Decentralized PV:

Opportunities & Barriers for Mini-Grids

Solar Energy Southeast Asia

4 December, 2013

Andy Schroeter, CEO

Sunlabob Renewable Energy, Ltd.
andy.schroeter@sunlabob.com
 About Sunlabob
Founded in Laos in 2000, expert in off-grid energy and clean
water solutions
Solar PV, mini-hydropower
Village grids, SHS, lanterns, water pumping/purification

Internationally-focused: throughout ASEAN, Pacific islands,

Africa, India

Approach to longevity: high-quality technology paired with

local training and capacity building

Customers: international donor agencies, governments,

NGOs, private sector, rural end-users
 Regional Situation
Rural electrification success:
Thailand: 99.3%,
Vietnam: 97.3% but

Myanmar, Laos, Cambodia: 55+ million people

Low population density: 26/km2 (Laos)
High rural electricity costs: $0.25 kWh (Cambodia)
Rising energy demand: 12% per year (Myanmar)

Economic and social development

hinges on
energy access
Energy for Productive Use

Energy Access
for
Mini-grids Productive Use
Solar PV
Biomass
Small Hydro
Hybrid
Eliminating the Rural PUE Gap
Replace the Incumbent Solution
Diesel gen-sets:
provide productive power

But

rising fuel prices

high tariffs
expensive transport costs
high maintenance
CO2 emissions
Photo credit: omcpower flickr
safety risks
 Why Village Mini-Grids?
Massive opportunity for mini-grids
- 42,000 Myanmar villages un-electrified
- 14,000 village grids on diesel

Market approach often already in place: people

are used to paying for kerosene lanterns, diesel
gen-sets, torches/batteries and candles

Better income-generation opportunities rice

mills, carpentry tools, irrigation; goes beyond
lighting/mobile phone charging

Displaces diesel cheaper, healthier, less time-

consuming, easier logistics/transport
 Why Village Mini-Grids?
Offers flexibility for increased demand

Hybrid options with other energy sources for robust reliability

Future proof -- ability to seamlessly interface with centralized

grid once it reaches area

Reduces cost of grid extension, and can become an incentive

that pulls national grid to remote areas

Opportunity for feed-in-tariff schemes once grid-connected

 Community Operational Models
Community-based operational
models can enable:

Direct local employment through

training and hiring of villagers to
manage/maintain systems

Incentive for self-sustaining

longevity of RE systems

Skills that can be applied

elsewhere (bookkeeping, small
business skills, etc.)

Community-based O&M fosters economic development

through local employment and wealth creation
 Why Village Mini-Grids?
In order to achieve universal electricity access,
mini-grids will have to provide more than 40%
of the new capacity needed by 2030.

Source: IEA (2010), World Energy Outlook, pg.

257.
 Village Grid Profile: Laos
Situation
Ban Houaypha, rural village in Luang Prabang Province
42 km from nearest grid connection
83 households, 498 people
$41.50 average household monthly income ($1.38/day)

Solution: Solar PV village grid

2kWh 20kWh provision
$1.25 $3.75 monthly options

Local Training and O&M

VETs, VEC, maintenance fund

Only possible w/ donor funding

 Village-Grid Business Opportunities:
Diesel Gen-set Replacement and Retrofitting
Existing private operators:
o Myanmar: 14,000+ villages
o Cambodia: 400 diesel grids by 2015

RE replacement/retrofitting providing
affordable, reliable, robust supply

Model heavily dependent on local diesel

prices

Financing options needed for gen-set

operators to accept up-front costs

Consumer/operator education to eliminate

RE myths i.e. too costly, unreliable, etc.
 Village-Grid Business Opportunities:
Telecom Tower--Village Power
Example: 15,000+ BTS stations needed
to support Myanmar telecom growth

RESCOs own/operate RE generation

in proximity to rural communities and
BTS stations

Mobile operators provide anchor

demand for power and stable revenue
stream

Can reduce towers OPEX

Encourages more mobile phone

usage/business

Development/aid contribution in pilots

Image source: GSMA 2010 Green Power for Mobile
 Common Barriers to Mini-Grids
Higher up-front investment costs than pico-PV solutions
o End-user income cant cover capital costs
o Lack of finance options for small enterprises

Insufficient household cash available for monthly tariff

payments

Mismatch of tariffs between on- and off-grid customers

Little chance for longevity without community-based

O&M models
 Common Barriers to Mini-Grids
Long-term commitments to conventional
technologies by governments and banks

Lack of capacity and knowledge: increase

awareness amongst policymakers, private
sector, consumers

High level of subsidies to competing fuels

Lack of a comprehensive, transparent

regulatory frameworks hinder private sector
participation

Reliance on support from donors and/or

government
 Common Barriers to Mini-Grids
The cumulative result of current barriers?

Lack of bankability

The current reality?

Donor funding still necessary

 Enabling Factors: Policy
Clear commitment and strategy from governments
o Short, medium & long-term mapping of grid extension
o Inclusion of decentralized RE
Level playing field: cant compete against subsidized
fossil fuel
o Ex: feed-in-tariff to encourage mini-grid integration

Removal of barriers on private sector

o Removal of import/export taxes on RE goods
o Ease of foreign direct investment (FDI)

Customized and creative funding schemes

o Public-private partnerships to share risk
 Enabling Factors: Local-level
Essential elements for achieving technical, social, financial
longevity of rural PV systems include:

Local desires must be included: collaboration from

beginning between implementing organization and
beneficiary community

Utilize community-based operational models

o Beneficiaries incentivized to maintain and manage
system
o Local employment and income-generation
o Village-based governance
 Enabling Factors: Project Design
Rural poor and private sector
cannot always bear burden of high-
quality, long-lasting energy
technologies; upfront costs must be
covered by donor community

Involvement of off-grid experts with

on-the-ground experience
(oftentimes the private sector) needed
from proposal writing to avoid
unrealistic technical plans
 Enabling Factors: Project Design
Shift emphasis to high-quality material and include
maintenance and minimum warrantees during planning and
procurement stages
o i.e. recommended 3 year warrantee in tender award.

Holistic approach: link energy access to broader rural

development agenda
o Introducing new skills, trades, products, etc.
o Connecting producers with distributors/middlemen;
creating new markets
o Partnership with NGOs and capacity-building experts
necessary
 The Future of Rural Electrification

Renewable mini-gridswill be a central tool in providing

sustainable electricity to the almost two billion people
around the world who currently do not have access to
electricity.

The Energy [R]evolution report

September 2013
 Decentralized PV:
Opportunities & Barriers for Mini-Grids

Thank
Andy Schroeter
CEO
andy.schroeter@sunlabob.com

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