Rural electrification through mini-grids
In a world where renewables are now the most affordable energy source, reliable electricity and fuel without the negative effects of pollution and emission of greenhouse gases are available to all. Families and children can have light in their homes to study, access to medicines requiring refrigeration and mobile telephone recharging, and communities have the opportunity to create small businesses to provide income generation. Many countries have started to implement policies and adopt legislation to harness renewable resources; water, sun, wind, geothermal and biomass — to produce electricity, heat and fuel. As the world moves towards adoption of renewable energy as a key source of energy production, the role of parliamentarians has been and will remain critical in developing legislation required to create and deliver access to energy from renewable sources.
Clean Energy Mini-Grid Policy Development Guide
UNIDO’s new Clean Energy Mini-Grid Policy Development Guide aims to help policymakers navigate the renewable mini-grid market. The guide outlines the various forms and models that public-private cooperation can adopt and reflects on the outcomes of policy decisions on mini-grid deployment. Based on the key lessons learnt from existing mini-grid policies and regulations, the publication also presents a decision tree designed for policymakers to guide them through the decision-making process. The guide submits five main conclusions:
sustainable mini-grid business models require scale
private sector involvement depends on decisions taken by governments
close government control over mini-grid deployment, minimum financial subsidies, and low-end consumer tariffs cannot be achieved all at the same time
the development of electricity demand in rural areas is difficult to predict, making it important to introduce demand risk mitigation instruments; and
the risk of a sudden end to the project should be considered by policymakers and regulators.
Gender, electrification and clean cooking
Across the world, women are less likely than men to have access to any form of electricity. In order to assess women’s needs and ensure a productive use of energy, electrification must be combined with clean cooking access and electrification of community facilities such as water supply, health facilities, schools and community centres. This has been found to be beneficial not just to women but to all stakeholders. There is a case for legislative actions : legislation should set clear targets for gender-responsive energy agendas, supported by appropriate levels of investment. Above all, the post-COVID-19 recovery packages represent an opportunity to include women in sustainable energy.
Boosting private sector participation in the mini-grids sector
In a bid to significantly scale up its rural electrification, Nigeria has undertaken several progressive reforms to advance solar mini-grids. The core objective of these reforms is to promote a stable investment environment for the private sector that ensures returns and minimises risks. The most significant as well as replicable reforms on this front are the following: 1) a cost-reflective multi-year tariff model that ensures a fair return on investment while providing a fair cost for rural customers with the help of an online tool (see MYTO document); 2) safeguarding measures for developers in case of grid extension by distribution utilities: and 3) a results-based financing framework that offers incentives subject to successful implementation (see Mini-grid regulation).
Concessionary system for mini-grids
Senegal is the only sub-Saharan African country to have implemented a zonal concession system for rural electrification. Through a programme set up in 1998, private concessionaires can obtain 25-years technology-neutral rights to provide electricity in designated rural areas to a sizeable number of households. The Government offers subsidies of up to 70% of capital expenditure with specific obligations, including charging cost-reflective tariffs and minimum hours of supply. For the remote and sparsely populated villages not included in the concession system, the Local Rural Electrification Initiatives (ERIL) programme was launched, allowing private players, NGOs or community organisations to set up off-grid small-scale electrification projects. A rural electrification fund was also established to facilitate the ERILs and to compensate developers for any inability to recover the operational costs.
Bundled tender mechanism for mini-grids
In 2016, seeking to stimulate private investments in its rural electrification sector, the Government of Uganda launched the Promotion of Mini-Grids for Rural Electrification Initiative, in collaboration with the GIZ. The initiative includes a reverse auction tender model for bundled mini-grid project sites and simplification of licensing procedures to ensure quality of power supply and attract the private sector. The Ugandan Government gives developers generous incentives for 10-year concessions, after which the mini-grids ultimately revert to the state. The Government pays for up to 70% of the cost of low-voltage lines and distribution networks, amounting to 14-28% of the total capex for the projects. Under this initiative, two developers have been selected to implement 40 mini-grids that are expected to supply electricity to 20,000 people and 120 small and mid-size enterprises. The project has established a frameworks and process that will help scaling up mini-grids projects in the future.