Grid Extension vs Off grid, Island / Isolated System

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Main Decision Criteria Grid Extension vs. Off grid, Island / Isolated System:

  • Distance to the national / centralised grid (incl. capacity of grid)
  • Demand:
  1. Population density and number of households
  2. Long-term demand (in kwh and terms of energy services) and peak load (in kw)
  3. Number and (expected) demand (growth) of productive end uses / industrial users
  • Levelized costs of energy production (to be consideres: long term marginal costs) in centralised grid and extension costs.
  • Levelized costs of energy production in isolated system
  • The selection of socially and environmentally appropriate technologies
  • etc.

Important Considerations

A sustainable rural electrification project depends on a number of critical planning decisions. Important factors in project planning and design are the choice of appropriate technology, ensuring institutional and economic viability, safeguarding of social and environmental issues, and optimizing productive uses of electricity. In the following paragraphs several rule of thumbs (ROT) will be developed on the basis of cost criteria and experience made in numerous rural electrification projects. They can be used only as a pre-assessment in a preliminary phase and more thorough analysis is needed. Rules of thumb can only give a general orientation. However, there does not exist a single way for rural electrification, each site and situation is different. Rules of thumb do not prevent project developers and decision makers from conducting a regular feasibility study that evaluates at least two options and that takes into account all relevant ecological, economical and social factors in the specific project environment. The key for success and sustainability is ownership amongst all involved parties including the stakeholders and the last consumer. It is therefore important to evaluate and assess each individual project thoroughly.

Grid vs Off-grid vs Evolutionary Approach

Until population densities and/or urbanization rates increase considerably, grid extension is not likely to be cost-effective for providing access to electricity for a large part of the population – and will therefore not happen naturally unless large subsidies are provided. Even then, lower cost but modern alternatives could more quickly provide adapted solutions that could be quite different for different beneficiaries. These specific solutions are likely to change over time, reflecting changing economic conditions in the area and/or the beneficiary, effectively setting in motion a process whereby individual households, institutions, or firms follow their own path towards ever increasing modern energy service levels and lower costs of service. Decentralized solutions are pursued by governments outside of grid areas, either on an individual basis (i.e., for individual consumers) or for a distinct group of beneficiaries (such as an isolated village with a mini grid).

PV solar home systems, PV lanterns, solar dryers and productive uses based on PV are among the frequently promoted individual solutions. When households desire more services than individual PV systems or PV lanterns can provide, mini grids can become a viable solution. Such mini grids can supply electricity from a variety of energy sources. Mini grids using diesel generators can provide high quality, high cost electricity quickly; however, high operational costs often result in reduced service delivery, such as supply during a few hours per day only. Mini grids supplied from micro hydro plants can provide lower-cost electricity, particularly when located in areas with substantial rainfall and rivers; however, some specific technical skills are required, investment costs are relatively high, and particularly local management and ownership require special attention. The costs of PV mini grids will continue to decrease. The use of electricity is almost addictive; once available, demand appears to be always increasing and never decreasing. This works in favour of utilities, since the more electricity clients use, the easier it will be for them to supply at reasonable costs (network externalities, synchronous services etc.). As soon as households obtained access to electricity, they have thereby started a path that is likely to lead to higher energy consumption for a long time to come. As and when the demand supplied by mini grids grows, eventually interconnection between them is likely to become viable.

The inter connection with the national electricity grid is the next conceptual step than might occur in the future. The same concept also holds for individual solutions, e.g. more PV modules can be added to an existing system, or more turbines, generators to an existing plant. The concept allows for non-static (or evolutionary) approaches, in many cases it is feasible to follow the above approach of electrification: from stand-alone solutions to mini grids, interconnecting the mini grids, etc. However, as technology improves and gets cheaper, one can imagine that there are circumstances under which grid-based solutions are no longer necessarily the final and most modern solution. The day might come that the grid is no longer needed if one were to boil water but that a PV system can do the same job at affordable costs. Mini grids and sometimes even appropriate stand-alone solutions could deliver reliable and sufficient supply in the medium and long run in those areas where grid is neither a cost-effective solution nor a realistic approach. It is more appropriate to promote evolving solutions rather than a final solution as the starting point – as has been and still is common practice. At any point in time, rural and peri-urban households, institutions, and private firms have then access to solutions that fit their needs and their wallets of that moment; these temporary solutions may then shift over time until the conditions are satisfied for grid-based supply to become attractive in the distant future. This is not a quest for rapidly extending electricity grid supply, but an attempt to focus more attention on solutions for those who will under no circumstances obtain grid electricity in the near to medium term future. It is evident that technological developments are progressing very fast (e.g. leap frogging) and network effects of (large integrated) grids can be ruled out for the foreseeable future by new generation and supply technologies, as well as new appliances (i.e. smart ICT).

The evolutionary approach is not new for cooking solutions, whereby households tend to move up over time from inefficient firewood and charcoal, to efficient wood-based fuels, briquettes, to kerosene, and LPG. Until now, the bulk of most countries’ electrification efforts have been to increase urban supplies and at best trying to replicate urban supply mechanisms in rural areas, leaving aside a few pilot projects to explore alternatives for use in rural areas. The time has come to state that this is no longer an adequate approach if the goal is modern energy access for the majority of the population within a reasonable time period. A different approach is therefore needed, conceptually, chronologically and physically. Imagine electricity not to be the final solution in itself, but a means to improve the quality of life, and then it would be possible to improve rural living conditions fairly quickly for a large number of people. The idea is not new – Amory Lovins in the early 1990s already advocated this concept, but has not been applied on a significant scale. Although the concept cannot be called traditional rural electrification, however, it is effectively the beginning of an era of modern services delivery that would be made possible by having at least access to some electricity; in other words, the beginning of the end of energy poverty. For many households, modern energy services will initially limited to the use of a television and/or modern lights, both of which will increase living conditions and may contribute to improved education, productivity gains, and/or accelerated economic development, but this will not make them attractive clients for a grid-based electricity utility. It is slowly trickling down in the minds of planners that rural electrification by grid extension may not be the most economical, technologically and developmentally appropriate solution for many geographical areas. By the time the population has outgrown a particular service delivery level, incomes are likely to have risen and population densities increased, resulting in entirely different economic conditions under which other temporary solutions might now become feasible (such as added PV modules to the battery system at home, or mini grids connecting most village households). A grid-connected city person may find it difficult to imagine, but even the simplest first step up from kerosene lighting, a battery-based modern CFL or LED lamp, would immediately improve the quality of life for rural households. There are numerous options to improve living conditions without having grid electricity, and all have fairly low investment costs. Indeed, a range of individual alternatives should be promoted to improve the quality of rural life across the board and create wealth, to commensurate with households’ desire and ability to pay for such services. Although these services constitute a major step up from prevailing living conditions, several subsequent steps will still be required to reach comparable conditions in the future as in urban areas.

Development of Criteria / Rules of Thumb

Basic Definitions

Grid-connected (on-grid) power supply / provision is defined as electricity supply which is fed by centrally generated electricity, and uses a network of (high) medium and low voltage distribution grid system that exceeds one village. Grid extension is therefore a network expansion from the national power transmission system to new areas and communities. Whereas decentralized power provision is understood as power generation in the village, such as solar home system or a mini-grid powered by a diesel generator / hydro power plant. Grid-connected (on-grid) electrification comprises the connection of entire villages through network extension (grid extension), so the construction of new transmission lines (transmission lines), as well as network densification measures.

The latter are divided into two categories:

  1. Grid densification by transformation, if villages which are located in close proximity to an existing transmission line will be connected, change of voltage level.
  2. Densification within an existing low-voltage distribution grid, connection of additional households.

Decision Tree

The following figure illustrates some critical factors and decisions to consider when selecting technology for a rural electrification project[1]:

Decision Tree: Off vs On Grid
Eligibility criteria for selection of the appropriate technological system could be based on either social considerations, cost-effectiveness criteria or a combination of both.

The cost-effectiveness criterion is crucial: Cost-effectiveness criteria typically include distance to the existing grid, population size, affordability and productive potential. A consequence of using cost-effectiveness criteria is that they are likely to promote the connection of communities with less poor people. A cost-effectiveness approach can be justified due to its emphasis on financial sustainability.

One example of using cost-effectiveness criteria is how the Pakistan Rural Electrification Project selected communities. They selected communities with I/K ratios > 24, with I being the population size and K the distance to the grid.

Additional examples are:

Rural Electrification in Benin:

In Benin, the project applies a comprehensive simulation through a newly developed calculation tool. On the basis of socio-economic and technical data this tool establishes a transparent planning which allows justifying it to beneficiaries, institutions, and, technical and financial partners. As an example, on a first step not-electrified communities could be selected by choosing a maximum distance from the existing grid, say 10 km. Thereupon a the tool computes based on a data base including costs and impacts of electrification the cost-effective order of connecting these communities. The input data of this calculation can be varied regarding for example next to the distance also the total number of households to connect or the impact estimated by electrification. In the case of the currently running project, the initial program size from 59 villages with 9’000 HH to be connected could be cost neutrally increased to 106 villages with 17’000 HH.

Rules of Thumb (ROT)

The suggested rules of thumb (ROT) for community selection are based on cost-effectiveness criteria.The source of these rules is Norwegian Development Assistance to Rural Electrification (NORAD), Best Practice Guide for Planning, however they have been adapted based on experience during the implementation of Energising Development (EnDev) and discussions with the above mentioned experts.

ROT (1) for Grid Extension

Question: Is grid extension a viable option?

  1. Estimate the total number of potential connections (N)</u>in a rural community. Due to time span between planning and execution one may take into consideration the grid extension within the next 2-3 years. The topography is also crucial for this decision. Normally households are the dominating customer group, however normally not all of them connect immediately (micro-finance & diversification of marketing strategies to be considered). Be aware of difference in costumer profiles. Industrial consumers have higher demand and different load profiles.
  2. Find the average distance (D) from the rural community to the centralized grid
  3. Calculate thenumber of connections (N) per distance = N/D
  • Case 1 =N/D < 2 connections/km => Grid extension is likely not to be viable
  • Case 2 =N/D > 30 connections/km => Grid extension is likely to be a viable alternative (Compared to off-grid systems)
  • Cases between N/D < 2 to N/D > 28 are undefined.

As the Rule of Thumb has a very large open, not defined, range it gives no solutions for many cases. Please consider individual situation.


Village 1) N = 500 HH / 11KM = 45,45 Conn/Km = Grid extension would be most viable

Village 2) N = 1000 HH / 100 km = 10 Conn/ Km = ?

Other important factors: Topography (such as mountain area ), national grid extension plan, different consumer / demand profiles etc.

Model Calc for ROT (1)

village data for model calculation:

  • Site name: HHPS Hopefully Having Power Soon
  • Households: 1,000
  • Institutions: 50
  • Small Businesses (e.g. shops): 100
  • Small industrial users: 50
  • Total Connections: 1,200
  • Population: 5,000
  • Case (1) Distance from the Grid = 100 km
  • Case (2) Distance from the Grid = 15 km
  • Connections within 600 m radius of the centre = 800

Excercise: Calculate the number of connections (N) per distance = N/D:

1.200 Connections / 100 Km (Case 1)= 12

Assumption: cost of medium voltage line (ca. 60 kV) = 10,000 U$/km

Resulting connection costs per costumer would be: 100 km x 10,000 US = 1,000,000 U$ or 833 U$/connection.

A PV-diesel-wind-hybrid (available for less than 1,000,000 U$) could be an alternative.

A reliable PV island system with approx. 100 kWp or a production of 300-400 KWh/d should feasible with less than 600,000 Euro.

HHPS is a site where an island system is the most viable option, given that no other villages are close to the transmission line and ceteris paribus demand.

ROT (2) for single-phase vs Three-phase Config.

Question: If grid extension is a viable option, which configuration?


Phases must be “loaded” equally.

The Grid operator has to agree, that a single phase extension is executed.

  1. Estimate the total number of connections (N) in a rural community.
  2. Find the average distance (D) from the rural community to the grid
  3. Multiply the number of connections (N) with the distance = N x D

  • Case 1 = N x D < 1,500 => Single-phase most viable option
  • Case 2 = N x D > 10,000 => Three-phase most viable option
  • Cases whose N x D range from 1,600 to 9,900 are undefined.

As the ROT has a very large open, it gives no solutions for many cases.


Village 1) N = 500 HH / 11 km = 45 conn/km = grid extension most viable

Village 2) N = 1,000 HH / 100 km = 10 conn/ km = ?

Here factors like topography, climate etc. play an even bigger role.

Three-phase is much more expensive (planning and construction). However, if demand growth is expected to be 5% per year or more, one should consider a three phase configuration shall be prepared already while the single phase is installed. For example: more resistant poles etc.

Model Calc for ROT (2)

1,200 x 15 km = 18,000 = Three-phase viable option

For longer transmission lines, >5 km, with medium high voltage, 15 kV, 3-phase transformers are most common and practicable and no extra calculation is required.

ROT (3) for Isolated Grids, Island Systems

Question: Is an island / isolated grid a viable option compared to stand-alone / off-grid soutions or grid extension?

Estimate the total number of connections (N) in a rural community within a 500m radius from the rural community centre.

If cross section can be increased, up to 600 meter are possible.

N > 100 => isolated grid could be a viable alternative to grid extension or stand-alone systems. Viability depends on load density.

N < 100 => technically, an isolated grid could be the least cost solution. It may however be challenging to sustain an adequate level of O&M as well as efficient cash management over time due to the limited size.

Model Calc for ROT (3)

N = 800 => isolated grid most viable option

ROT (4) for Grid Extension vs Off-grid Systems

Estimate the expected load of a rural community (L). Sweco 2009 (Appendix 3) can be used to evaluate the load demand of different users.

  1. Find the average distance (D) from the rural community to the centralized grid.
  2. Calculate an approximate installed capacity (P) for the off-grid system by multiplying the load (L) by a factor of 1.5 – 3.0.
  3. System reliability increases with a higher multiplication factor.
  4. Modest energy resources require a higher multiplication factor.

  • Case 1 =P < 0.7 x D => An off-grid system is likely to be the most viable option
  • Case 2 =P > 3 x D => Grid extension is likely to be the most viable option
  • Cases between P < 0.8 to P > 2.9 or 21 are undefined, individual adaptation required

As the Rule of Thumb has a very large o8pen, not defined, range it gives no solutions for many cases.

Model Calc for ROT (4)

P = L x D =2.5 kW x 2 = 7

“D” assumed to be 2

“L” estimation after using SWECO 2009

Households: 1,000 x 0.2 kW

Institutions: 50 x 0.8 kW

Small businesses (e.g. shops): 100 x 0.5 kW

Small industrial costumers: 50 x 2.0 kW

Total connections: 1,200 = 3.5 kW

Case 2 = P (7) > 3 x D (2)

Grid extension is likely to be the most viable option

Further Information


The main source for the criteria and the rules of thumb is an excellent publication by NORAD “Best Practice Guide For Planning”, NORPLAN & NORAD, October 2009 and SWECO: Assessing technology options for rural electrification. Guidelines for project development. Draft report. Sweco, Oslo, 2009.[3] Rules of thumb have been adapted based on experience during the implementation of Energising Development and discussions with the above mentioned experts.

  1. NORAD 2009
  2. not online available anymore
  3. not online available anymore