Mini grid and Solar home system

Editor's Notes

• #3: - discussions are mainly led by projects on a large scale, e.g. DESERTEC - they contribute to further migration into cities (“to where the energy is”) - central thermal power plants might be the future energy supply for urban areas - in rural areas, the usage of Solar PV through Solar Home Systems is more suitable
• #5: - sun offers a lot more energy than we need (3,8 sextillion kilojoules) - global energy consumption is 0,01 % of the solar energy that is available - many rural areas without electricity are in regions along the sunbelt
• #6: Why can grid connection not be suitable? - long distances, no investment capital for grid connection, no facilities for maintenance, too few customers -> energy suppliers concentrate on urban areas Solar PV as a solution: - technical, economical, social and environmental aspects have to be taken into account - several advantages/ disadvantages
• #8: Mini grid is basically an isolated network in which households are depend on one power supply. - For centralized community where the geographical density is high, this shows the cost effective advantage. - Because of large system with many loads connected, some high technical skills required for monitoring and maintaining - Generally, the system enable AD appliance which are more popular and available at low cost - However, due to the dependence network, the overload risk is high. - Besides technical issues, the financing management model should be also considered to ensure that houshold are willing to pay for their monthly electric bill and connection cost. - The technician should also take care of the vandalism (theft) risk in this case.
• #9: Mini grid is basically an isolated network in which households are depend on one power supply. - For centralized community where the geographical density is high, this shows the cost effective advantage. - Because of large system with many loads connected, some high technical skills required for monitoring and maintaining - Generally, the system enable AD appliance which are more popular and available at low cost - However, due to the dependence network, the overload risk is high. - Besides technical issues, the financing management model should be also considered to ensure that houshold are willing to pay for their monthly electric bill and connection cost. - The technician should also take care of the vandalism (theft) risk in this case.
• #10: Mini grid is basically an isolated network in which households are depend on one power supply. - For centralized community where the geographical density is high, this shows the cost effective advantage. - Because of large system with many loads connected, some high technical skills required for monitoring and maintaining - Generally, the system enable AD appliance which are more popular and available at low cost - However, due to the dependence network, the overload risk is high. - Besides technical issues, the financing management model should be also considered to ensure that houshold are willing to pay for their monthly electric bill and connection cost. - The technician should also take care of the vandalism (theft) risk in this case.
• #11: a PV panel is installed on a roof or pole away from shade and tilted so as to catch the sun’s rays as directly as possible. -The panel converts solar energy to electricity and charges a storage battery through a charge controller. A control device regulates the flow of electricity into and out of the battery to ensure that it is properly charged. A basic system of this type does not convert electricity to alternating current. Some of them have an Inverter which can convert DC current into AC current, then more popular appliance can also be used. DC Loads are lamps, radio, small black and white TV A complete solar home system looks like this, as you can see the PV panel, cable, battery, lamps, and charge controller.
• #12: a PV panel is installed on a roof or pole away from shade and tilted so as to catch the sun’s rays as directly as possible. -The panel converts solar energy to electricity and charges a storage battery through a charge controller. A control device regulates the flow of electricity into and out of the battery to ensure that it is properly charged. A basic system of this type does not convert electricity to alternating current. Some of them have an Inverter which can convert DC current into AC current, then more popular appliance can also be used. DC Loads are lamps, radio, small black and white TV A complete solar home system looks like this, as you can see the PV panel, cable, battery, lamps, and charge controller.
• #13: a PV panel is installed on a roof or pole away from shade and tilted so as to catch the sun’s rays as directly as possible. -The panel converts solar energy to electricity and charges a storage battery through a charge controller. A control device regulates the flow of electricity into and out of the battery to ensure that it is properly charged. A basic system of this type does not convert electricity to alternating current. Some of them have an Inverter which can convert DC current into AC current, then more popular appliance can also be used. DC Loads are lamps, radio, small black and white TV A complete solar home system looks like this, as you can see the PV panel, cable, battery, lamps, and charge controller.
• #15: - The picture shows again the single components of a SHS and some examples of appliances, which can be powered by such a system. - Small systems are usually using DC and the most common appliances (like lights, fan, radio, TV, etc.) are also all available as DC powered products. - The operation of the system has to be as easy as possible for the users.
• #16: - For the planing of the size of the SHS, the electricity service expectations (which determine the loads) and the income situation of the household have to be known. - To reach a high effiency of the PV module the direction, angle and altitude have to be optimised - For the choice of the battery size the number of cloudy days and the depth of discharge (DOD) is important - Formular: The size of the PV module is determined by daily energy consumed by load (in Wh/day), battery efficiency (usually estimated at 70%), installation efficiency (usually estimated at 85%) and mean irradiation of worst month. - There is a freely accessible software available to calculate the size of SHS: www.retscreen.net . It includes information for all the relevant aspects as well as worldwide solar radiation data
• #17: - Prior to installation of a system, the users have to be informed about the performance and prices of the single components. For example there are several different PV modules on the market, which have different characteristics concerning effiency, durability and prices. - For a proper operation and especially maintenance of the system the users need a basic understanding of the technology. In places where the have not been electricity access at all before, a special training is needed (see social aspects) - Not all the maintenance can be done by the users themselves, htat is why there need to be local skilled technicians, who have the knowledge to repair and replace single components
• #18: - A regular maintenance has to be organised. The main components which need special inspection are: - PV modules: regular cleaning - batteries: in the case of fooled lead-antimory batteries a regular addition of water and special cleaning is required - wires and contacts have to be freed from corosion - Regular performance checks should be made to controll for the general operation efficiency.
• #19: - The choice of battery and charge controller are essential for the quality and durability of the whole SHS - Good quality components have to be available at the local level and at a reasonable cost - Therefore logistical aspects of accessing remote areas have to be organised - There is a need for capacity development and capacity building concerning skilled technicians, local entrepreneurs, who deploy SHS and as well local manufactures, who proves key components, which have to be replaced regularly (like wires, batteries, etc...)
• #21: Short introduction of methodology used for cost analysis SHS: Aim: Calculate electricity price per kWh generated by a SHS annual costs/ annual electricity generation   Annualized life cycle costs - Life-cycle-costs  all initial and future costs a system will incur namely acquisition costs, costs for replacement of system components, costs for operation and maintenance etc. , are calculated over the total lifetime of a system - Annuity method is used  all net payments in connection with an investment project are converted to a series of uniform annual payments - the so-called annuities  annuities method is useful for assessing the economic efficiency of a project as fixed annual costs can be directly compared with the annual benefits and for comparing various investments with very divergent projected lifetimes  to calculate the annuities all individual payments are multiplied with a so called capital recovery factor (CRF)  CRF accounts for the cost of financing a project for which the investment volume has to be raised by way of loans or if the capital outlay is covered by cash funds, to account for ceasing gain in the form of lost interest CRF is calculated using a chosen discount rate (=interest rate) i and the lifetime n of the particular component being considered
• #22: In order to determine the actual costs of energy generation the Levelized Unit Cost Of Electricity are calculated:  Annualized life cycle costs are divided by the amount of electricity that is generated in one year = peak Watt capacity of PV module multiplied by the equivilant hours of full sunshine (total amount of incident solar radiation received on a unit surface area in a day) and the capital utilization factor (incorporates non-utilization and outages of systems)  Levelized unit cost of electricity  enables comparison of the generation costs of different energy supply options and determination of the least cost option
• #23: Cost Analysis SHS India    here you see an example cost analysis for a cost analysis of a solar home system with a 70 Wp PV module 1 st ,2 nd , 3 rd column: costs of all components with their respective lifetime are listed 4 th column: respective capital recovery factors are calculated using the lifetime of each component and an assumed discount rate of 12% (Lending interest  the rate charged by banks on loans to prime customers in India in 2009 as published by the worldbank) 5 th column: annualized costs are calculated - Furthermore the annual costs for operation and maintenance are estimated  numbers are summed up to the total annualized costs, which are then divided by annual electricity generation (kWh)   Levelized Unit Cost Of Electricity: 84 $Cents/ kWh   If the calculation is done with a 6.5 % discount rate (subsidized interest rate: see cases study) the LUCE reduces to 0.65 USD/kWh. Still this cost is very high compared to the price paid per kWh by households with a grid connection:    
• #24: Cost comparison: SHS vs. Mini-grid   In general PV-driven mini-grids can be expected to have a cost-advantage  Cost reductions ($/kWh) as sizes and volumes of PV modules and batteries increase   But: Costs for setting up and operating a mini-grid are driven by: - Length of total distribution line  depending on the number of service connections (households) connected via mini-grid + spatial distribution + geographical factors (forests, mountains etc.)  may offset cost-advantage !
• #25: This graph shows the annual costs per household in case of a) a mini-grid solution or b) solar home systems. Whereas the annual costs per household for an SHS stay the same the annual costs per household for the mini-grid decrease as the number of connected households increases. Accordingly, the graph shows that whether a mini-grid or solar home systems are the economically preferable solution (based on annual costs) very much depends on the number of households as well as their spatial distribution.  
• #26: Financing schemes for SHS can broadly be divided into two main categories: - Sales models  Cash Sales, Creadt Sales (End-user-credit, dealer-credit), Donation - Service models  Leasing/ Hire-Purchase arrangement, fee-for service/ fee-for-energy
• #27: Cash Sales  PV supplier distributes PV systems directly or through a dealer network to the end-users, who pay in cash end-user is responsible for installation, operation and maintenance of the system Advantages: Easy financing  only dealer and end-user involved Low transaction costs  end-user is responsible for installation, operation and maintanace High flexibility of consumer choice  consumer can choose what system suits his needs and financial capacities best Disadvantages: Limited market as a result of the high up-front investment needed  cash sales model has lowest market penetration rate  targets only higher income group Incentive to buy under-sized systems and cheap replacement components to save money, risk of improper installment and maintenance  e.g. studies in Kenya show that 21% of systems purchased in cash were not operational
• #28: Credit Sales  The end-user acquires the PV system on credit - can either be provided by the dealer or by a third party credit institution - depending on the arrangement the end-user either immediately becomes the owner of the system or when all payments are made - PV system can be used as collateral Advantages: Main barrier of the high initial investment is lowered  higher market penetration investment costs are spread over a number of year  increased affordability Disadvantages: High rural credit risk  ability and willingness to repay the credit are often limited  willingness to pay is often lowered due to operational problems and the growing awareness of the system’s capacity limitations Dealer credit vs. End-user credit Dealer credit Usually characterized by relatively short terms (mostly between 6 months and one year), high down payments (up to 50 %) and high interest rates (rates of 20 % to 25 % are not uncommon) Advantages: One institution handles both the financial and the technical work Disadvantages: Dealer cash-flow often as a constraint High interest rates due to expensive capital through dealer re-finance
• #29: End-user credit Advantages to dealer-credit: - PV company avoids financial risks and can concentrate on sales and after-sales services - credit institutions are much better equipped to manage a credit scheme Disadvantages: - market is restricted to customers that the credit institution deems creditworthy  may create problems e.g. for those without regular income - high interest rates and down-payments  financial barrier - geographically restricted because of the infrastructure needed for the collection of the payments and possible retrieval of the collateral
• #30:   Donation  Hardware is provided for free (or almost free) by a sponsor can be under a governmental programme, NGO etc. Advantages: - low initial costs for end-user - potential for cost reduction through economies of scale  sponsor generally provides a larger number of systems - rapid deployment   Disadvantages: - Users are less involved  feel less responsible for the system they are using - mostly donations are limited to the hardware  often results in neglect of maintenance and service requirements  
• #31: Lease/ Hire-Purchase arrangements PV supplier/dealer or a financial intermediary leases the PV system to the end-user capital costs of the system are paid in installments over a period user pays a down payment (determined based on affordability of target group) + a service charge Advantages: - spreading of costs for the user over a long period  reduces cost-barrier- - cost reductions due to economies of scale - maintenance can be kept at a high standard because of the professional care for the system - good-quality products are selected because of the long repayment period Disadvantages: - End-users may not treat the systems with care, as initially the maintenance and ownership do not lie with them - geographically restrictive (extensive infrastructure needed for the collection of the payments and the maintenance and repair of the system  
• #34: The access to electricity in general means an increase in comfort, for example by having more energy security and reliability and reduced journey time to buy fuel or recharge batteries. By substituting kerosene laterns by lighting bulbs illumination can be enhanced, so the possibilities for reading and working get much better. By the introduction of SHS extra income can be generated and costs for energy can be reduced. The working hours can be extended after sunset, for example for sewing – so more time is available for production and housework and commercial enterprises can extend their opening hours. Also for learning and reading more time is available, so children can benefit from longer times for doing homework, reading and learning. Another impact of SHS for education might be the access to media like radio and TV. Finally SHS requires and develops skilled technicians in the areas to install and maintain the plants. Under the aspect of health and security the substitution of kerosene and other combustibles is an important factor to avoid hazards, as they often lead to respiratory diseases, fire accidents or poisoning accidents with children.
• #35: Despite those positive influences of SHS there are also some limtitations and challenges concerning the introduction of Solar Home Sytsems in rural areas: A first challenge is the local peple‘s knowledge about how to use electricitity in general and PV in the special case, so often they have to be well-trained. As mentioned before, it may happen that the expectations regarding SHS are much to high, as this example shows:
• #37: In addition some less obvious barriers may incident, due to the cultures, traditions and values of the local people. For instance an example of Thailand shows a problem of maintenance: as it is a matter of respect and politness, people may not let the supplier or maintenance technicians know, if a component of the system breaks to avoid conflicts and be polite. Another case study of Papua New Guinea showed, that there are even more complex problems, when introducing Solar Home Systems: Tribes in Papua New Guinea have neither an idea of money nor of time measured in years – so it‘s hard to teach them credit mechanisms. Furthermore property is an important barrier, because a division into households and geographical communities is not commmon there, but everything is a common resource. So if one introduces SHS in some families this would lead to jealousy, sabotage and theft, as only some households or communities can benefit, but not the whole clan can share a system. These examples illustrate, that our perspective and idea of electrifying rural areas sometimes can not be easily adopted, but that one has to consider the region and the people in detail to find the best possible solution.
• #38: Regarding the environmental aspects of SHS, one can easily state the general advantages of renewable energies for climate production, being (more or less) CO2-neutral in power generation. Going into detail for rural areas there is the possibilty of displacing fuels and dry-cell batteries by SHS with a positive influence on the environment, where missing recycle programs for solid waste lead to contaminations of water and soil by the batteries. Two main advantages of SHS are the little space consumtion, as no additional area is needed for the system and a grid, but only a roof; and the noiseless operation of the system, so they are even well applicable in protected areas. The problems of SHS or PV in general arise from the life-cycle of such a system. Firstly SHS also need batteries, which need good recycling programs to avoid damages by the comprised lead-acid. Secondly a lot of energy is needed for the production, transport and recycling of the system components and also a lot of resources. Especially the production of the high purity silicon for the panels requires a lot of heat and outputs a lot of by-products. Finally components like Cadmium tellurides in the semi-conductor are discussed to be toxical.
• #40: Harish Hande got the inspiration to start this company while studying energy engineering at the University of Massachusetts Lowell At the beginning. having no financial backing, he traveled across different villages in coastal Karnataka holding demonstrations and trying to explain the villages about the benefits of solar electricity
• #42: The Ashden Awards for Sustainable Energy are annual awards given by a charity which reward local sustainable energy projects in the UK and developing countries that protect the environment, and improve quality of life.
• #43: SELCO employees went on a door-to-door campaign trying to understand the needs of their potential customers and explaining to them the benefits of few extra hours of light in the night like less fumes from gas lamp and extra study time for kids. - Selco also toiled for three years to convince banks that solar electricity would empower borrowers economically and help them repay their loans. For instance, after 25% of the investment for first payment, the amount charged to consumers ranged from as little as 10 rupees (0.25$) per day to 350 rupees (8$) a month - Rather than building a system where each vendor had its own solar light set-up, SELCO hit upon a scheme where a new type of vendor, the solar lighting entrepreneur, would supply street vendors with solar energy on a daily basis
• #44: A common system design supplies four 7W compact, fluorescent lights (CFLs). Electrical power is generated by a 35 Wp PV module A typical 4-light SHS costs the user about 18,000 rupees (£220) including design, installation and a one year service contract. In 2006. there has been a 33% government subsidy. Along with this, the SELCO INDIA also provided a year's guarantee to the warranty of the manufacturer along with free service for a year and a 90-day money back guarantee - SELCO INDIA has focussed on working with various financial institutions and micro finance institutions to come up with various financial products for its clients