High efficiency light bulb in field of grass

Rural Electrification - The growth segment in the energy space

Posted Sep 1, 2010 | 0 | Filed under:

Anjali Shankar, Director General of  and member of the advisory board of , makes the case for rural electrification being one of the growth segments in the energy space. Data shows that countries with lowest population density also have the least electrification hence the need for technology solutions such as solar PV. Africa is also experiencing rapid urbanization with some countries in Western Africa having more than 50% of their population already in urban settlements. This is putting a great deal of pressure for power utilities.

Technology options for rural electrification include:

Solar PV - Mobile, versatile but not productive power.

Mini grids - more relaible with the inclusion of diesel generators and electronics.

Grid extentions - Terribly expensive at the moment ranging from $10,000 to $20,000 per km. Some steps can be taken to lower this cost, however it does remain prohibitively expensive. 

With mini grids, Diesel PV hybrid systems, at 50 euro cents per litre of diesel and 5,000 euro per kw installed, the payback time on the Hybrid station is 7 to 8yrs today and given the life of PV at 15 to 20 yrs, then PV is definitely worth investing in. Life cycle costs, environment, long term cost of fossil fuels, social economic and cultural dimension and infrastructure available are other factors that need to be considered. The challenge with mini grids is the complexity of managing them. In addition, solar PV is evolving rapidly with prices projected to be at 2011 at $2,475 and by year 2020 $1,200/Kw. This compares very favorably with hydro power while being cognizant that PV doesn't provide the same firm power as hydro.

One challenge with developing mini grids is that utilities more often than not, use number of connections as the key metric vs. the cost per kWh. A change in perspective would be to focus not only on connections but also the cost per kWh. Another challenge with mini grids is that they are based on local ownership and each has a variety of variables that make them very hard to manage. Innovation on incentives and subsides to ensure that minigrid owners interests are aligned with the national interests on electrification are key to ensuring success.

In co generation for agro industry. With a reasonable FIT, the processor could sell to the utility or sell to rural electrification. The rural electrification component is often times not as reliable a revenue stream and therefore requires grants. Rural Electrification Authority in Kenya is looking for partners cogenerate and distribute in rural areas. The key for the partners is to ensure that the rural grid component constitutes a manageable percentage of their overall revenue stream to ensure risk mitigation.


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