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Difference between revisions of "Impact of Tariff Structures on the Economic Viability of Mini-Grids"
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| + | = Background = | ||
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| + | == Mini-Grids == | ||
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| + | Mini-Grids vary significantly in terms of their design and structure, depending on their location, available natural resources in the area, the local policy framework and the demographic being served by the grid. Therefore, many different tariff structures are being implemented and tested in mini-grids throughout the world. | ||
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| + | For more information on mini and micro-grids in general have a look at the energypedia articles: [[Mini_Grids|Mini-Grids]], [[Mini-grid_Policy_Toolkit|Mini-grid Policy Toolkit]] and the Micro-Grid Portal | ||
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| + | == Economic Viability == | ||
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| + | A project is economically viable when it is able to secure initial funding to cover the capital cost and when the revenues are able to cover the operation and maintenance (O&M) costs throughout the entire lifetime of the project while still generating an acceptable rate of return on the initial investment. In order to achieve this, the project should have a set operation plan which is flexible enough that it can adapt to future changes including political and regulatory changes, ownership hand over or economic fluctuations. Long term economic viability can be achieved through careful planning and economic modelling, taking into consideration external costs. (LafargeHolcim Foundation, n.d.) In a mini-grid the expected sale of electricity can be used to calculate financial indicators such as project return, equity return expectations and payback periods. These values provide the bases on which investment decisions can be made (Al-Hammad, et al., 2015). | ||
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| + | [[Category:Mini-grid]] | ||
| + | [[Category:Micro-grid]] | ||
| + | [[Category:Financing_and_Funding]] | ||
| + | [[Category:Financing_Grid]] | ||
[[Category:Microfinance]] | [[Category:Microfinance]] | ||
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Revision as of 17:03, 26 June 2017
Background
Mini-Grids
Mini-Grids vary significantly in terms of their design and structure, depending on their location, available natural resources in the area, the local policy framework and the demographic being served by the grid. Therefore, many different tariff structures are being implemented and tested in mini-grids throughout the world.
For more information on mini and micro-grids in general have a look at the energypedia articles: Mini-Grids, Mini-grid Policy Toolkit and the Micro-Grid Portal
Economic Viability
A project is economically viable when it is able to secure initial funding to cover the capital cost and when the revenues are able to cover the operation and maintenance (O&M) costs throughout the entire lifetime of the project while still generating an acceptable rate of return on the initial investment. In order to achieve this, the project should have a set operation plan which is flexible enough that it can adapt to future changes including political and regulatory changes, ownership hand over or economic fluctuations. Long term economic viability can be achieved through careful planning and economic modelling, taking into consideration external costs. (LafargeHolcim Foundation, n.d.) In a mini-grid the expected sale of electricity can be used to calculate financial indicators such as project return, equity return expectations and payback periods. These values provide the bases on which investment decisions can be made (Al-Hammad, et al., 2015).
