. Thus, mini-grid supplying electricity for lighting will have a small load factor. The mini-grid operator will then have to charge either a high tariff which might not be affordable or a low tariff that is affordable but do not over all the O&M costs[10]. Thus, promoting PUE in rural areas increases the financial viability of the mini-grid[9]. However, it is important to understand that the provision of electricity will not automatically boost productivity but active support is required to increase the uptake of PUE in rural areas[9][11][12]. Additional activities such as access to appropriate financing, access to the market for selling the products, appropriate training and skill development is needed[8][10].

Further Information


References

  1. ↑ Bhogle, S., & Rodriguez, S. (2017). Standardized process for productive uses & gender integration. Myanmar Action Learning Event. Retrieved from https://www.esmap.org/sites/default/files/Myanmar_Standardized Process for Productive uses Gender Integration_Web.pdf
  2. ↑ 2.0 2.1 2.2 2.3 2.4 Energy 4 Impact, & INENSUS. (2019). Green mini-grid help desk. Retrieved December 17, 2019, from https://greenminigrid.afdb.org/
  3. ↑ Murunga, J., Gichungi, H., Koech, C., & Gochi, H. (2014). Where shall we put it? Solar mini-grid site selection handbook. Retrieved from https://energypedia.info/images/4/48/GIZ2014-en-where-shall-we-put-it-kenya.pdf
  4. ↑ 4.0 4.1 Blechinger, D. P., Papadis, E., Baart, M., Telep, P., & Simonsen, F. (2016). What size shall it be? A guide to mini-grid sizing and demand forecasting. Retrieved from https://energypedia.info/images/0/0f/Mini-Grid_Sizing_Guidebook.pdf
  5. ↑ Kondev, B. (GIZ). (2016). Assessment of renewable energy resource potential for mini-grids. Retrieved December 17, 2019, from Energypedia website: https://energypedia.info/wiki/Assessment_of_Renewable_Energy_Resource_Potential_for_Mini-grids
  6. ↑ Hornor, C. (2014). Commercially operating mini-grid systems workshop. Retrieved fromfckLR49fckLRhttps://www.esmap.org/sites/esmap.org/files/DocumentLibrary/Commercially Operating Mini Grid 2014 Workshop Report .pdf
  7. ↑ USAID. (2018). Bamiyan Renewable Energy Program. Retrieved December 19, 2019, from https://www.usaid.gov/energy/mini-grids/case-studies/afghanistan-hydropower/
  8. ↑ 8.0 8.1 8.2 8.3 8.4 8.5 8.6 8.7 Contejean, A., & Verin, L. (2017). Making mini-grids work: Productive uses of electricity in Tanzania. Retrieved from https://pubs.iied.org/16632IIED/
  9. ↑ 9.0 9.1 9.2 EUEI PDF, & GIZ. (2011). Productive use of energy – PRODUSE A manual for electrification practitioners. Retrieved from http://www.produse.org/imglib/downloads/manual/euei_productive_use_manual_med.pdf
  10. ↑ 10.0 10.1 Pueyo, A., & Maestre, M. (2019). Linking energy access, gender and poverty: A review of the literature on productive uses of energy. Energy Research and Social Science, 53, 170–181. Retrieved from https://www.sciencedirect.com/science/article/pii/S2214629618306145
  11. ↑ Osunmuyiwa, O., & Ahlborg, H. (2019). Inclusiveness by design? Reviewing sustainable electricity access and entrepreneurship from a gender perspective. Energy Research and Social Science, 53, 145–158. Retrieved from https://www.sciencedirect.com/science/article/pii/S2214629618311204
  12. ↑ Terrapon-Pfaff, J., Gröne, M. C., Dienst, C., & Ortiz, W. (2018). Productive use of energy – Pathway to development? Reviewing the outcomes and impacts of small-scale energy projects in the global south. Renewable and Sustainable Energy Reviews, 96, 198–209. Retrieved from https://ideas.repec.org/a/eee/rensus/v96y2018icp198-209.html
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