Basic Energy Services - Stand Alone / Off grid Energy Systems

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Basic Energy Services in a Nutshell: Context | Basics | Energy Systems


An off-grid energy supply is one that is autonomous and independent of the public grid. It is most ideal in regions where it is not possible to connect to a public electric grid or in some cases where it is planned due to the high development costs to construct electric line systems.[1] Decentralized, small-scale and off-grid solutions are often more applicable than centralized large scale power projects in meeting the specific energy needs of poor rural communities. In terms of access to electricity, off-grid solutions can be more economical than grid extension in many parts of rural sub-Saharan Africa and South Asia due to the low population density, relatively low energy demand and lack of existing infrastructure. [2]

-> More Information on Grid Extension vs Off grid, Island / Isolated System

Off-grid Market

The off-grid renewable energy market can be split into domestic scale and commercial scale customers. And the main demand / market for off-grid renewable energy is driven by various stakeholders which include; households, rural communities and indigenous communities, tourist facilities, small industrial projects, pumping and irrigation, Mine Sites and Mini-grids and Islands. [3]

Further illustration on application of off- grid renewable energy according to the Deutsche Energie­Agentur GmbH can be illustrated as;[1]

Applications Power Supply Heating/Cooling Mobility
Domestic Households Mobile phones, Lighting, Computers, Sewing Machines, Radio, TVs Hot Water, Room heating, cooking, Building A/C
Agriculture Water Pumps, Gran Mills, Seawater desalination Drying of agricultural products
Commerce and Services Machines, Computers, Scientific measuring stations Process heat, Building A/C
Public and Social facilities Lighting, Refregirators, Medical devices Building A/C
Infrastructure Landline and Mobile phone networks, Mini-grids, Street lighting and road illuminations, Maritime on-board electrical systems
Vegetable fuels

However based on a global market analysis by Deutsche Energie­Agentur GmbH, the following countries have been shown to have potential for the use of off-grid applications due to various factors such as electrification rates, local diesel prices, political and economic conditions, the security situation and data on the rural population.[1]

In Latin America: Columbia, El Salvador, Guatemala, Honduras, Jamaica, Nicaragua, Panama, Peru
In Asia: Bangladesh, Burma, Cambodia, India, Mongolia, Nepal, Pakistan, Philippines, Sri Lanka
In Africa: Botswana, Cameroon, Ethiopia, Ghana, Kenya, Mozambique, Namibia, Nigeria, Senegal, South Africa, Tanzania, Togo, Zambia.


Off-grid renewable energy technologies are those that supply power to regions that are not serviced by the electricity grid. Electricity is generated using various off-grid technologies which include; solar power, wind power, hydro power, geothermal power, marine power, bioenergy, hybrid (diesel / gas) and fuel cells.[3]

Advances in Off-grid Technologies:

In recent years there have been significant advances in off-grid technologies. Some technologies that have advanced in the off-grid technologies include:

Advances in the design, performance, and dissemination of biomass cook stoves: Some advanced wood-burning cook stoves emit less particulate matter and carbon monoxide than liquefied petroleum gas. Thermoelectric generators (TEG) are becoming cost-competitive and allow stoves to generate both heat and electricity, enabling them to operate fans for improved combustion, or provide electricity for other applications.[4]

Emergence of Pico PV (or Solar Pico Systems, SPS) in rural electrification: These very small (<10 Wp) systems enable people to access modern energy services in cases where the cost of larger solar home systems (SHS) is not affordable or the energy demand is too low. Solar lanterns have also seen quality improvements and have been adapted to meet the needs of local communities; they have also become more readily available and affordable.[4]

Competitive wind energy technologies: Companies are aiming to enter the off-grid market with the advent of small and medium-size generators that will make it a competitive solution.[4]

Hybrid Systems: Consisting of Solar home systems, Pico systems, wind turbines, and hybrid or renewable-powered mini grids, these present enormous potential to substitute fossil fuels in existing energy systems, thereby making infrastructure costs to decline.[4]

Solar thermal: Low-temperature solar thermal have experienced significant growth in developed and developing countries and continues to have a large untapped potential.[4]

Economic Viability of Off-grid Systems

According to the Clean Energy Council , there are three major factors affecting the economic viability of off-grid systems, these include:

Diesel Generation Costs: Diesel generation is one of the most common alternatives to renewable energy generation in off-grid locations. When the cost per unit of diesel is on the rise, it is likely that renewable energuy generation will be cost competitive in many places.

Grid Connection Costs: Grid connection being the alternative to off grid connection, it includes costs associated with a grid connection which might range from, the connection application, new transmission or distribution line and sub-station costs. While transmission/distribution line costs being the highest incurred costs, these costs can be substantial when high voltages are involved.

Renewable Energy costs:The unit costs per MW of various types of renewable energies are estimated to being close to that, if not less than of diesel generation.[3]

Other Costs: Other various costs are associated with off grid projects which might include; higher unit costs due to economies of scale and maintenance and operation costs, non usage of the renewable energy due to load profiles, and finally Integration costs which should be lower for off-grid projects.

Barriers to Uptake of Off-grid Renewable Energy

Off grid renewable energies (RE) face a lot of challenges and barriers before they are implemented, some of the major barriers for development of off-grid RE include:

Cultural barriers:

<u</u>Assessing renewable energy projects is a complex and new issue in many organizations, most of them end up making upgrades and expansions quickly without having the time to setup new project assessment processes. [3]Public perception that grid connection is the only acceptable electricity[5] is another major challenge as well as lack of public support, high taxation rates and situations where off-grid systems are not acted. [6]

Regulatory Framework:

Lack of a cogent regulatory framework to mainstream off-grid RE as well as non inclusion onto the energy policies poses a great challenge. This leads to energy access not being recognized as an essential right therefore not sufficiently integrated with larger developmental goals.[5]

Energy supply security:

For entities that require high levels of supply for energy like mining corporations, the intermittent nature of renewable energy means that hybrid systems and storage also need to play a role.[3]

Uncertainty around price triggers:

There is investor uncertainty and project deployment from uncertainties around Renewable Energy Certificate (REC) prices and the introduction of a carbon price.[3]Although there are large subsidies disbursed, there is with little regard to whether they are reaching the target populations, incentivizing renewable energy or improving energy access. [5]

Diesel Excise:

The level of government subsidy applied to diesel fuels also impacts the costs comparison of alternative fuels.[3]

Project Size:

Due to the nature of small size in the off grid projects, the administrative cost associated with them is usually high. And despite a significant and continuous drop, subsidies are required for the high investment cost. [6]

Project Ownership:

Involving the local communities in the renewable energy gives them a sense of ownership, Community awareness through education, training and information is also essential in giving the local communities a sense of ownership of the project. [6]


Lack of efficient mechanism to make finances available at various levels, for both the end user and entrepreneur is another barrier encountered by the off grid renewable energy projects.[5]

Policy Support Mechanisms for Off-grid RE

Decreased Uncertainty in Energy Modelling:

Lack of information increases uncertainty in projects and can therefore lead to difficulties for projects seeking external funding sources. To decrease this uncertainty, funding or assistance could be provided so as to, provide metering to collect load/demand data for existing and potential off-grid power supplies, and to provide strategically located long-term resource data collection for renewable resources in particular wind and solar. The task would involve the installation and upkeep of: wind monitoring masts and solar ground stations. However the locations would need to be decided based on industry consultation to maximize the benefits.[3]

Certainty on Price Triggers:

These are three main areas of revenue/cost for off-grid projects that are directly influenced by Government policy and introduce uncertainty to the evaluation of the projects, they include: The application of the price of diesel fuel through the diesel excise, the price of Renewable Energy Certificates (RECs) and the future price of carbon emissions. If stability and certainty can be achieved in these three costs, developers can plan and evaluate with more certainty which will also assist in the uptake of renewable energy off-grid projects. [3]

Taxation incentives for off-grid renewable energy projects/Ioans for renewable energy projects:

In order to assist with the viability of off-grid renewable energy projects, special (lower) tax rates or deprecation rates that would improve the viability of renewable energy over fossil fuel based generation.[3]

Grant Programs:

Governments should be willing to provide grant funding. Such grants would therefore need to provide long term certainty and be adjusted to cater for both small scale and large scale projects. However for this to work effectively the support required in terms of co-contribution from the Government for any off-grid grant program would need to be a 1:1 ratio with private investment. [3]

Financing Off-Grid Systems

By enacting an appropriate statutory framework, Public institutions and government bodies can play a vital role in the funding of off-grid power supply solutions. However, this being the case, the approach to funding renewable energies is fundamentally different from that applicable to conventional energy technologies. Special funding policies can also be allocated by Governments for areas that will not be considered for a grid expansion. Public tenders could also be put out where government funding is not available. Alternatively, some governments establish a rural energy fund and offer to help with investments in the electrification of off-grid areas with grants on a first-come-first-serve basis. [7]

Another option is that an energy provider nominated by the government operates an off-grid island network at state-defined energy prices, but receives funding from the state to offset the in-creased generation, operation and maintenance costs. Mixed models can also be very successful. For example in Sri Lanka, micro-loans from the government combined with direct subsidies ensure that rural solar home systems are very widespread; over 100,000 Solar Home systems (SHSs) have been installed under the program. [7]

Planning and building regulations along with preferential customs duties for relevant product lines can also have a positive effect on the establishment of off-grid projects, combined with financial planning, where various project and consumer financing models that are available could be utilized. To clearly achieve this, a clear distinction has to be drawn between general project plans that can access appropriate capital (tourism or telecommunications industry projects) and those that are primarily funded by means of loans or public subsidies. [7]

Solar home systems can as well be procured through Micro-financing institutes (MFI). And in order to prepare a well defined micro-financing plan, energy requirement, consumption and affordability are taken into account. Other sources of funding that are realistic especially for large-scale technical projects include Bilateral and multilateral funding for programs and aid projects. However, there are still gaps in funding for medium-sized projects, especially those still in the initial stage of development requiring start-up funding, for example for initial feasibility studies. [7]

Off-grid electrification projects by the World Bank are traditionally co-financed by the Global Environmental Facility (GEF) if there are market barriers to the use of technologies. However, various models for rural electrification are also funded by the Global Partnership on Output Based Aid (GPOBA). The Energy Sector Management and Assistance Program (ESMAP) funds training in operational and financial management, whilst technical training is supported by the World Bank’s Asia Sustainable and Alternative Energy Program (ASTAE) and the Public Private Infrastructure Advisory Facility (PPIAF). On the other hand the Climate Investment Funds (CIF) has been funding off-grid projects in developing countries since 2008, as well as the market based Clean Development Mechanism (CDM) set out in the Kyoto Protocol. The clean development mechanism ensures that, renewable energies projects in developing countries can acquire Certified Emission Reduction (CER) loans for every tonne of CO2 saved; this CER can be traded or sold.

Energy supply is a long-term service which should go hand in hand with careful, long-term planning of consumer tariffs, operation and maintenance as well as battery replacement. Accordingly, maintenance contracts, insurance policies and product guarantees should be incorporated into the project plan. Essentially, this calls for reliable partnerships between technology suppliers and local partners. Power supply via a Rural Energy Service Company (RESCO) may be an appropriate model for low-income households, not only do they offer initial investment cost but also perform the necessary maintenance work. Refinancing of their expenditures is through a Fee-for- Service model.[7]

Success of a project in the long-term depends on the qualifications and skills of the staff on site. Capacities of local partners in terms of installation, operation and maintenance of the system need to be developed, particularly in remote regions with limited market structures. Furthermore, technical training must be provided using specific case studies and practices.[7]

Sustainability Issues in Off-Grid Programs

According to World Commission on Environment and Development of 1987, ‘Sustainable development is defined as meeting the needs of the present without compromising the ability of future generations to meet their own needs.’

Sustainability and Social Impacts of Off-Grid Lighting: Analyzing, monitoring, and managing the intended and unintended social consequences, both positive and negative, of planned interventions involve the Social Impact Assessment . For instance in a social impact assessment of off-grid lighting project conducted by OSRAM in Suba district Kenya (2008/9) with a goal of displacing kerosene with solar lanterns. From this study the results demonstrated that 91% of off-grid service users perceived a favorable impact on their daily life, this included, higher incomes and savings due to cost reductions for lighting in households, fisheries, and communication; higher quality of lighting; replacement of a non renewable energy source (e.g., kerosene); elimination of fumes from household lighting; reduction in direct CO2 emissions from lighting; investments and jobs; children studying in the evening; women working in the evening, thereby enhancing their social position; and men advancing their position in the community as a result of higher income levels.

A variety of health issues associated with kerosene lamps which include; burns, child poisoning due to inadvertent consumption, exposure to unburned fuel, comprised visual health due to sub-standard luminance, and indoor air pollution were also studied and it was observed that indoor air pollution is adversely impacting health, and LED lamps will yield fewer respiratory health issues for consumers. [8]

Disposal and Recycling of Used Lead Acid Batteries: Lead acid batteries are often used to power solar lanterns. Although these batteries play a critical role, they can as well yield detrimental health and environmental impacts as the acid is extremely corrosive and are a good carrier for dissolved and suspended lead, which can contaminate soil and water sources. This lead when it enters the human body can cause severe damage such as reduced IQ levels, anemia, nerve disorders, kidney damage, muscle and joint pain, loss of memory, seizures, birth defects, and even death. Thus recycling of batteries is important.[8]

Further Information


  1. 1.0 1.1 1.2 Deutsche Energie-Agentur GmbH, 2012 Cite error: Invalid <ref> tag; name "Deutsche Energie-Agentur GmbH, 2012" defined multiple times with different content Cite error: Invalid <ref> tag; name "Deutsche Energie-Agentur GmbH, 2012" defined multiple times with different content
  2. CEPS ,Escaping the Vicious Cycle of Poverty: Towards Universal Access to Energy in Developing Countries:
  3. 3.00 3.01 3.02 3.03 3.04 3.05 3.06 3.07 3.08 3.09 3.10 Clean Energy Council, 2010:
  4. 4.0 4.1 4.2 4.3 4.4 Renewables 2012: Global Status Report:
  5. 5.0 5.1 5.2 5.3 Ashden India Sustainable Energy Collective, (2012)
  6. 6.0 6.1 6.2 African Development Bank, 2012- FINANCING OFF-GRID RENEWABLE ENERGY SYSTEMS:
  7. 7.0 7.1 7.2 7.3 7.4 7.5 Renewable Energy Solutions for Off-grid Applications:
  8. 8.0 8.1 Lighting Africa: