Across Africa and Asia, exciting plans for new mini-solar grid projects are being announced at a rapid pace. However, a surprisingly small percentage of these projects are actually being built and activated, according to Infinergia Consulting, a group based out of Grenoble, France. Mini-grids can give millions power, but bureaucracy and technical issues still stand in the way.
Infinergia Consulting released “Mini-grids for Village Electrification: Industry and African & Asian Markets Analysis—2020 Edition,” a report that showcases the recent developments of this market. Infinergia analyzed the regulatory situation and projects, installed and planned, in more than 20 African and 11 Asian countries.
The report celebrated that more than 3,000 mini-grid projects are slated to open by the end of 2022 in Africa and Asia. But these announcements mean little compared to the results of 2019, the report also found that 1,600 projects were announced and only 150 are classified as completed in Africa. This is just a 9.3 percent completion rate.
Mini-grids have the potential to bring electricity to thousands still living without it, but bureaucracy and cost are slowing down the process.
A mini-solar grid is a local electrical network powered by photovoltaic panels, diesel generators, or a solar battery, usually between 10kW and 10MW in size. This grid can continuously power an entire village or town, without connecting to the national power grid, at a competitive price. Sometimes, the grid can also be powered through multiple sources.
Bringing electricity to small villages
Globally, 850 million people are living without electricity and 80 percent of those people live in Africa, according to Baptiste Posseme, a senior consultant at Infinergia Consulting. Mini solar grids work as a great solution for countries in Africa where it is impossible to extend the national power grid far enough to reach these villages.
Extending the national grid usually isn’t an option because it would weaken the existing power distributed and it could be extremely costly to extend the power lines to a remote village.
Another solution to power the remote villages is individual solar panels or batteries on every building or home, but that has a high price and timely installation process.
“There’s no financial interest if people are too spread out or if the village is too small for mini-grid,” Posseme said.
In India, small businesses will rely on diesel to power their buildings, resulting in excessive carbon emissions.
So the countries turn to mini-grid solutions in the hope to provide clean, affordable power. When the mini-grids do work, it can revolutionize a village. But often the projects are installed hastily, quickly and for the lowest cause possible and fail after less than five years, leaving the villages in the dark once again.
Funding the mini-grids
“To be honest, the main factor is the capital expenditure in the initial cost of the project,” Posseme told Solar Magazine. “It’s been an issue because more and more the projects are being installed at the lowest cost possible and then the project stops working after a few years.”
To combat the rush to lower the price of projects, a standardized solution on how to build mini-grids is emerging. This way, workforces will not have to be trained each time a mini-grid is installed across Africa or Asia. These containerized are standardized solutions provide and ease in installation and have proven to be more reliable in the long run, according to Infinergia’s findings.
Instead of doing a custom made project each time, where money and time are spent on creating a specific study and on-site installation is needed from a local workforce who needs to be re-trained, it will be more of a plug-and-play method.
“Instead, you’ll plug in a container, inverter, solar panels, and you will see those solutions are getting traction,” Posseme said. “Most of the time they have a higher initial cost, but they have higher quality and the project lasts longer.”
The mini-grids are typically being paid for by countries securing sustainable finance to cover upfront costs. Whether it be an investor or the country, they typically want to see the operation and maintenance costs pay for themselves through tariffs or subsidies in order for the projects to make sense.
However, companies such as Vulcan claim they have three strategies to ensure the Internal Rate of Return is 15 percent in 10 years for these projects, making them more attractive to potential investors.
Until a few years ago, mini-grids in these countries weren’t considered relevant for private investors, but now ongoing political and technological advancement for mini-grids it’s encouraging investment.
Slow implementation is both the cause and the issue
The two main reasons for the delay in installations are political and technical issues, and sometimes both, according to Posseme.
“The mini-grids are not being built at a fast rate because of a political delay, sometimes it can take six months to a year for politicians to decide the price of electricity or they have issues getting the products to rural Africa,” Posseme said.
Sometimes, the process of building the grids has begun but the political delays stop it from being turned on. If the grids have a battery installed and are ready to be turned on, but the politics got in the way, big problems for the grid can arise.
“Then, by the time this is all worked out the project was delayed so much the battery for the mini-grid has died. Now, you’ll need the start the process of securing a battery all over again, which takes time and creates a further delay.”
The future of mini-grids
With 3,000 mini-grids planned to be installed by 2022, the potential is extremely high. There are some factors helping shape the way for these 3,000 to be more successful than its past predecessors.
On the policy side, the Kenyan Energy Act, which went into effect in March 2019, promotes renewable energy and regulates coal activities. It also established the Rural Electrification and Renewable Energy Corporation, which mandates developing and implementing a renewable energy plan for rural Kenya.
In Ethiopia, where electricity access is available to 30 percent of the country, the National Electrification Program plans to bring electricity to all citizens by 2025. The World Bank is supporting the effort with a $375 million credit to develop the technology and systems needed.
“The Ethiopia Electrification Program will ensure the sustainability of service delivery over time, moving away from a project-by-project approach. This is one of the largest and most ambitious electrification programs the Bank has ever undertaken in Africa,” Rahul Kitchlu, team leader for the Ethiopian Electrician Program, said in a statement from The World Bank.
In the private sector, initiatives such as Tata Group’s announcement for 10,000 new mini-grids in India provides a pathway for clean, affordable and renewable energy access to Indian citizens. The company said their plan would reduce carbon emissions by 1 million tons per year and diesel consumption by 125 million pounds per year.
“TP Renewable Microgrid anticipates setting up of 10,000 microgrids through 2026 to provide power to millions across India and help eradicate energy poverty,” Tata Power, the group’s new arm to handle the expansion, said in a statement. comment