Mini-grids – deployment needs a rethink


Mandaluyong City, Philippines — (METERING.COM) — August 13, 2013

Mini-grids are increasingly being looked at for rural electrification where grid extension is not a reality – but rather than being treated as individual solutions for single communities, they should be deployed as clusters, in order to improve their impacts and economic feasibility.

That is a finding of a new study from the Asian Development Bank’s (ADB) Energy for All Partnership, which is intended to support the Bank in its development and promotion of mini-grids in Asia and the Pacific.
The report contends that while the performance of individual mini-grid systems is critical, the number of people and communities still to be electrified in Southeast Asia alone requires their deployment at scale. Aggregating systems locally can build efficiencies in planning and financing, program administration, equipment supply, and operation and maintenance services – and a viable program structure will need to demonstrate a means of doing this.

Real scale in turn will also build the capacity of the sector to be able to deliver on this – to get new private enterprises involved and attract both public and private investment so as to drive the establishment of larger numbers of systems, requiring numerous enterprises to supply, build, operate and maintain them.

The report proposes an “independent aggregator approach,” which employs a private sector led ownership and management model with a hybrid (public and private) financing structure. In this model each actor is appointed to fulfill the roles to which they have specific competency – finance providers arrange the financing structure, suppliers are responsible for ensuring the best technical solution is installed and the local aggregating capacity of consumers is leveraged – while the independent project management facility takes on the other roles and responsibilities (e.g. project development).

Piloting at scale is necessary to verify the program structure, and a minimum project size of 50 villages is proposed as a nominal starting point for a scaled pilot, with a total budget including full capital, development, program and administration costs of around US$20 million.

The report concludes that the future of mini-grids is not reducing their cost but increasing their value – using a demand driven design process to detail and meet the service requirements of consumers and thereby maximizing revenue and hence financial viability as well as the social and economic impact of these systems. The model will vary from country to country and region to region, but all the elements must share a common set of objectives and must be planned and coordinated, structured, and delivered in an integrated manner.