Mini-Grid Policies: Resource Collection

Introduction

Mini-Grids are small power systems, usually involving electricity generation between 10 kW and 10 MW. This generation is fed into a small distribution network, which provides electricity to several end-users. Generally, mini-grids operate independently from the main grid, however, they operate more stable than pico PV products or Solar Home Systems. This makes mini-grids a viable option for providing electricity access to rural off-grid populations, which live so far away from the main grid that transmission lines are not economically viable. In their 2011 Energy for All report the international Energy Agency estimated that “only 30% of the world’s rural populations currently without access to electricity are best served by extending the main grid. The remaining 70% are better suited either to mini-grids (in total 52.5%) or stand-alone systems (in total 17.5%).” This shows what a large role mini grids could play in achieving global electricity access.

The Importance of Policies

While the potential for mini-grids is large, as of today, very few grids have actually been installed. The challenges faced by mini-grid developers are not technical in nature. They are founded in uncertain or underdeveloped policies as well as financing and regulatory issues. While mini-grids can be government or community owned, installing mini-grids in large numbers will only be possible through private ownership investment. However, in order to attract private investments, stable policies and favourable economic condition need to be in place.

Therefore, through policy development, governments will play an important role in supporting the growth of mini-grids in their countries. Successful policies will have to be adapted for the individual conditions of each country or region. While this suggests that a highly individualistic policy design is required for each country, there are a few general guidelines which can be followed in terms of mini-grid policy design.

In the report Policies and Regulations for Private Sector Renewable Energy Mini-Grids, published in 2016, IRENA lists these as being the key regulatory conditions for private sector engagement in the mini-grid market:

• “The generation, distribution, and sale of electricity by private firms must be legal. Licenses and permits should be obtainable within a reasonable time and at a reasonable cost.
• Private mini-grid developers, operators, and investors must be allowed to recover costs for sustainable operation and within a reasonable time and at margins commensurate with risk.
• Regulations must address the risk to mini-grids created by the arrival of the main grid.
  
• Measures should be taken to facilitate access by mini-grids to affordable finance."
  

Resources on Mini-Grid Policies, Frameworks and Regulations

Energypedia Articles / Uploads

 

Mini-grid Policy Toolkit

The goal of the Mini-grid Policy Toolkit is to foster electricity access as well as economic activity based on secure and ideally clean electricity over the long-term. It presents insights into operational models, economics and financing aspects of mini-grids, as well as an overview of relevant stakeholders. The Toolkit also opens up the discussion of mini-grids deployment for rural electrification from a business point of view: it clearly links the different operator models and the respective financial issues and required policies and regulations.

The article includes case studies from Kenya, Mali, Tanzania and Senegal.

 

Costs and Tariff Setting - Examples

This article looks at cost and tariff setting based on an example of a Hybrid Mini-Grid Project in Senegal by EnDev.

 

File: Example of Power Purchase Agreement (PPA)

This is a short form document giving an example of an agreement which sets out the terms on which the seller is to sell electricity from a mini-hydro generating station it is building to the state-owned Electricity Board. The file is particularly relevant for small rural village hydro schemes and the agreement is suitable for use in common law or civil law jurisdiction (subject to local laws).

 

File: Electricity Generation Licence Template

The template for this licence was prepared as part of an EUEI PDF project for the Regional Electricity Regulators’ Association of Southern Africa (RERA) to establish a framework for attracting increased investment in mini-grids employing renewable and hybrid generation in SADC. This project was financed under the Africa-EU Renewable Energy Cooperation Programme (RECP), an integral part of the Africa-EU Energy Partnership (AEEP).

 

File: Electricity Distribution Licence Template

The template for this licence was prepared as part of an EUEI PDF project for the Regional Electricity Regulators’ Association of Southern Africa (RERA) to establish a framework for attracting increased investment in mini-grids employing renewable and hybrid generation in SADC. This project was financed under the Africa-EU Renewable Energy Cooperation Programme (RECP), an integral part of the Africa-EU Energy Partnership (AEEP).

 

File: Standardized Small Power Purchase Agreements (PPAs) for Isolated Mini Grid Connection

“Short-form relatively simplified power purchase agreements developed for Small Power Producers in Tanzania -Standardized PPA for Main Grid Connection and Standardized PPA for Isolated Mini Grid Connection together with Standardized Tariff Methodologies for each case and Detailed Tariff Calculations, which can all be found on the EWURA website.”

 

File: Standardized Power Purchase Agreement for Purchase of Capacity and Associated Electric Energy to the Isolated Mini-Grid – Based on Tanzania/Kenya Examples

“This template of Power Purchase Agreement (PPA) is modified from one developed by the Energy and Water Utilities Regulatory Authority (EWURA) in Tanzania. It was prepared as part of an EUEI PDF project for the Regional Electricity Regulators’ Association of Southern Africa (RERA) to establish a framework for attracting increased investment in mini-grids employing renewable and hybrid generation in SADC. This project was financed under the Africa-EU Renewable Energy Cooperation Programme (RECP), an integral part of the Africa-EU Energy Partnership (AEEP).”

 

File: Standardized Power Purchase Agreement for Purchase of Capacity and Associated Electric Energy to the Isolated Mini-Grid – Based on Zimbabwean Practice

“The template for this Power Purchase Agreement (PPA) was prepared as part of an EUEI PDF project for the Regional Electricity Regulators’ Association of Southern Africa (RERA) to establish a framework for attracting increased investment in mini-grids employing renewable and hybrid generation in SADC. This project was financed under the Africa-EU Renewable Energy Cooperation Programme (RECP), an integral part of the Africa-EU Energy Partnership (AEEP).”

 

File: Namibia Case Study - Gap Analysis and National Action Plan - Supportive Framework Conditions for Mini-grids Employing Renewable and Hybrid Generation in the SADC Region

“This Namibia Case Study focuses on gap analysis of market needs and demand for RE/hybrid mini-grids. It includes guidance on technology choice, lessons learned and recommendations for the development of action plans. Furthermore, the Annex 2 (page 28) includes a sample ToR for Country Case Study for undertaking gap analysis, recommendations for developing national action plans and final workshop.

This study has been elaborated on behalf of the Regional Electricity Regulators’ Association of Southern Africa (RERA) to establish a framework for attracting increased investment in mini-grids employing renewable and hybrid generation in the countries of the Southern African Development Community (SADC). This project has been financed under the Africa-EU Renewable Energy Cooperation Programme (RECP), an integral part of the Africa-EU Energy Partnership (AEEP).”

 

File: Zimbabwe Case Study - Gap Analysis and National Action Plan - Supportive Framework Conditions for Mini-grids Employing Renewable and Hybrid Generation in the SADC Region

“This Zimbabwe Case Study focuses on gap analysis of market needs and demand for RE/hybrid mini-grids. It includes guidance on technology choice, lessons learned and recommendations for the development of action plans. Furthermore, the Annex 1 (page 29) includes a sample ToR for Country Case Study for undertaking gap analysis, recommendations for developing national action plans and final workshop.

This study has been elaborated on behalf of the Regional Electricity Regulators’ Association of Southern Africa (RERA) to establish a framework for attracting increased investment in mini-grids employing renewable and hybrid generation in the countries of the Southern African Development Community (SADC). This project has been financed under the Africa-EU Renewable Energy Cooperation Programme (RECP), an integral part of the Africa-EU Energy Partnership (AEEP).”

 

File: Retail Tariff Tool - SADC RERA Mini-Grids

“This Retail Tariff model/tool was prepared as part of the EUEI PDF project for the Regional Electricity Regulators’ Association of Southern Africa (RERA) to establish a framework for attracting increased investment in mini-grids employing renewable and hybrid generation in SADC. This project was financed under the Africa-EU Renewable Energy Cooperation Programme (RECP), an integral part of the Africa-EU Energy Partnership (AEEP).”

 

Power Purchase Tool - SADC RERA Mini-Grids

“This Power Purchase model/tool was prepared as part of the EUEI PDF project for the Regional Electricity Regulators’ Association of Southern Africa (RERA) to establish a framework for attracting increased investment in mini-grids employing renewable and hybrid generation in SADC. This project was financed under the Africa-EU Renewable Energy Cooperation Programme (RECP), an integral part of the Africa-EU Energy Partnership (AEEP).”

 

Catalogue of Mini-Grid Tools

The Catalogue of Mini-Grid tools on Energypedia gives an overview of the useful tools for mini-grid practitioners. The catalogue is divided into tools for general rural electrification planning and mapping, tools for resource assessment, tools for technical system design and analysis, tools for financial planning/business model development and other useful tools.

 

Mini-Grid Portal on energypedia

The clean energy mini-grid portal has been developed with contributions from the members of the Clean Energy Mini-grid High Impact Opportunity under Sustainable Energy for All (SE4All) and provides information on various mini-grids topics. The Clean Energy Mini-grids High Impact Opportunity (HIO) is a voluntary initiative supporting Sustainable Energy for All (SE4ALL) to further enable, enhance and promote existing and upcoming efforts in the sector, with a view to increasing rate of deployment and market transformation impact.

External Sources

The Mini Gird Policy Toolkit

The Mini-grid Policy Toolkit is primarily written for policy-makers with the objective of enabling scale-up of mini-grids beyond a few pilot projects. The information contained in this Toolkit is also relevant for development banks and donor agencies seeking to support and advocate mini-grid policies. The toolkit presents different mini-grid operating models (utility, private, community and hybrid operator model) as well as all the elements required for a sound mini-grids policy and regulatory framework within each individual model.

 

Report: Policy Briefing - The history of mini-grid development in developing countries, GVEP International, 2011

This report provides an overview and analysis of the history of mini-grid development in developing countries. It does this by summarising some of the main approaches to mini-grid development, the requirements for successful implementation and key challenges to their development, particularly in Africa.

 

Mini-Grids Information Portal Tanzania

This Portal provides comprehensive information for investors interested in developing renewable mini grids in Tanzania. It was developed under SREP (Scaling-Up Renewable Energy Program). SREP was prepared under the leadership of the Government of Tanzania, through a National Task Force led by the Ministry of Energy and Minerals (MEM). The broader objective of SREP is to catalyze large-scale deployment of renewable energy in Tanzania, including a specific component on mini-grids.

References

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