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Mini-Grids Developers and Operators

This document provides an overview of considerations for setting up and operating mini-grids. It discusses topics such as feasibility studies, site selection, renewable resource assessment, demand assessment, applicable health and safety regulations, tariff structures, technical system design including generation and distribution technologies, community engagement, financing options, procurement, installation, commissioning, and operation and maintenance. Key factors for site selection include proximity to existing grids or mini-grids, population density, economic activity, and renewable resource availability. Regulatory issues around tariffs, licensing, and grid arrival can hamper mini-grid growth, as policies are often unclear and tariffs may not allow for cost recovery.

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Adedimeji Fred
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63 views6 pages

Mini-Grids Developers and Operators

This document provides an overview of considerations for setting up and operating mini-grids. It discusses topics such as feasibility studies, site selection, renewable resource assessment, demand assessment, applicable health and safety regulations, tariff structures, technical system design including generation and distribution technologies, community engagement, financing options, procurement, installation, commissioning, and operation and maintenance. Key factors for site selection include proximity to existing grids or mini-grids, population density, economic activity, and renewable resource availability. Regulatory issues around tariffs, licensing, and grid arrival can hamper mini-grid growth, as policies are often unclear and tariffs may not allow for cost recovery.

Uploaded by

Adedimeji Fred
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Developers and operators

o Introduction to mini-grids
o Setting up a mini-grid business
 Feasibility studies
 Setting up a company
 Human resources
 Accounting and reporting
o Site selection
 Renewable resource assessment
 Demand assessment and forecasting
o Legal & compliance
 Health and safety
 Energy policy and regulation
 Energy policy and regulation by country
 Licenses
 Concessions
 Tariff approvals
 Environmental and social impact assessment
 Land rights
 Construction permits
 Taxes
o Mini-grid business models
 Demand management
 Quality of electricity services
 Tariff design
 Revenue collection
 Productive end use
 Power purchase agreements
 End user finance
o Technical system design
 Power generation technologies
 DC power generation systems
 Hydro
 Biomass
 PV/PV-hybrid
 Wind
 Power distribution technologies
 Low voltage DC
 Low voltage AC
 Medium voltage AC
 Customer connections
 Metering
 Indoor installations
o Community & stakeholder engagement
 Community engagement
 Customer service management
 End user contracts
o Financing
 Financing overview
 Financial models
 Grants
 Equity investments
 Debt investments
 Guarantees
 Foreign exchange hedging
 Due dilligence
o Procurement, installation & commissioning
 Procurement
 Imports and duties
 Logistics
 Storage
 Installation
 Commissioning
o Operation & maintenance
 Corporate management
 Local operation and maintenance management
 Health and Safety

o Introduction to mini-grids

A mini-grid is a set of small-scale electricity generators and possibly energy storage systems interconnected to a
distribution network that supplies electricity to a small, localised group of customers and operates independently
from the national transmission grid. They range in a size from a few kilowatts up to 10 megawatts. Smaller mini-
grids are sometimes referred as "micro-grids" or "nano-grids".

Mini-grids can serve a wide range of customers. These include private households, commercial businesses such as
shops, ice makers and mobile phone chargers, agricultural loads such as irrigation pumping and cold storage,
productive loads such as grind mills and wood or metal working shops, and semi-industrials such as telecom
towers, processing plants or flower farms.

Mini-grids can be developed or operated by state utilities, private companies, communities, non-governmental
organisations, or a mix of different players such as public-private partnerships. The generation and distribution
assets may be developed and managed by different players, both public and private. The mini-grids can run on
diesel, renewables (solar PV, hydro, wind, biomass etc) or as renewable-diesel hybrids. Green mini-grids are those
that generate a significant portion of their power from renewables.

o Site selection

Site selection is critical and many factors must be considered when making a decision.
Key criteria include:

 Existence of or distance to the national distribution grid or other mini-grids;

 Population and settlement density;

 Average income and purchasing power;

 Existing economic activity;

 Existing semi-industrials such as telecom towers;

 Renewable resources; and

 Accessibility and security


For example, solar mini-grid developers targeting towns or villages clustered closely together may be able to
support a single larger mini-grid (say 1MW or above).

Those targeting individual villages may require multiple mini-grids of smaller capacity (say 20 mini-grids each with
capacity of 40 to 200 kW).

Those developing DC nano-grids may have to install over 100 mini-grids of less than 10 kW to cover their fixed costs.

o Legal & compliance


Policy and regulatory issues often hamper the growth of mini-grids, especially issues around tariffs,
licensing and the arrival of the national grid.
Many countries in Africa do not have dedicated laws and regulations for private investment in mini-grids and in
those that do, the rules are often complicated and unclear.
Tariffs
Most countries in Sub Saharan Africa have uniform national tariffs, which means that household consumers are
charged the same tariff regardless of whether they are connected to the national grid or located in remote rural
areas served by a mini-grid operator.

The electricity generated from mini-grids is generally more expensive than grid power, which means state-owned
mini-grids are cross-subsidised.

Private mini-grids have to make a return on their investment and therefore require cost-reflective tariffs or
government subsidies to be viable. Some countries allow cost-reflective tariffs, but many do not and this holds back
the growth of private mini-grids.

With the exception of very small mini-grids, tariffs will probably need be authorised by the local regulator.

Licences and permits


Getting licences and permits is another challenge. Licenses may be required for the generation, distribution and
supply of electricity.

In many countries,there are no formal rules for mini-grid licences. In others the process of obtaining licences is
lengthy, bureaucratic and unclear, and multiple government agencies may be involved.

Most countries currently require a separate set of approvals for each mini-grid which can be very onerous on
developers.

In future it may be possible to get approvals for clusters of similar mini-grid sites which will reduce the
administrative burden on developers.

A wide range of documents may be required to get a licence approved, including:


 Certificates of incorporation;

 Land lease or ownership documents;

 Construction permits;

 Environmental and social impact assessments (ESIAs);

 Health and safety certificates;

 Water use rights (for hydro projects); and

 Rights of way
For larger projects, it may also be necessary to have a concession contract or a power purchase agreement (PPA).

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