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Mini-Grid RE
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 Experience in many developing countries shows that renewable energy mini-grid systems are an effective approach to expanding electricity service in certain rural areas, especially if a renewable energy resource is available. Most of the experience to date has been with micro-hydro systems where successful results have been achieved in China, Nepal, India and Sri Lanka among others. more
|  | Key Issues
Rural electrification planning should clearly define the roles of grid extension vs. mini-grids, which are complementary to each other, and criteria to determine when grid extensions vs. mini-grids are cost-effective options. Mini-grids can not only play an important role in increasing access to modern energy services in rural areas, but also contribute to productive uses and social services, as well as generate heat, motive power, and other non-electric energy. Renewable energy mini-grids have unique characteristics -- high investment requirements but low energy costs, fuelled by indigenous resources, and environmentally benign. However, mini-grids, particularly renewable energy mini-grids, are a “missing link” of rural electrification except micro-hydro, because they are more difficult to implement than grid extension or stand-alone systems. For example, to set up local institutional arrangement for mini-grids is a challenge due to the “tragedy of common goods”, and there is limited knowledge on regulatory framework for mini-grid systems. It is also important to select least-cost mini-grid technologies, and the optimum system size. Key issues include:
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| | Regulatory Framework
The regulation for mini-grids, whether from renewable energy or conventional sources, must be performed in different ways relative to the same regulatory tasks for grid extension. Mini-grid electrification uses different business models, and often requires the need to coordinate tariffs with subsidies. Particularly, renewable energy mini-grids require specifically designed tariff schemes because of the supply characteristics and demand patterns. Worldwide, almost all rural electrification programs involve some forms of subsidies. There are a number of key barriers to mini-grid renewable energy systems. Currently, most mini-grid service providers are often not regulated or over-regulated.
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| | Business Models
A key success to mini-grid systems is the local institutional arrangement on who invest, develop, own, and operate mini-grid projects, particularly renewable energy mini-grids. The core issue here is Ownership and Management. In general, there are four business models for mini-grids:
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| | Finance Mechanisms
Most the service providers for renewable energy mini-grids are either community-based organizations or local entrepreneurs. Promising programs are emerging that support rural entrepreneurs and community cooperatives with technical and business training in renewable energy technologies, marketing, feasibility studies, business planning, management, and financing. Finance mechanisms are directed to the project developers and are generally designed to support one or more of the typical project financial components.
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| | Technical Requirements
Resource requirements, siting and environmental issues, technical standards, equipment specifications and other requirements for typical mini-grid renewable energy power systems. Since diesel generation has the largest share of the existing mini-grid market, there is a huge potential to retrofit existing diesel generators with improved efficiencies or renewable hybrid or battery storage.
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