Mini-grid Webinar 2 - Q&A

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Mini-grid Webinar Series -Q&A (Part 2)

This page lists all the questions asked during the webinar: Grid interconnection of micro/mini hydro mini-grids: What happens when the national grid arrives?

1. What are the Institutional Framework for local turbine manufacturing and what are the sources of financing?

Answer: GIZ implemented a technology transfer project (“Mini Hydropower Project MHPP”) during the 90s to introduce the cross flow turbine technology in Indonesia. Following this successful technology transfer, the following GIZ project (“Technical Support Unit TSU”) mainly supported the technical implementation of MHP projects (ensuring quality standards for planning, implementation and operation & management). Today, Indonesian turbine manufacturers even export turbines to other (Asian, European and African) countries.

2. What justify the low capacity factor of these plants when used in off-grid settings and what brings it up with the grid?

Answer: The MHP plant which connects to a mini-grid is designed in such a way that it can cover the local peak demand. Consequently, during times of low or normal consumption the plant does not operate at full capacity (on an average the load factor is often 20-30% or lower). Once the MHP is connected to the big national grid it can sell all its (excess) power to the national grid as the national grid can absorb all produced power. By increasing the load factor significantly the MHP can then continuously operate at optimum efficiency, selling more power and generating more revenues for sustainable operation and maintenance. 

3. Is the BPP (IDR/kWh) now publicly available?  

Answer: Kindly check the last link, as the two documents (i.e. regulation and presentation of regulation no. 12/2017) are in Bahasa Indonesia:

4. What do you mean by well-managed MHPP?

Answer: “Well managed” micro/mini hydropower plant means that a reasonable tariff level is fixed which generates sufficient revenues to pay to/for operator/s and management of the plant, ensuring that the plant is operated and maintained properly and is thus kept in a good shape.

5. After the grid arrived to the MHP Kalimaran village, the pie chart showed that 26% of revenues came from selling electricity to the community. Is this electricity only sold to the community when the national grid goes down, or is there another circumstance when the community buys the electricity directly from the MHP system?

Answer: The consumers which originally got electricity from the MHP still remain as customers of the MHP. Only surplus electricity which is NOT consumed locally is fed into the national grid (at a higher tariff). Although the MHP management could sell ALL power to the national utility to generate more revenues, they decided to continue providing “cheap electricity” to the community which otherwise had to buy (more expensive) electricity from the national utility. Furthermore, when selling ALL (not only excess) electricity to the utility would lead to a lower feed-in tariff.

6. Do these mini-grids connected to the national grid tend to be islandable?

Answer: Since an additional control system is required this islanding is slightly more expensive but is a great advantage in case the national grid has blackouts.

7. Is there a difference between the Mini hydro tariff and the tariff provided by the national government?

Answer: Yes, please have a look at slide 14 of the Indonesian presentation which provides all relevant tariffs.

8. Were there relevant policy changes initiated by the government or did it require substantial advocacy from the practitioners?

Answer: The latest policy changes were initiated purely by the government, but possibly by incorporating and/or employing the utility (PLN) interest. We are afraid that no input were requested and/or from the practitioners.

9. Can you tell us the range of avoided cost-- the BPP?

Answer: The range of BPP is very wide depending on the region and the respective avoided cost. It goes from 5.57 US-Cent/kWh in West Java up to 16.94 US-Cent/kWh in East Nusa Tenggara (NTT). The average BPP at the national level is 7.5 US-Cent/kWh. See the last link in point 3. The variation is due to the fact that PLN’s generation cost vary in the various places. E.g., in places where PLN produces electricity mainly through thermal power plants, the avoided cost is much higher than in places where electricity mainly comes from bigger hydropower plants.

10. Are some community residents employed at the facility? Do the community residents assist with the maintenance of the facility?

Answer: YES, all operation and management staff are employed from the community. They have been trained during project implementation to be in a position to do a good job.

11. About the capacity factor of the plant: does it means the plant was oversized or designed to be connected to the grid later on?

Answer: See Question 2. Normally, an isolated MHP is designed to cover the peak demand of the community, so that in off-peak hours, not all available power is needed and can be fed into the national grid. (no oversizing!)

12. What is the impact of climate change on the hydro plant?

Answer: That is difficult (if not impossible) to say. In general, the seasons become more extreme (heavier rainfalls and more extreme dry periods. Therefore, it is even more important to introduce a good management of the catchment area so that it continues to be a good “storage” for water, avoid deforestation, avoid palm oil plantations (which completely destroy a sound hydrological balance!), avoid erosion, stimulate infiltration etc.

13. Is there any similar policy available for installing rooftop Solar Power Plants on domestic roof tops?

Answer: The above government regulation no.12/2017 generally also applies for roof-top PV. But, for rooftop PV, it would be better and easier if we use specific policy introduced by PLN (i.e. PLN Direction no. 0733-K/DIR/2013). The payment concept will be based on the net-metering. The final balance will be set-off on a yearly basis.

14. When grid is down can the MHP provide backup (islander) ?

Answer: yes

15. Who covers the interconnection costs, the mini-grid or main utility? IS there an off grid system which buys power from the main grid and maintains their own distribution network, if so how well is the model working?

Answer: Normally the interconnection cost has to be covered by the MHP developer/owner (which can be a community, an NGO or individual); it is NOT paid by the utility! Systems which buy power from the main grid exist in huge numbers in Nepal. A “Rural Electrification Entity” gets subsidies and contributes own funds to build a small distribution network and then buys electricity in bulk (at a slightly lower tariff) from the utility NEA. The advantage for the consumers is that they get electricity at a lower price (but have to manage their own distribution grid, tariff collection etc.) and the advantage for the utility is that they do not have to bother with remote communities, non-payment of bills, illegal connections etc. But such models were NOT part of the webinar topic. Maybe we’ll look at it in a later webinar series.

16. What are the organizational pros and cons of a. Community supplied by MHP and excess sold to the grid versus b. MHP sells everything to the grid and the community is supplied by the grid.

Answer: First of all, if the community is supplied by the national grid, each consumer is required to become an official utility customer and needs to pay a (high) initial connection fee. And secondly it depends on the 3 different tariffs: FIT, tariff paid by the consumers to the MHP and tariff to be paid to the utility. For Kalimaron the better option was “a.”. This may be different in other cases / other countries.

17. Are the policy similar for PV mini-grids ?

Answer: See question 13

18. Can you tell a bit more about how the enabling environment was addressed 'in an integrated manner'?

Answer: In Indonesia, the enabling environment was created through the technology transfer of turbine technology, and consequently the industry’s interest in MHP. Also, the various projects and NGOs did a lot of advocacy work.

19. What was the rationale for preventing 100% acquisition of erstwhile off-grids by entrepreneurs?

Answer: In Sri Lanka the MHPs have been subsidized as “community projects” by the government. So, the idea was that the communities continue benefitting and do not just sell the MHP (at 100%) to an investor. As a government supported community project it should not be fully commercialized / privatized to ensure the communities’ long-term continued benefits.

20. Is the stated "cost of conversion", per site?

Answer: Yes, the cost of conversion depends on the condition of the civil structures and electromechanical equipment, capacity of the system (kW), distance to the national grid etc.. Further, these projects were set-up as a “pre-electrification measure” and were not intended to connect to the national grid. The priorities were safety, sustainability and least cost. The possibility of connecting these projects to the national grid was evaluated later, only after national grid reached these areas with the objective of making the best use of an already developed but idling resource.

21. What are the costs of a "generation license", once connected to the grid?

Answer: At the time of obtaining the energy permit, the developer is required to make a payment of USD 3.33 (USD 1 : LKR 150) per kW to the Sustainable Energy Authority. Further, there is an annual payment of USD 0.66 per kW to the Divisional Secretariat.

22. Who offered the loans on a commercial basis to the entrepreneurs setting up the company to run the mini-grid?
Answer: Mostly regional banks

23. Is it possible that this condition has prevented wider uptake of the grid connection possibility?

Answer: There is no “condition” which prevents the grid connection. If loans are required the developer can access a financial institution. If the project capacity is of 10 kW or higher the Electricity Consumer Society members can initiate the transformation.

24. What is avoided cost?

Answer: These projects are connected to the national grid and get paid as per the energy generated. The households in the community are independently connected to the national grid for which they pay the Utility as any other customer. (question was not very clear)