Energy Access in

South Africa
a toolkit for developing
successful green mini-grids

For more information please visit:

http://www.cityenergy.org.za/uploads/resource_426.pdf

For more information please visit www.carbontrust.com or email [email protected]

 What is a mini-grid?
• Mini-grids serve the same purpose as the main grid – to provide electricity to
households and settlements. This electricity can be used for lighting, cooking,
and other services such as water pumping or refrigeration.
• Rather than being part of the main grid, mini-grids are decentralised
generation and distribution systems, built to reduce capacity constraints
and supply end users in an unserved or underserved location. They can be
The Carbon Trust, with support from the British High autonomous or grid-tied systems.
Commission’s Prosperity Fund, has produced a toolkit which • They typically deliver an intermediate level of service demand, serving
provides key information to mini-grid stakeholders, including communities in areas where grid extension is uneconomic and which require a
municipalities, to develop operational mini-grid projects in consumption and service above that offered by Solar Home Systems (SHSs).
South Africa. It includes information on the key success criteria • Levels of electricity service correspond to ‘Tiers’ of the Global Tracking
for establishing successful mini-grids, sustainable business Framework. Mini-grids are able to deliver service corresponding to Tiers 2, 3
and 4, where SHS would be considered Tier 1, and main grid Tier 5 and above.
models, key project stages and outlines the things that you will
Tiers 2-4 correspond to 50-2000kWh/household/year.
need to think about along the way. • Mini-grids can be considered ‘green’ when they use a renewable source of
energy for power generation.
• Cost reductions and business model innovations are making green mini-grids
This mini-guide serves to provide a snapshot of some of the cost-effective electricity solutions.
themes explored in the toolkit.

For the full toolkit please visit: UN Sustainable

Development Goal 7:
http://www.cityenergy.org.za/uploads/resource_426.pdf Universal access to
affordable, reliable
and modern energy
services by 2030
 The case for mini-grids in South Africa
The benefits of mini-grids to South Africa is now compelling
• South Africa’s national grid provides access to 85% of South
Africans but suffers from capacity and connection constraints,
which are a barrier to the economy and the development of
renewable energy. Non-grid solutions are recognised as being
• South Africa’s New Household Electrification Strategy, initiated necessary to effectively serve the c 3.4 million
by the Department of Energy in 2011, states that although a households without electricity in South Africa
90% electrified target is possible, the rest will have to be off-
grid.
• South Africa currently has an aging transmission grid
infrastructure and there are challenges associated with grid
South Africa Mini-grid
congestion and increasing grid connection costs. Developments Developments
• The Eastern Cape (64.5%) and Kwazulu Natal (67.0%) have
the lowest grid connection rates in South Africa, and the South Rising cost of grid electricity Falling costs of renewable
African National Energy Development Institute (SANEDI) and municipality budgetary technologies and energy
estimates that more than 3 million people in rural areas of constraints storage
South Africa are without access to electricity.
• South Africa is an energy intensive and growing economy which Need for quality, lifetime and Increasing reliability and
level of service beyond SHSs better quality of service
means that current energy challenges are likely to increase.
• Expectations of grid connection and quality of service are high Demand-side
within South Africa, including amongst those who are not yet Grid congestion & connection management technologies
connected to the grid. backlog & strategies
• Currently, only 9% of South Africa’s 45GW of generating
capacity is renewable (86% coal). South Africa has a target to Better remote payment
increase renewable energy generation from 4GW to 13.225 Mobile money services and monitoring
GW by 2025, and cap emissions at 600MT CO2 by 2025 (current available technologies
levels are 400MT CO2). There is therefore a big opportunity for
green mini-grids to drive a more sustainable energy system. Growing awareness of Innovative business
renewable energy models
• Green mini-grids provide South Africa with an opportunity to
overcome current capacity constraints, reinforce the grid, and
provide improved service delivery while increasing renewable Mini-grids for South Africa
energy generation.
• In South Africa, solar mini-grids could be ideal for electrifying
communities due to the abundant solar resources that are
available across the country.
 The benefits of mini-grids to communities
• Mini-grids benefit socio-economic development, particularly of lower
income households, through job creation, improved education and gender
equality (e.g. lighting enables increased literacy and gender equality by
3 million+
people do not have
50% SA has a target to
increase renewable
of feeders in South energy generation
enabling women and children to study during the evenings). access to electricity in Africa are in thermal from 4GW to
• They provide health benefits – electric lighting replaces kerosene and rural South Africa overload 13.225GW by 2025
paraffin which are used by 17-20 million households in South Africa and
which cause severe respiratory health conditions.
• They can be used to power water pumps.
• Mini-grids create income generating opportunities – the level of service
from mini-grids can be sufficient to enable the powering of small companies
and appliances such as refrigerators and battery charging stations, resulting
in poverty alleviation. They provide higher energy consumption than solar
home systems.
200,000+ 40%
people are injured or 17-20 million (40%)
• A large enough mini-grid may provide further health and educational lose property annually households in South
benefits, such as powering vaccine refrigeration or school commputers, in South Africa due to Africa use kerosene
although the supply stability to achieve this can be a challenge. kerosene related fires daily

How might mini-grids benefit municipalities? Optional grid connection

• A mini-grid will ultimately be the primary provider of electricity locally, which

will reduce the local demand for grid electricity and decrease budgetary
pressure on municipalities to invest in new grid infrastructure.
• Mini-grids, through the provision of mid-tier electricity can enable the
development of local industries, and create jobs.
• For remote communities, rural locations combined with low consumption
makes grid extension too financially costly. For communities close to
the congested main grid, the high cost of upgrading the main grid to Control, Store
accommodate their connection can also be uneconomic. Mini-grids provide Mange,
Measure
the lowest cost option to increasing energy access in many areas.
• Mini-grids will also reduce the amount of grid infrastructure that the Generate Consume
municipality must build to connect new customers.
Convert
• In some circumstances, the mini-grid may also be structured to ease
congestion and provide additional connections in wealthier areas, e.g. for the
development of new housing estates, which in turn can generate new income
streams for the municipality.
What might a green mini-grid look like in
South Africa? A toolkit for successful project development
• Grid-tied mini-grids, combined with isolated mini-grids With support from the British High Commission, the Carbon Trust has
for deep rural locations could offer the best route for 100% produced the South Africa Mini-Grid Toolkit for key stakeholders in South
electrification in South Africa. The following key features are Africa. The toolkit acts as a reference document for the development of
recommended for South African mini-grids. sustainable business models and operational off-grid projects in South Africa.

• Solar Powered: South Africa enjoys high solar irradtion • It recommends pathways to develop a business case and revenue model
with limited seasonality which means that PV, potentially for mini-grids.
combined with solar thermal, should be the generation
technology choice. Solar also benefits from low operational and • It provides guidance on business models, financing strategies and
management costs. community engagement.

• Grid-code compliant AC systems: this means they can be • It includes learnings and best practices from mini-grids in other countries.
part of the main grid as it grows, and avoids the need for DC
appliances. • It provides further information on funding opportunities.

• Grid-tied: via a 60A farmer’s connection where possible. The toolkit also provides details of additional sources of information,
This will enable constant service, regardless of possible including:
system failures, and dramatically reduces cost as storage
requirements are lowered. • Western Cape Government Environmental Affairs & Development Planning
– provides a ‘How to’ guide that describes timeframes, steps and best
• Utilise before-the-meter energy storage as a shared practices.
resource. Lithium-iron battery technology is currently best
suited for this application and should be used ahead of Lead • EU PDF Mini-Grid Toolkit financial model – provides default cost estimates.
Acid due to lower lifetime costs.

• Use energy storage and generation to provide services back to

the main grid (e.g. energy and frequency response). Access the toolkit at:
http://www.cityenergy.org.za/uploads/resource_426.pdf
• A demand scheduling technology should be used to manage
the mini-grid and protect the integrity ofstorage technologies.

• Accessible location: good road access is recommended.

 A pathway to successful mini-grids in SA Key success criteria for establishing mini-grids

The toolkit proposes the following pathway for developing successful Project Pillar Success Criteria
green mini-grids in SA. We explore the five key pillars in detail: Design simple, integrated, replicable, modular
grid
Target highest possible quality of service
Goal Sustainable mini-grids Optimal mini-grid infrastructure
Plan for demand management & scheduling
tools
Leverage existing infrastructure for balancing
Develop a public-private partnership initially
Develop payment model adapted to customers’
ability to pay and consumption growth
Project Outcomes
Define clear ownership and responsibilities
Scalable business model model with project developer(s)
Target accessible off-grid population zones
Reliable and ~20 year
Payback
flexible lifetime Identify local champions and baseload
customers
Maximise data collection and utilisation
Community Positive Positive Identify sources of capital and operating
support development impact environmental impact subsidies early on in the process
Financing
Adapt source of finance to stage of project
development
Identify local innovative providers of finance
Stakeholder engagement & Exchange information with peer projects
Project Pillars partnering Identify and engage with key market entry
enablers
Ensure buy-in through direct and early
Optimal grid Scalable engagement
structure business model
Develop local employment and ownership
Community engagement Deliver training and manage expectaions
Stakeholder Align with community structures, other
Community
Financing engagement/ initiatives and local and national economic
engagement
partnering development goals
 Some example considerations
from the toolkit

Permits and other regulatory requirements will be required. Geospatial datasets can be used to compare electrification
models.
• Obtaining licenses - a distribution license will be required for a
mini-grid operator.
• Ensuring compliance - with grid codes and technical standards.
• Securing planning permission – this is subject to the relevant Training is recommended for users of mini-grids.
authority.
• Environmental Impact Assessment - check with the local
provincial department of the Department of Environmental Aiffairs
whether your project requires an EIA (most likely not required). Local manufacturing can lower costs of mini-grid development.
• Procurement standards – the Municipal Supply Chain
Management Regulations set a minimum procurement standard
which all municipalities have to adhere to.

Health and safety procedures will need to be established.

Pilot Projects are recommended to unlock mini-grids as a
mainstream energy technology in South Africa.

• There is a need to demonstrate key technical, business case and

Funding – financial sustainability of mini-grids is one of the main
contractual aspects of mini-grid models for S.A.
challenges for developers and additional funding support is often
needed.
• Successful pilots can unlock public financing that is currently
available for other modes of electrification.
• There are a number of sources of finance that can be applied for.
• Successful applications for funding require the preparation of
• Pilot projects will not require a license.
documentation and financial and business models.
• Financial stability can be achieved by designing and scaling the
• It should be possible to access international donor funding for the
system to achieve a suitable payback period within the regulatory
development of a pilot mini-grid project.
restrictions.