For remote villages that require grid quality electricity, microgrids based on solar energy (MGS) and other renewables are proving to be the most cost effective option. Lessons learned from implementing demonstration micro grid projects provide insights on issues that must be shared and considered for successful replication. In addition to good quality components, engineering and construction, sustainability will depend on revenues to sustain the service and maintain the equipment.

Even if it is difficult to commercially finance small projects with very high levels of risk and transaction costs, most projects may be feasible with some degree of partial grant. A well maintained and managed facility can run over 20 years and this should be the target of every new implementation. The objective of a rural microgrid project is to provide remote communities with access to electricity in the expectation that the impact of the project will be to enhance rural incomes and encourage economic growth. It is therefore reasonable to expect from the start that there is much greater assurance of the operation if it can be sustained exclusively from tariffs paid by the subscribers of the service.

Questions such as tariff level and tariff structure have to be considered when planning rural electrification programs, and the potential contribution from the beneficiaries should not be neglected. The microgrid operator provides energy services, rather than selling bulk kWhs of electricity. It is energy services that village beneficiaries are willing to pay for, and with this approach the unit cost of electricity (LCOE) is not as relevant as the avoided costs provided by the new service. In our experience, service-based tariffs have proven to be more effective than energy-based tariffs. The concept EDA (Energy Daily Allowance) provides flexible energy budget to the client, demand side management as well as predictable revenue to the operator.

All too often, rural businesses and households have been denied access to electricity through politicians insisting that they should pay no more per kWh than consumers in the capital city, even if they were willing to pay for the tariffs that ensured the feasibility of the project. Strategic combinations of subsidies and well-designed tariff structures will attract operators and lead to sustainable project designs.

Xavier Vallvé
Director
Trama TecnoAmbiental

Xavier Vallvé holds engineering and a Master's degree from the University of Waterloo, Ontario (Canada), and he is a partner of the international engineering consulting firm, Trama TecnoAmbiental based in Barcelona, Spain. He has comprehensive experience of more than 25 years in renewable energy remote electrification and microgrids for isolated villages and islands, in Europe, Africa, Latin America and the Caribbean, Middle-East and Oceania. His experience covers not only technical aspects, but institutional, economic, financial and social within the RE generation and energy storage and management. He is member of the Board of Secartys. He is an active member in international codes and standards committees on this subject.