Sharing Business Models and Scaling up Mini Grids in Asia and Pacific

Innovative Business Models

Debajit Palit
Associate Director, TERI

February 7, Kathmandu

Mini-Grids in India

Pioneer of Mini-Grid system

First mini grid commissioned in 1996 in Sunderban Islands

State-of-the-art system designs & use of components (converters & inverters), continuing till date Cooperative model of service delivery

Involvement of local community from planning stage

Policy enablers from time to time Around 5000 villages covered through mini-grids, serving more than 50,000 HHs Multiple technology adopted

Managing Mini Grids: Earlier Model

FUNDING AGENCY
Grant from Central Government Equity by PIA/NGO or Beneficiaries Consultant (DPR, system design, TA support)

System Supplier

PIA

Organize VEC

System Engineering. System Owner Installation & Commissioning

Power Plant
System custodian O&M LT line Maintenance

VEC

Village Energy Committee (VEC) Model

Electricity

Revenue: Tariff, billing, collection

Source: TERI, 2011

Consumers

Case Examples of Emerging Models

Community Based Entrepreneur Driven Pro-Poor Public Private Partnership

How we can Introduce Smartness

Solar Multi Utility

Community based model
Multiple Energy Sources Solar PV Wind Aero Generators Biomass Gasifier Hybrid Systems Multiple Applications Charging lanterns Powering computers, Charging cell phones Water purification Micro enterprises

Located near the energy utilization points in a village to provide electricity services as per the communitys need
Source: TERI , 2012

Solar Multi Utility

Self Help Groups, Farmers Associations & Individuals from the surrounding villages access the SMU & utilize services for a fee.

Source: TERI , 2012

Institutional Model
TERI Overall Project Management Raise Grant support for the projects (~ 75%) Technology Provider Installation of power plant AMC Local Partner (~ 15%) Scoping, community mobilization, monitoring & training Users (~ 10%) Farmers Associations, SHGs, Individuals Payment for services & new investments

SMU

VEC
Operation & collection of revenue Maintenance & saving for replacement

Source: TERI , 2012

Sustainability going beyond technology

Technical/ Social

Energy efficient system & intelligent load management for reduced peak demand Need based design with standard procedures for operation Variable grant : equity ratio. Customized pricing strategies to suit particular livelihood activities

Financial

Institutional

Creating linkages with other developmental programs/ marketing agencies Local capacities developed to operate and manage the system

Some glimpses

SMU Business Unit

Manure Sattu Mixer Grinder INR/kg Annualized Equity for 0.75 0.43 setting up of unit Buying cost of 0.21 0.21 Electricity O&M cost 0.5 0.5 Logistics Cost 1 1 Value of service 5% 5% Risk 10% 10% Inflation 8% 8% % of profit 25% 25% Service charge 7% 7% Actual process cost 4.04 3.48 Ability to Pay 5 2.5 Profit/Loss 0.96 -0.98 Final Processing Cost 5 2.5
LUCE INR/kWh 7 10 15 20 Elect Price INR/kg 0.21 0.3 0.45 0.6 Prod Cost INR/kg 4.04 4.19 4.44 4.68]

Sale price of solar electricity can be kept high and it does not significantly affect the price of service Regulation vs. No regulation
Source: TERI , 2012

Solar DC micro grid

Entrepreneur Driven
DC distribution lines (voltage varies depending on distance) run along rooftops from the battery bank to households over a short distance to power lights, mobiles etc.

Running time : 5-6 hours Installation Cost: Rs 3200 3800 per HH Tariff: Rs 120 150 per month, charged by the operators

Source: TERI , 2012

Institutional Framework

Solar Mini Grids in Chhattisgarh

Pro-Poor PPP
Providing access to population earning less than 1$/day Remote, tribal communities w/o cash disposable income Subsidy vs. financing affordability ? Subsidy for capital infrastructure ? ensuing operational sustainability improved quality of life

CREDA has reportedly electrified around 35,000 households through solar PV based mini-grids

Financing
Capital cost ~ 25000 INR (500$) per household Capital subsidy
- 18,400 INR (368$) per HH by MNRE under RVE program - Balance by state government

Tariff per connection = 30 INR/0.6$ (2x11 W CFL) Tariff subsidy (by Chhattisgarh government)
- 25 INR (0.5 $) per HH connection

- In Sunderban region, tariff for mini-grids ranges between 2-3$ depending on light points (3-5) for 4-5 hours supply
Source: CREDA and WBREDA

Solar mini-grid model of CREDA

Source: TERI , 2012

Some Lessons
Decentralized, usually low capacity, covering remote areas Usually small loads served Limited by capacity and duration of supply Community as stakeholder Tariff based on flat rate Clustering of projects more successful Inability to meet increased demand Single energy resource catering to fixed load for fixed time Battery vulnerable, overdrawl by most consumers Difficulty in O&M because of remoteness Social issues tampering, non payment etc.

Technology development Smartness of mini-grid addressing some of the above challenges Hybrid systems addressing single resource and load issues Opposed to popular approach let the community handle Each entity sticks to what it does best

 Foster demand side management and demand side response; Reduce power outages, increasing reliability, efficiency and safety of the grid; Efficient management of systems , reducing tampering better collection efficiency (pre paid) Better battery management Provide better autonomy to customers to manage their electricity needs. *A Smart Mini Grid System is a subset of Smart Electric Grid and it is generally defined as an intelligent electricity distribution network operating at or below 11kV, providing electricity to a community; uses advanced sensing, communication and control technologies to optimize electrical power generation and delivery Works with grid interconnection or off the grid Dynamic communication

 10.5kWp Solar Photovoltaic (C- Si) system installed on the roof of the North Block of the TERI Retreat; 2kWp Solar Photovoltaic (C Si) system installed on the roof of the Biomass Gasifier building; 1kWp Thin-film based Solar Photovoltaic system on the roof of the South Block of the TERI Retreat; 3.3kW Wind Turbine Generator (WTG); 100kW Biomass Gasifier (woody) system in the Biomass Gasifier building; Battery Bank of 48V, 600Ah for energy storage and, Diesel Gensets/Utility Grid.
How does the TERI Smart Mini Grid System work:
s3.EXE

Data collected from the various data nodes are transmitted via Ethernet using Modbus Protocol and GSM modem using TCP/IP.

 Develop a Smart Mini Grid Maturity Model (SMGMM) and Matrix according to the Indian context on strategy, management and regulatory, system operation and technology, asset management etc. Integration of Smart Mini Grid system with conventional Smart Electric Grid network and addressing the issues related to Smart Metering system Establishment of Smart Controller Laboratory where various research activities on different smart techniques can be taken place

In conclusion
Appropriate technical design Enabling Policy

Sustainability condition

Ecosystem
(AAQS)
Local Skills

Innovative Financing