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Global off-grid Markets
and ARE Recommendations
Anjali Shanker
Innovation Energie Développement, IED
ARE Board Member
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Electricity in the world: The picture
1.6 billion people worldwide do not have access to electricity in their homes
3
Global
Electricity
Access 2005
1.577
8
1.569
41
45
930
554
Million
Population without
electricity
65,186,472,82.4883.418Developing Asia
65,698,090,0404449Latin America
61,790,475,64.8756.452World
98,2100,099,51.5011.510
Transition Economies and
OECD
56,485,268,33.3744.943Developing Countries
61,886,778,1145186Middle East
19,067,937,8337891Africa
%%%Millionmillion
Rural electrification
rate
Urban electrification
rate
Electrification rate
Population with electricity
Population
of those, 1.340 million live in rural areas
43,6% of rural population in developing countries have no access to electricity
Electricity in the world: The figures
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Global PV Off-Grid Market
“THE ALLIANCE FOR RURAL ELECTRIFICATION PROMOTES AND PROVIDES EFFICIENT RENEWABLE
SOLUTIONS FOR RURAL ELECTRIFICATION IN DEVELOPING
COUNTRIES”
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Enormous untapped off-grid potential
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Medium term prospects for off-grid very promising
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Off Grid is a future market
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The Alliance for Rural Electrification promotes
renewable energy in developing countries
“THE ALLIANCE FOR RURAL ELECTRIFICATION PROMOTES AND PROVIDES EFFICIENT RENEWABLE
SOLUTIONS FOR RURAL ELECTRIFICATION IN DEVELOPING
COUNTRIES”
ARE provides efficient renewable solutions for rural electrification in developing countries.
Our objectives are: • The Alliance attracts and unites all relevant actors in order to speak with one • The Alliance generates technical and financial solutions about rural electrification • ARE communicates and advocates for rural electrification using RES• ARE assists its members in the field of CSR projects.
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The Alliance for Rural Electrification
MembersASIF
EPIA
ESHA
EUROBAT
EWEA
GWEC
BAE
ENERSYS
Hoppecke
Rolls Battery Europe
Trojan Battery
IED
IT POWER
TRAMA TECNO AMBIENTAL
IDAE
Institute for Sustainable Power
(ISP)
RENAC
FONDAZIONE MADRE AGNESE
Rural Energy Foundation
C-TEK
KACO
OutBack Power
Siemens
SMA
STECA
STUDER INNOTEC
ACCIONA
Eauxwell
KAITO
KXN
SCATEC
Solar 23 Dev. Plc
SOLAR PACK
Solaria
Sunlabob
BP SOLAR
CEDES
Phaesun
Phocos
Q CELLS
SHARP
SOLARWORLD
INES
ISE FRAUHOFER
University of Southampton
University of Twente
FORTIS WIND
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Electricity a Must for Development
• Enhance education
• Reduce isolation and marginalisation
• Safety measures
• Improve healthcare
• Prevent natural disasters
• Foster productivity
• Improve situation of women
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Technology: The most common renewable energy options
Technology Advantages Shortcomings
Small RE stand alone applications • High flexibility.
• Easy to move and share.
• Limited to their specific use.
• Maintenance / repairs not safeguarded.
Mini-grid fed by RE/ Hybrid systems • Power for economic activities.
• Efficient maintenance
• Easily expandable
• With diesel backup: Stable power supply also at night and during unfavourable weather conditions.
• If no backup: Battery storage needed. Power shortages in cases of unfavourable weather conditions.
• If diesel backup: functioning depends on availability of fuel. Emissions and noise
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Mauritania
Mozambique
Decentralised renewables vs grid extension
Technology Advantages Shortcomings
Grid extension
• Energy for productive use
• Maintenance in principle is safeguarded
• Risk of electricity theft
• High price of connection for remote areas and limited willingness to pay
• Even higher prices over difficult terrain
• Power supply depends on quality of the grid
• Power transmission losses
Country Labour & other costs Materials Total
Kenya 6590 5960 12550
Senegal 5150 10810 15960
Mali 2590 15170 19070
Costs of grid extension in selected countries in US $ per kilometreSource: Reducing the cost of grid extension for rural electrification, ESMAP (2000)
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Decentralised renewables vs diesel generators
Comparison:
Cumulative costs diesel vs. PV/diesel hybrid system
Source: Alliance for Rural Electrification
Technology Advantages Shortcomings
Diesel generators • Easy maintenance
• Spare parts easily available.
• Steady power source
• Noise, emissions, local environmental/health damage
• Continued dependence on external supplies
• Exposure to international price fluctuations.
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The efficient and climate friendly technology: Conclusions
The following principles are important when
choosing a technology for rural electrification:
• Life cycle cost analysis • The environmental dimension • A long term perspective on fuel prices• The socio-economic and cultural dimension• Local infrastructure and manpower available• Technical requirements of the system and • measures to improve energy efficiency
Mini grids based on hybrid systems are very often the most cost-competitive solution. They can power small businesses, are reliable and environmental friendly.
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16
-59%
2020
1.238
2019
1.329
2018
1.428
2017
1.535
2016
1.653
2015
1.782
2014
1.924
2013
2.084
2012
2.265
2011
2.475
2010
2.725
2009
3.000
With continuous rapid technology improvements, system prices are expected to decrease
by ~60% by 2020
1) In real terms 2009 €2) Field system between 1 – 10 MWp
Sources: National Renewable Energy Laboratory, Interviews, EPIA set for 2020, A.T.Kearney analysis
Assumptions
• It is assumed that module prices will drop in line with the historical price experience curve at a 20% learning ratio
• The same learning ratio is assumed for inverters
• Area related costs (mainly installation, cabling and substructure) are assumed to decrease in line with the expected increase in module efficiency
Current price levels in the US for large PV systems are at the forecasted price level of 2011, supporting our cost price assumptions
PV competitiveness
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Source: RWE Energie AG and RSS GmbH
Photovoltaics
Utility peak power
Bulk power
0,0
0,2
0,4
0,6
0,8
1,0
1990 2000 2010 2020 2030 2040
€/kWh
900 h/a: 0,60 €/kWh
1800 h/a: 0,30 €/kWh
For large scale grid connected PVFor large scale grid connected PVsource:RWE, EPIAsource:RWE, EPIA
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• investment : 700€/kW• kWh cost : 80% fioul� diesel @ 90cts/L :
Cost > 30cts/kWh
Genset
Solar injection
• investment : 8000€/kW• Cost : 20-25 cts/kWh• with long-term financing,
•without battery storage
National electricity company
Borrows and maximises n° connections in the
short term, …
but bears high operating costs over time
Unwilling to use borrowing capacity for low number of
connections per $
Despite LT sustainability ensured
National electricity company
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Rural Electrification: A political challenge
• Access to electricity must rank high
on the development agenda
• Access to electricity should follow a
reliable long term strategy and the legal
framework must allow for private and
local initiatives
• A close dialogue between
policymakers, the private sector and
representatives of rural communities is
indispensable for sustainable policies.
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Financing schemes for rural electrification
Energy must be defined as a service rather than an installation. It is essential to ensure the O&M of the systems. Subsidies can be legitimate but should be phased out in the long run.
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ARE recommendation: the Regulated
Purchase Tariff:
• Based on the FiT adapted to off/mini-
grid.
• Upfront costs of system is spread over
a fixed period.
• Consumers pay fixed tariff.
• Ongoing tariff payments are subsidised
(by national government / international
development finance) to make up the full
costs.
• Renewable IPP recovers costs plus
marginal profits over the fixed
period.
• Long-term contract obliges company
to maintain the system (repairs,
replacements etc).
Financing schemes for rural electrification
Illustration:
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• Local ownership determines whether projects are successful.
• All stakeholders, community leaders, companies, aid organisations and public authorities have to be called upon to work together.
• The local community needs adapted financial support. A social network is appropriate for supporting community payments.
• Local technicians and trainings are indispensable.
• Electricity users have to be educated about the possibilities and limitations of their power system.
Challenges at the local level
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Information: Receive regular updates on new international projects and business opportunities.
Marketing: Underpin your commitment to quality and your technological expertise.
Networking: Get connected to the international off-grid community. Raise your company’s profile vis-a-vis international development organisations and governments (Worldbank, European Commission etc.).
Public Relations: Highlight your company’s commitment to improve access to energy and to deliver sustainable solutions.
Lobbying: Engage to shape the global off-grid markets.
Join the Alliance!
Engage in the global off-grid markets...
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Alliance for Rural Electrification
Rue d’Arlon 63-65,
1040 Brussels, Belgium
T +32 2 400 10 52
www.ruralelec.org
Let‘s talk
