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Leonardo Webinar 1st December 2011
Sustainable Energy Regulation Network - REEEP University College London – Energy Institute
Dr Xavier LEMAIRE, Research Associate
1. Status of rural electrification in developing countries 2. Various RE technologies for rural electrification 3. Emerging forms of rural decentralised electrification 4. Main features of an off-grid framework
Part 1. Current status
1. Status of rural electrification in developing countries 2. RE technologies for rural electrification 3. Emerging forms of rural decentralised electrification 4. Main features of an off-grid framework
High disparity of non-electrification rate (2008)
Source: UNDP/WHO, 2009
Large part of the world in the dark
“The amount of electricity consumed in one day in all sub-Saharan Africa, minus South Africa, is about equal to that consumed in New York City” (Fatih Birol, IEA's chief economist)
Number of people without electricity will remain high… Source: IEA/OCDE.2009 .
Why rural electrification is lagging in some part of the world? (1) Historical reasons Ex-colonies – colonizer not interested in rural electrification (2) Demographic impact (3) Lack of financial resources (4) Lack of “political commitment” Rural inhabitants far from decision-makers! Bias in favour of limited extension of the grid Priority to urban areas Remote areas with low density: too costly/uncertain benefits .
Poor quality of service/pricing Lack of control 2. Unauthorised Connection / Low energy tariff = Non efficient energy appliances . Lack of investment in network and rural areas Poor maintenance 3. Priority power generation in urban areas Consumption subsidised 5. Lack of financial return for electric companies Increase of consumption = increase of financial gap 1.Vicious circle linked to financial situation of utilities 4.
Self-perpetuating logic Utilities tend “naturally” to focus on electrification of areas with high density/high income where they can sale electricity produced with conventional energy sources Utilities tend to ignore areas difficult to reach. where income can be very low and electricity has to be produced by decentralised systems High operating costs / logistic difficulties Systems with RET out of their field of knowledge (Poor) regulation/ (weak) institutions and policies for centralised system ignore small decentralised generation anyway Rural inhabitants “in the dark” OR unregulated electrification of remote areas by small private investors Privatisation/unbundling/transparency/tariff de-politicisation of the electricity sector? BUT economic barrier remains = rural electrification costly – private investors? .
South Africa. Bangladesh.Rural electrification? Necessity: of a rural electrification policy ! of a central institution to promote this policy & channel funding of an (adapted) regulatory framework No fatalism Some countries have made spectacular progress in few decades Mexico. Tunisia.… . China. Thailand.
Main features of an off-grid framework . RE technologies for rural electrification 3. Emerging forms of rural decentralised electrification & case studies 4.Part 2. RE technologies in rural areas 1. Status of rural electrification in developing countries 2.
funding for hydro-electricity goes mainly. Class Station Capacity Micro Hydro Mini Hydro Small Hydro Up to 100 KW From 100 KW to 2 MW From 2 MW to 25 MW . Furthermore.Hydro Power The technically feasible potential of hydro-electricity developing part of the world: less than 7% in Africa exploited Around 22% in Asia exploited and 33% in Latin America exploited (World Atlas of Hydropower and Dams. for large hydro-electricity. if not exclusively. 2002).
Small hydro power (SHP) .
Micro Hydro (100 kW Manali District .Himachal Pradesh) .
wind + diesel) Or wind pump for water .750 MW to 5 MW) Big players – emerging countries India: 14. South Africa. Morocco. Brazil.5 kW to 300 KW) Electricity with hybrid system (wind + hydro.Wind power Large generators (0. Egypt. Mexico.5 GW installed in March 2011 China: 40+ GW installed end 2010 Turkey. “Small” players in emerging/developing world Small generators (0.
30 MW wind farm in India .
Small wind generator in developing countries 200kW in Sri Lanka Wind pump in Guatemala .
Biogas generation Produces gas Cooking/Heating China. India. Nepal.4 kW to 700 KW Help to remove waste Reduce Green House Gas emissions .… + Generator = Electricity 0.
Biogas system .
“Big” photovoltaic system 200 Wp .
Pico-photovoltaic? Source: Lighting Africa .
5).Solar generation The Watt Power output of a Solar module is the number of Watts Output when it is illuminated under standard conditions of 1000 Watts/meter2 intensity. A 1 kWp system will produce 1 kW under ideal conditions Typical Solar Home System in Europe – 1 kW peak to several kW peak for households With 2kWp = 50% of electricity of an household in the UK (10+ K£) In a developing country : 10 Watt peak to 150 Watt peak – light / TV Around 200 W peak – solar fridge Water pump one to several kW peak . 25°C ambient temperature and a spectrum that relates to sunlight that has passed through the atmosphere (AM or Air Mass 1.
PVGIS copyright European Commission 2001-2008 and HelioClim-1 copyright Mines ParisTech / Armines 2001-2008.com/eng/map / . Source: http://www.soda-is.
Huge decrease of PV cost .
quality of light with PV is superior Diesel generators . paraffin .high costs of substation .mechanical parts and cost of fuel Connection to the grid . Solar interesting in remote areas/scattered houses for low loads compared to: Candles.Particular interest of solar Reduction of the cost / Wp of more than 80% since early 1980s of the solar panels from the manufacturers to 2004. stable for few years then since 2008 another 60%. Current long-term growth rate of the photovoltaic market + 40%/year BUT photovoltaic panels only part of the cost (40/50%) against batteries (20%) and installation costs (40%) Cost decreasing but still quite high initial investment (350-1000 US$ for a 50 Wp system) if it has to be borne by end-users.
How rural areas could benefit from new technologies? Paradox of solar energy: in rural areas of developing countries where it could be useful – solar remains expensive Source: REN 21 .
Status of rural electrification in developing countries 2. RE technologies for rural electrification 3. Emerging forms of decentralised electrification 1. Main features of an off-grid framework .Part 3. Emerging forms of rural decentralised electrification 4.
Main barriers for rural electrification with RET? Diffusion of a new but now mature technology Technology-driven not sufficient Needs a context Institutions and people Financing scheme Companies End-users Training / Knowledge scheme Companies / Utilities / Decision-makers End-users Financial institutions Sustainable market Market-driven Stable & adapted regulatory framework .
Toward a new generation of RET projects? 1) First generation of projects funded by aid transfer of technology passivity of receptors Renewable systems were given Not maintained by local beneficiaries of aid 2) New generation of projects Energy just a technical problem? Social needs (not just kWh!) To provide a service (not just to sell & install a product) Maintenance of systems even if the cost is low has to be borne by the end-users Clients selected according to their purchasing power Selection of local entrepreneurs Market-driven (and not just donor or technology-driven) Far larger scale than previous projects Economies of scale and density .
NGOs. private entrepreneurs. cooperatives.… Overcome barriers of up-front costs Rural electrification subsidies Access to diversified sources of funding Innovative financial scheme Reduce costs of installation & maintenance Local manufacturing Clear definition of who is responsible of systems and monitoring Find good combination conventional & new technologies Integrated energy services and not just promotion of one technology Long-term commitment of public authorities Stable regulatory framework .How to design a rural electrification scheme… New actors for public-private partnership.
2008. .Source: World Bank/ESMAP.
RE technologies for rural electrification 3.Part 4. Emerging forms of rural decentralised electrification 4. Main features of an off-grid framework . Main features of an off-grid framework 1. Status of rural electrification in developing countries 2.
standards Operational measures (energy surveys) and funding/bundling (loans. grants) notably CDM Install. (integrated planning).A robust institutional framework FUNCTIONS Defines rules for competition: tariff for RE. But all functions needs to be covered and clear definition of who is responsible of what Delegation / sub-contracting ESCOs ESCOs ESCOs Same entity (or linked entities) responsible for installation AND maintenance of a system x x x x xxx x x xx x x x x xx xxx xx x xxx x xx end-users . collect fees AND guarantee functioning of sustainable energy systems Function of independent regulator Regulation by the national electricity regulator with a specialised department OR Regulation by the government entity that provides installation subsidies Control standards and tariffs Rural electrification agency / fund Control standards and tariffs complaints Variety of approach possible for institutional design.
Reduction of costs for end-users and funding agencies Off-grid regulation Regulation can be sub-contracted to rural electrification agency (expertise) Organisations capable of evaluating local needs Sub-contracted to NGOs/close supervision of rural electrification agency Need to monitor and evaluate the scheme ex-post Delegated/subcontracted to consultants End-users can nominate a delegate Rural electrification plan and strategy Evaluation & feed-back .Clear repartition of roles Functions/roles to be fulfilled <> creation of new departments not always needed.
Appropriate regulation for off-grid Light-handed approach Protection of consumer Adapted standards Importance of correct tariff setting .
Light-handed regulation? Regulation often adapted first and foremost to conventional utilities Avoid over-regulation: Regulation of small utilities <> large utilities Licensing procedures & control shall be adapted to small operators Over-regulation = no regulation (illegality) Protect small operators against encroachment /expansion of grid by large utilities or give them financial compensation .
000 users. all operators of isolated village mini-grids above 300kW installed generating capacity were required to acquire concessions BUT Concessions could only be granted to entities that were shareholder companies / 2/3 of mini-grids operated by cooperatives The reporting requirement and technical standards were too costly to satisfy by small cooperatives Better to have light regulation than to have multiple unlicensed operators (safety.Case of Bolivia: Recognition of the impossibility of implementing conventional regulation* Before 2000. 2006. Proposed final regulation Systems above 1 MW Regulated as before Systems between 300kW and 1 MW Fewer reporting requirement and less stringent service standards Systems under 300 kW No obligation for operators except to register themselves and provide a yearly update of basic information * Working paper from ESMAP/World Bank.…) Partial intermediate solution Raise the threshold of regulation to 500 kW peak demand Allow cooperatives to maintain their legal status for an initial period of 7 years Discussion to lower reporting and technical requirements for all mini-grids with less than 2. .
end-users are isolated Channel of information? Revoke license? Rural companies can abuse their power .Role of regulator – protection of consumer Communication / public awareness Control of level of expectations of end-users What RE can do and cannot do Energy efficiency measures RE implies energy efficiency Complaints of end-users In rural areas.
technicians.Role of regulators . NGOs.standards Standards have a cost High standards = high costs Compromise .what is really needed Regulators can refer to already existing standards for materials in other countries: photovoltaic solar heater installations Regulation of the market has a tremendous impact for limited cost Avoid sub-standards products or installation Guarantee consumer satisfaction Important to monitor / regulate effectively the market Periodic control Staff specialised on rural electrification Specialised department of the regulatory body Or can be left to the rural electrification agency Or subcontracted (regulation by contract) Awareness and training are fundamental part Regulators.…) . end-users Get local institutions involved (universities.
Role of regulator: tariff setting Kind of tariff Flat tariff for individual systems Metering systems when connected to collective central system Offer: importance of cost recovery for sustainability of business Operating costs of utilities Needs to be covered ! public subsidies for investment costs only ! Importance of creation of provision/batteries fund for solar If tariff covers part of capital cost. continuous public subsidies are needed for expansion Part of capital costs? Subsidies = the ones given for grid-connection Demand: tariff that can be afforded by end-users Survey of structure of incomes % of the inhabitants of an area to be reached Procedure for annual revision High inflation rate in some countries Rate of exchange / US dollar (imported components) Capacity of payment of end-users . utilities can expand to new customers If not.
Central role of rural electrification agency Integrated planning Energy surveys Socio-economic comparisons (Regulation) Tariff Standards and codes of practices Funding Interlocutor of international agencies Bundling small scale projects (Clean Development Mechanisms) Monitoring and evaluation Rural agencies Central interlocutor of local utilities (and end-users) Importance of permanent trained and dedicated staff Importance of financial resources – own budget Operating autonomy with rural electrification as primary objective .
Appropriate planning & design system Design local generation and distribution system Comparisons Cost RE technology Cost hybrid system Cost connection to the grid Least cost planning (not just energy supply) Energy efficiency and demand-side management Lifetime of the project: 20/30 years Rising operating costs and risk linked to conventional energies Increase of the demand Demography Future extension of the grid? What is planned by the utility .
spatial location of energy needs SHS ideal for basic needs: light. TV. health centres… Other energies / small grid for productive use . biomass. solar cooking. SWH.… Individual needs / productive use – precise evaluation of energy needs fees and income generated locally. radio. mobile phone Solar for use with low loads: solar pump.Technology neutral: combination of various technologies Technology neutral with an “optimal” combination of: Centralised systems – grid / Decentralised / mini-grid systems / Individual systems Market open to new entrants with new technologies Not just one source of energy. but a combination of energies * Electricity When available: small hydro / wind / biomass / geothermal Otherwise solar photovoltaic Intensity of solar radiation (5-6 kWh/m2) Low density of population in some areas Flexibility of the investment High operational costs / difficulty of supply of fuel and repair mechanical parts in remote areas Rising costs of energy & risk + diesel generation as a complement (for productive use) and not necessarily main source: * Heat / cooking LPG. schools.
Combination of mini-grid & individual systems Minimum costs = mini grid for 78 HH and individual solar home systems for 22 HH Source: WordPower. 2000 .
Long term comparison of total costs (case PV) High operating costs Low investment costs = genset $ High investment costs $ Low operating costs batteries Long-term integrated comparisons Life cycle costing N+20 or even N+30 N+20 or even N+30 Diesel systems Solar Home Systems .
Utilities: Fee for service / ESCOs. Creation of organisations to spread the up-front costs and maintain systems .Implement institutions to solve the questions of high investment costs in rural areas and long-term maintenance 1.“Banks”: Micro-credit / revolving credit / loan . Support mechanisms to reduce up-front costs / creation of rural funding agencies (subsidies.… $ Reduction of up front costs of RET Spread RET up front costs N+20 . integrated planning) 2.
biogas) May diversify to other services / products Water? Solar water heaters But then increase complexity of management Existing structure or new enterprises? Add activities to consolidate electrification business Synergies: LPG.Rural energy service companies Deliver an energy service Electricity (SHS or hybrid) Heat/cooking (LPG – Liquefied Petroleum Gas. Solar water heaters.… Specialisation on core activities Long-term financial sustainability Branch of a major company Independent enterprise .
Elements of conclusion New institutions / new way of thinking Market-driven (and not just donor-driven) Training is crucial (at every level) Focusing on sustainability in the long term of delivery of energy services (and not just kWh) Appropriate level of financing of the operators Maintenance of the energy systems Long-term homogenous & stable regulatory framework … with regulation adapted to new actors Adapted to small companies = introduce new actors Limit the power market of existing utilities Rural electrification depoliticised (independence and transparency) … framed by a real energy strategy/policy Long-term commitment of the government Energy + industrial policy + local development Nurse a market = create jobs locally and nationally + local expertise .
Keys to Successful Policies. 2004. Esmap – World Bank. by Douglas Barnes and Gerard Foley. Resources for the Future – ESMAP. July 2006. (Ed. . and Clemencia Torres de Mästle.References to go further Electrification and Regulation: Principles and a Model Law Discussion Paper No. The Challenge of Rural Electrification – Strategies for Developing Countries. Douglas B. Bernard Tenenbaum.worldbank. 2007. pdf Comparative Study on Rural Electrification Policies in Emerging countries. 18 by Kilian Reiche. Energy and Mining Sector Board. OECD. by Alexandra Niez.org/INTENERGY/Resources/EnergyPaper18. World Bank http://siteresources. 2010. World Bank.). Rural Electrification in the Developing World: A Summary of Lessons from Successful Programs.
reeep.org REEEP . Central House .Lemaire@reeep.htm .Sustainable Energy Regulation Network http://www.org/830/sern.Contact University College London -Energy Institute.14 Upper Woburn Place London WC1H 0NN United Kingdom Xavier.
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