Sustainable Electricity for All: How Viable Are Mini-Grids in Senegal?
- May 3, 2016 5:00 pm GMT
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Maka Saar is a small remote village in Senegal, about two hours’ drive from the nearest city Thies and another one and half hours’ drive from Dakar, the capital of Senegal. Until two years back, it had around 700 residents who depended on paraffin candles and small torches for their lighting needs. There were some diesel generators to meet the few productive loads in the village. In 2015, a company called `Enersa’ established a 10 kWp solar power plant with a 1.5 km underground distribution network to provide electricity to the households and small businesses. The aim was to generate clean electricity from a village-scale solar power supply system for the 60 households and small shops. Similar to Enersa, there are many other small power companies that have set up solar–diesel hybrid mini-grids in Senegal, primarily with support from different donor agencies. For example, the German development agency, GIZ, has reportedly supported setting up of 300 mini-grids in the country. Further, around 400 mini-grids are being implemented by ASER (Agence Sénégalaise d’Electrification Rurale) with support from multilateral and development finance institutions.
Status of rural electrification in Senegal
As per World Energy Outlook 2015 report, close to 45 percent of the population, that is, approximately 6 million people, in Senegal lack access to electricity, as compared to 68 percent un-electrified population in sub-Saharan Africa. Globally, 1.2 billion people do not have electricity access with a majority of them, approximately 634 million, in sub-Saharan Africa. Senegal relatively has a much better electricity access rate than many other sub-Saharan countries, particularly its neighboring countries, where rural access rate ranges between 2 and 20 percent. This energy poverty – lack of access to modern energy services—manifest itself as dependence on costly and harmful fuel for lighting and associated household pollution resulting in adverse effect on health.
Senegal’s national utility, Senelec, maintains an electricity grid that reaches most of the country’s urban centers and large rural habitations. As part of the reforms in the late 1990s, the government created the ASER to increase the electrification rate in the rural areas. ASER currently is managing two major programs: (1) the rural electrification priority program, under which it has allocated six concessionaires to extend rural electrification through the private sector, and (2) locally initiated rural electrification projects.
Experiences with mini-grids in Senegal
As a part of the multi-partners research project called ‘Solar xChange’, I visited Senegal with a team of co-researchers from Norway and Kenya, during March 2016, to understand the energy access situation and learn from the solar hybrid mini-grids that have been installed by private developers. The Solar xChange project is led by the University of Oslo, and our institution, TERI (The Energy and Resources Institute), is one of the research partners. Our team visited five villages near Thies city, which are served by hybrid mini-grids. All these mini-grids are run commercially with users paying metered tariffs based on a novel concept called “electricity blocks,” developed by a German company, Inensus. These mini-grids were implemented during the last two to four years and they all are functioning well, except one, where one of the charge controllers was found non-functional. The villagers who have taken connections from the mini-grids are using the electricity to meet their basic lighting needs and for charging their cell phones. There are also some small commercial enterprises using electricity from the mini-grids in these villages.
In Maka Saar, there are two shops selling grocery products and each has a freezer to store cold drinks, ice cubes, beer bottle, etc. These shops are paying around 16,800 XOF (1 US$ = 584 XOF) per month towards electricity charges for the freezers. They shared that they are earning approx. 15,000 XOF per month after meeting all their expenses, including the expenses on electricity. In case of households in this village and other villages in the cluster, they are paying a tariff of 925 XOF per week per electricity block. One typical block is equal to maximum 50 W of load running for four hours a day, that is, around 1.4 kWh per week. The company also collected a one-time connection fee of around 20,000 XOF per electricity block. Typically, the households in the villages, where our team visited, were found to have subscribed to one to two blocks to meet their basic household need. However, we also found some larger households that have subscribed three to four blocks and are running TV and fan in addition to the LED lights.
While tariff might appear to be on a higher side as compared to the grid electricity provided by Senelec, in the absence of grid electricity in most of the villages in the country, decentralized electricity is currently the only reliable option in these villages and many other similar villages in the country. The Village Power Committee, set up by Enersa in all the villages where they have mini-grids, said that they plan to have a few more small productive enterprises that can run on electricity from the mini-grids. Enersa also shared that depending upon increase in demand for electricity, they may think of increasing the power plant capacity in future by coupling small wind generating systems with the existing solar plants.
We visited another village, Ndombil, where we found a maize grinding shop, being run on electricity from the mini-grids, in addition to around 64 household connections. The shop was found to have two grinding machines (2.2 kW and 1.5 kW), installed recently, with one machine converting the raw maize into the coarse grain and the second machine grinding it to fine powdery grain. Currently, the demand for grinding is not high, and the machines run only for an hour per day; however, the entrepreneur was optimistic that in a month’s time, there will be more customers and both systems will run for longer hours. Though the purchase price of the grinding machines and the payment being made towards electricity charges vis-à-vis the entrepreneur’s current earning from maize grinding do not justify the business viability, the fact that solar mini-grids can support productive enterprise such as a grain mill, justifies the efficacy of decentralized projects in meeting both household and small business’ energy demand.
We also found some unconnected households or de-electrified households in these villages, which have not taken the connection or are not buying electricity blocks every month due to monetary constraints. On discussion, it was found that they are actually spending more on torch batteries than the price of an electricity block. However, as they can buy batteries for their torches at different times during the month, it is easier for them to spread the spending than paying Enersa at one time. We also visited three other villages, Sine Moussa Abdou, Leona, and Wakhal Diam, all at traveling time of around one to two hours from Thies, and found similar usages of electricity in these villages.
Challenges in scaling up: Some solutions
This may be little early to predict whether the mini-grid models can continue to provide sustainable electricity in the villages of Senegal and sub-Saharan Africa. Most of the projects face a number of challenges—technical, policy, and regulatory. Discussions with the regulatory commission and ministry officials indicate that Senegal is planning to double its electrification rate in the next few years, primarily by extending the central grid. They are also planning to harmonize the tariff for the grid and the mini-grid systems for reasons of equity. However, grid tariff is much lower as compared to the tariff charged by the private operators of the mini-grids (approximately 117 XOF per kWh for central grid versus more than 500 XOF per KWh for mini-grids). Enersa has thus slowed down on their initial plan for setting up 30 mini-grids because of the lack of clarity on the future treatment of mini-grids by the electricity sector regulator in Senegal. The regulator is reportedly also not providing the license or approving the tariff for mini-grids and, thus, the mini-grids are being operated without approvals and with uncertainty. This is a common issue across sub-Saharan Africa and South Asian countries, where mini-grids have been successfully piloted by many private sector players but are slow in scaling-up. While there is definitely a need for private finance to scale-up electricity access in energy-starved countries, unless clarity is provided through better policy formulation by the respective governments, the sector may not see scaling-up in the short to medium term beyond the grant-supported pilots. Further, an objective and scientific approach need to be adopted to set tariff for grid-connected and remote mini-grid–connected consumers and/or ensure cross-subsidy from a universal energy access obligation fund; otherwise, the mini-grids would be at an obvious disadvantageous position. The mini-grids should also be designed such that the infrastructure is grid compatible and can be interconnected with the main grid system, to draw and feed energy, as and when the main grid reaches such remote villages.
Another key issue worth highlighting is building the technical support system to provide the required post-installation maintenance services to the mini-grids. As mentioned in the previous section, one of the charge controllers in Leone village was not working and reportedly became defective due to a lightning strike. Due to this, the power plant is not working at full capacity and there are frequent power cuts, resulting in strong dissatisfaction among the users. We were told by the Enersa technical person that the equipment needs to be sent to a different country for rectification as there is no authorized service center of the original equipment manufacturer in Senegal. This calls for building technical support systems in the sub-Saharan countries where mini-grids are being set up. As business is currently not adequate, the companies may find it difficult to invest in building supporting infrastructure, but without the maintenance infrastructure, scale-up is not possible. Programmatic grant support can play a big role in addressing the issue and in creating the necessary post-installation maintenance infrastructure covering different regions of Africa.
Last but not the least, access to finance at the right terms and conditions is critical for scaling-up. While partial grant support from various donors is available, generation of the remaining capital at lower cost and/or without any collateral is difficult for many private players because of the high perceived risks of investments in mini-grids. The problem gets compounded by the smaller capacity of these projects. Donor agencies need to work with local governments to create a revolving fund that can be used to provide soft and collateral free finance. However, a strong performance monitoring system will also be required to ensure that the fund is utilized properly to achieve the project outcome.
Is grid extension the remedy?
While there is an ongoing debate between the efficacy of grid extension and off-grid models for electrification of remote rural communities, a recent paper titled “Rural electricity access in South Asia: Is grid extension the remedy? A critical review”, published in the Renewable and Sustainable Energy Reviews has dealt with the issue comprehensively by juxtaposing grid and off-grid modes in terms of their merits and demerits. The paper based on extensive literature reviews, infers that instead of considering each of the modes of electrification in a stand-alone manner and perceiving them as mutually exclusive or competing with one another, as usually perceived in the policy sphere, off-grid electrification can actually be considered as a complementary mode and should ideally be integrated with grid expansion to serve the bigger cause of ensuring universal rural electrification.