Role in Rural Electrification

Renewable energy systems can play an important, cost-effective role in rural electrification.  However, the national or regional utility companies responsible for expansion of electricity services into rural areas are often structured exclusively around the grid-extension option.  The first step to creating a more open rural electrification planning framework is to understand the situations in which off-grid (mini-grid and stand-alone) renewable energy systems can be cost-effective in comparison to grid-extension.  

Extension of grid-based power and off-grid energy systems (mini-grid and stand-alone) are not necessarily mutually exclusive options in delivering electricity services to rural areas.  The extension of grid-based power requires a minimum threshold level of electricity demand and certain load densities to be cost-effective.  Deciding whether grid-extension or off-grid energy systems (conventional or renewable) are the least-cost option for supplying electricity to rural areas requires attention to the following factors:

• Household service level: the expected daily electricity consumption of the average household;
• Total number of households to be served;
• Load density: the number of households to be served per unit service area (in km2) or by the number of households to be served per unit of distribution line (per km of low-voltage distribution line);
• Productive loads: the number and power requirements of productive loads such as rice mills, grain-grinding mills, water pumping, and commercial or service sector loads; and
• Load growth: the annual increase in the load that will result from increases in both the number of customers served and the demand for energy.
• Load curve: the daily and seasonal variations in the power requirements;
• Renewable resource availability: the nature and strength of the resource, which directly impacts the technology selection and system costs;
• Fuel costs: these costs (including transport-related costs and fuel subsidies) determine the relative attractiveness of conventional mini-grids and hybrids systems; and
• Electrification planning: the long-term plan that utility planners may have for grid-extension to the region.

The expected daily electricity consumption for un-electrified households is usually based on replacement of the current energy sources, such as kerosene lanterns and batteries, plus an estimate of any planned additional services such as new appliances.  The time of day and duration of these services must also be estimated to allow proper design of the off-grid systems.  

An example of the cost trade-off for grid extension versus stand-alone solar home systems is shown in Figure 6, and for grid extension versus mini-grid options conducted for Bahia, Brazil in Figure 7¹ .   Additional examples of how to determine grid-extension vs. off-grid options can be found in this reference² , which also provides examples of typical rural energy needs and loads, and a comparison of solar home systems costs to conventional energy supply based on kerosene lanterns and batteries.

Computer models are available to determine the economic transition between grid-extension and off-grid systems.  ViPOR is one such model that is available from NREL.  It determines the optimum mix of centralized and off-grid generation when designing village electrification systems. It is able to select between grid extension and hybrid system for centralized power, select the optimal placement of the centralized power system(s), determine the optimal placement of transformers, and design the optimal local distribution grid. 

Finally, stand-alone renewable energy systems improve quality of indoor lighting compared to kerosene lamps and generally reduce time needed to manage household energy services.  This can free up time for women and children resulting in improved educational opportunities and expanded productivity for home based crafts. 

¹ Regulation of Rural Electrification in Latin America: Kilian Reiche, Policy and Regulatory issues for Grid and Off-Grid Electrification, A Working Clinic ESMAP and the World Bank, Buenos Aires, Argentina, July 22-23, 2004.
² Best Practices for Photovoltaic Household Electrification Programs: Lessons from Experiences in Selected Countries, Anil Cabraal, Mac Cosgrove-Davies, and Loretta Schaeffer, World Bank Technical Paper Number 324, August 1996. (PDF)