Introduction to Technical, Energy Mini Grids (CEMG)

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Introduction to Technical, Economic and Socioeconomic aspects of Clean Energy Mini Grids (CEMG) page 1

Chapter 1 Technical aspects of CEMG page 2

Definition A micro-grid and a mini-grid, in the context of rural electrification, is an integrated decentralized local generation, transmission and distribution (production, transport et ditribution) system serving numerous end users that stand on its own separated from the national grid with an installed capacity from XX kw to XX MW or XXX km page 3

General characteristics of a CEMG? A combination of different but complementary energy generation systems based on renewable energies (solar, wind, biomass, hydro) or mixed (diesel) Hybrid powered mini grids can provide steady community level electricity service, such as village electrification, offering also the possibility to be upgraded through grid connection in the future Total installed power up to 100 kw (according to IEC) but can go to multi MW in real Distribution line in low voltage (up to 1.000V) (only distribution) Single or 3 phases page 4

Components of the CEMG page 5

Components of the CEMG: Generation page 6

Components of the CEMG: Generation page 7

Components of the CEMG: Generation

Components of the CEMG: Storage page 9

Components of the CEMG: Energy Management System, page 10

CEMG categorization Solar-Diesel Systems % RE peak % RE year Excess RE Fuel offsetting - 20-30% - 5-10% - No excess Fuel Save Controller Full Energy Management System - 30-60% - 10-15% - Is curtailed - 30-80% - 15-30% - Is curtailed Energy Storage - 100% - 45-100% - To storage page 11

Pros and cons PV/Diesel systems Solar-Diesel Systems Pros Cons Fuel offsetting - Cost effective - Low risk Fuel Save Controller - Cost effective - Higher savings Full Energy Management System - High savings - Full control Energy Storage - Use of excess energy - Blackouts very unlikely - Limited savings - Risk of grid instability - Expensive & Complex - Expensive - Complex system page 12

Weekly functioning of a PV/diesel mini-grid page 13

Decision for categorisation: Inputs Penetration of RE: High > 80% Medium 30<RE<80% Low <30% Quality of service Hour per day SAIFI, SAIDI Voltage DC Voltage AC Consumption: Average daily energy demand Load profile Site Related: Project horizon Accessibility User dispersion Diesel or grid fuel price (at site) RE sources (solar, wind, hydro) Legal framework / subsidies page 14

Decision for categorisation: Output Technology mix: Combination of renewable technologies (solar, wind, hydro) Share of diesel generation Capacity and technology of storage LCOE: Capital investment costs Operating costs page 15

Chapter 2 Economic aspects of CEMG page 16

Fixed cost (2014) page 17

Variable cost (2014) page 18

Cost impact hybridizing (2015) Diesel cost 0.96 USD/l Source: Frankfurt School of Finance & Management ggmbh 2015 page 19

Cost impact hybridizing (2016) page 20

Remarks on fixed cost Three fixed cost positions are regularly underestimated: Company overheads such us, administration, coordination and social and technical problem solving, bookkeeping, reporting (to donors, lenders and authorities), hospitality Customer relationship, this category includes conflict resolution, training on safe and efficient use of electricity These cost will happen continuously and independently of the number of kwh The access to preferential finance will impact significantly the levelized cost of the electricity (LCOE) page 21

Impact in LCOE of different funding sources Source: Frankfurt School of Finance & Management ggmbh 2015 page 22

Weighted Average Cost of Capital (WACC) Financial costs WACC 9% approx. (15% shares + 8% preferential debt) Source: Frankfurt School of Finance & Management ggmbh 2015 page 23

Profile of capital providers in Africa page 24

Revenues Retail tariff Connection fee Grant and subsidies page 25

Financial model tools page 26

Financial model tools https://energypedia.info/wiki/file:financial_analysis_of_micro-hydropower_projects_-_excel_tool.xls page 27

Financial model tools page 28

Chapter 3 Socio- economic aspects of CEMG page 29

Economic impact Increase productivity Potential increase in household incomes Development of new economic sectors (tourism) Prolonged business hours and expansion Potential financial burden page 30

Social impact Improve educational system Improve health system Prevention of child accidental poisoning, and decrease in indoor-air smoke Increase in access to information and entertainment Access to clean wáter Safety and reduction of workload Community involvement and reduction in youth migration to urban areas page 31

Environmental impact Displacement of dry cell batteries Reduction in deforestation Potential burden due to recycling and waste disposal of solar panels and batteries Competition for land and with vegetation page 32

Access and Jobs page 33

Access and Jobs Most of the enterprises are small. Some employ roughly a dozen or so people. Many others are micro-enterprises with just a handful of permanent or casual employees, and in some cases there are no employees at all beyond the entrepreneur him- or herself A significant number of temporary jobs are created among renewable energy enterprises. Some work is temporary simply owing to the nature of the activity, such as construction of a hydropower plant or a biogas facility Another divergence from conventional employment creation is found in community projects since members receive a small income for their work, they are not full-time employees page 34

Access and Jobs Renewable energies are well adapted to the rural context. The bulk of the skills and training that are required can be developed locally. This is of great importance because there is limited need for foreign know-how and expertise Training can be done on-site or on-the job. This is especially true for many micro-enterprises and particularly those that rely on casual labour in addition to the regular employees page 35

Access and Jobs The Green Climate Fund agreed to serve as anchor investor in a USD 3.5 billion debt fund for decentralised renewables called Universal Green Energy Access Program. As a result, as many as 15,600 permanent and 7,900 temporary jobs will be created in the next 15 years, about half for women Rwanda wants to increase electricity access to more than 70% by 2018; with o-grid connections rising from 2% to 22%. A 3-year programme (Scaling up O-Grid Energy in Rwanda, or SOGER) was launched in July 2016 with the aim to provide energy access to 77,000 people in rural communities through solar and hydropower mini-grids and solar-powered irrigation. Altogether, it is expected to create 7,000 jobs, especially for women and youth page 36

Access and Jobs page 37

Access and Jobs page 38

Thank you for your attention!