Researchers from SEI Initiative on Behaviour and Choice followed the adoption of solar mini-grids in rural Tanzania to understand their impact and sustainability.
In north-west Tanzania straddling the main unpaved road between two major towns lies the village of Kalenge, with a population of 5200. Its people farm rice, tobacco, maize, beans and sunflowers, mostly for their own consumption. The national energy grid doesn’t reach Kalenge, and over the past decade more than half of households in the village purchased and installed solar home systems and solar lanterns.
In 2017, mini-grid developer PowerGen installed a solar hybrid mini-grid in Kalenge with the aim of providing electricity to homes within a 600-metre radius. Partially funded by Tanzania’s Rural Energy Fund and PowerGen, Kalenge mini-grids are one of many solutions being implemented in Tanzania as part of the country’s efforts to increase access to electricity in rural areas. SEI researchers followed the adoption of solar mini-grids in rural Tanzania to understand their impact and sustainability.
Policy considerations
Whereas solar mini-grids are an opportunity for rural electrification, developers ought to be flexible so that mini-grids can be integrated with existing community solutions.
It is also crucial to separate energy supply for social uses and productive uses. For the former, projects funded mainly by governments and donor grants would be recommended. This would mitigate the impact of investment cost on tariff setting, which is a key deterrent to the financial sustainability of mini-grids.
A private-sector led mini-grid should identify anchor entrepreneurs and focus on plausible businesses for productive gains for the community while achieving return on investment. The effort should also engage the community through capacity building on the use and maintenance of distributed solar PVs, such as SHS and solar lanterns.
Mini-grids and energy access
It’s expected that solar mini-grids will play an important role in the pursuit of universal access to modern energy across rural Africa, particularly where grid extension is technically and/or financially unviable. Over the past few years, there has been a political push for mini-grid development, through government bodies, such as Tanzania’s Rural Energy Agency and Zambia’s Rural Electrification Authority, and development financing initiatives, such as the Sustainable Energy Fund for Africa.
At the regional level the Green Climate Fund set US$250 million as public debt to leverage US$4 billion for 10 000 mini-grids across sub-Saharan Africa. In Tanzania, 19 solar projects benefitted from the national energy fund at a cost of about US$890 000 in 2013. The aim of these efforts is to drive a shift in households and communities away from reliance on traditional fuels, like fuelwood and charcoal, to more modern energy sources with lower environmental and health impacts. Bringing about such change, however, is a complex process and hindered by various cultural, technical and economic barriers.
The mini-grid service in Kalenge
The Kalenge mini-grid has an installed capacity of 6-kilowatt peak (kWp) supplied by a solar PV array of 20 modules connected in battery storage of 24 volt nominal (i.e. average voltage) and a backup diesel generator. The system serves a total of 129 customers, 61% of which are households, 33% are businesses, and 5% are combined households and businesses. The system – working optimally and assuming an average six hours use daily at similar demand load – would supply each customer with about 280 watt hours (Wh) per day. This is sufficient to power a 3W bulb, 15W radio and 30W television for six hours.
In other mini-grids with generator backups there is often very small battery storage or none at-all, which means at any time of the day, and especially in the evenings, the diesel generator will automatically kick-in to generate electricity. In contrast, the system in Kalenge has an innovative set-up whereby the generator only kicks-in to recharge the battery when it is exhausted. The plug-and-play power generator box is set with intelligent tripping and an electricity recharge kit that makes it possible to implement a pay-as-you-go business model.
Before the mini-grid was installed, the community expected it would bring power for social uses, like lighting, entertainment, television, cooking, charging phones and telecommunication, as well as for businesses uses, like printing and photocopying, drills, welding, chicken breeding, saloons, milling and cooling services. Before grid installation, over 50% of the community used solar home systems (SHS), mainly for lighting and in a few cases for radios and televisions, while diesel generators supported business services such as printing, milling, welding and carpentry.
Poor design and overuse of solar home systems tended to reduce their effectiveness and meant they were difficult to maintain. As a result, about 90% of all businesses and households we interviewed opted to complement their SHS with the mini-grid for a more stable and reliable power supply, while at the same time reducing electricity costs.
The challenge of limited capacity
At the outset, the Kalenge mini-grid could only connect a limited number of customers within a 600 metre radius, and also had a limited capacity. As the developer sought to serve a greater number of people, load management became an integral part of the design. Customers were categorized as either small users (using energy for lighting, TV and radio) and large users (using energy for, e.g., fridges and freezers, welding and clothes presses) to manage their consumption.
This kind of inclusive design is a sound approach, but the mini-grid’s limited capacity cannot support multiple large loads when most connected customers are using power. Our interviews showed that only about 21% of businesses had refrigeration, and even then used it mainly during market days. Welding machines and clothes presses are not used for two reasons – cost and capacity.
The challenge of balancing the books
The investment cost of mini-grids is high and not competitive compared with the national grid. In Kalenge, watching television is still a challenge despite steadily available electricity. Most families who subscribed for television only watch it for news and at night. One of the respondents reiterated that, “The cost of having TV and radio on is very high. We are not able to watch the programmes we would love to watch. We thus only watch the television between 7pm and 8pm during the national news”.
It costs TZS 7200 per month to watch a 30-watt LCD television for two hours a day, at a tariff cost of TZS 4 per watt hour. This is considered too expensive in a community where most people are able to pay a maximum of TZS 10 000 for their entire electricity bill. To counter the cost, all households connected to the mini-grid adopted a complimentary rooftop solar PV, with the mini-grid acting as a backup. About 70% of connected households and businesses requested a tariff reduction if they were to continue to use the mini-grid.
3 lessons for mini-grid sustainability
First, the concept of a mini-grid is new to many rural communities. This means that narratives used during the promotion and sensitization phase of the project had a big influence on whether people decide to connect or not. Early adoption by community leaders is also vital in influencing others to take up the service.
Second, the priorities of private mini-grid developers (i.e. maximum profit from high consumption), government funders (i.e. broad energy access) and rural customers (i.e. affordable electricity for lighting, appliances and machinery) are not always aligned.
Lastly, it is not clear that the mini-grid services in rural areas are more affordable or offer a better value to the consumer than solar home systems, beyond a better management of battery life. In Kalenge, though, most households that had SHS use the mini-grid as a backup power option and have continued to use their SHS. This complementarity between a solar mini-grid and SHS is unique, and enables households to manage monthly electricity bills. It is not clear, though, how this symbiotic arrangement will affect the financial sustainability of the mini-grid in the long-term.
This article was originally published on sei.org