Clean Energy Mini-Grids

A UNEP Perspective

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Mark Radka

Chief, Energy Branch

7 March 2013

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Overview

• 1.4billion people with no access to electricity, most living in rural areas

• 3,000 inhabited islands in Indonesia / Philippines

• Rapid advances in technology and decrease in costs

• Abundant renewable energy sources in most developing countries

• Increasing international interest in the approach

Mini-grids estimated to provide 40% of new capacity by 2030

The potential for mini-grids is large

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Why mini-grids?

• Utilize local renewable energy resources

• Typically offer greater levels of energy access compared to simple household PV systems and off-grid lighting devices

• Provide power for commercial and agricultural applications (not just residential use)

• Create local jobs

• Offer health and environmental benefits compared with alternatives

Renewable energy mini-grids offer possibilities for improved energy access with environmental and health benefits

Source: Lawrence Berkeley National Laboratory, Schatz Energy Research Center at Humboldt University

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Barriers exist

• Need for suitable renewable energy resource

• Higher capital cost

• Cost of storage

• Need for back-up power supply?

• Affordability of the energy service provided (low or erratic customer disposable income)

• Customer awareness

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Feasibility depends upon many factors

• Favourable and stable policy framework

• Tariff sufficient to support re-investment

• Technology that matches needs

• Adequate skills and capabilities in the local community

• Experience of practical implementation

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Requirements from the Public and Private Sectors

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Viable Business Model - Challenges

• High up-front costs

• Long-term revenues

• Predictability of public funding or support

• Local management of operations

• Risks from political/regulatory uncertainty

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Role of the Public Sector

• Policy framework

• Tariff structure

• Guarantees for initial investment

• Public-private-partnerships

• Economies of scale

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