Page 1 Challenges in rural electrification Stefan Opitz, Director for Water, Energy and Transport, GIZ Intersolar, Munich, 19 June 2013
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Challenges in rural electrification
Stefan Opitz, Director for Water, Energy and Transport, GIZ
Intersolar, Munich, 19 June 2013
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GIZ - A Brief Overview
� GIZ is active in more than 130 countries worldwide
� Turnover in 2011: 2.03 billion Euros
� Worldwide 17,100 employees (approx. 70 % in the partner countries)
� Status: The GIZ is a private limited company (GmbH) with the Federal Republic of Germany as its sole shareholder
� Main clients of the GIZ are:
� BMZ (Federal Ministry for Economic Cooperation and Development)
� Other German Ministries (BMU, BMWi, AA, etc.)
� Other clients (World Bank, EC, UN, regional banks, governments, private sector)
Stefan Opitz Challenges in Rural Electrification
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GIZ - Rural Electrification Sector Portfolio
� Policy & regulation
� Macro-level / multi-stakeholder dialogue, sensitization of policymakers
� Support to formulation and implementation of the regulatory framework
� Capacity Development (for public & private sector)
� Organization development, e.g. supporting energy planning
� Training and know-how transfer for all stakeholders
� Project preparation / implementation & financing
� Support to stakeholders in project preparation and implementation, e.g. regulators, utilities, communities, private sector
� Facilitation of financing, incl. development of incentive schemes
� Sensitization, information & contacts
� Provision and compilation of information, facilitation of contacts
Stefan Opitz Challenges in Rural Electrification
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What is Access to Electricity Supply?
Level of Access Peak available capacity Duration of Supply Use of ElectricityPossible Type of
Provision
Tier 5
Tier 4
Tier 3
Tier 2
Tier 1
> 2.000 W
> 2.000 W
> 200 W
> 50 W
> 1 W
> 8h AND
>2h evening supply
> 4h AND
>2h evening supply
> 4h AND
>2h evening supply
Tier 4 AND any high-power
appliances (e.g. air
conditioning, electric cooking)
Tier 3 AND any medium-
power appliances (e.g. water
pump, refrigeration, ironing)
Tier 2 AND any low-power
appliances (e.g. food
processing, washing machine)
General lighting AND
television AND
fan (if needed)
Task lighting AND
phone charging
(OR radio)
Solar Home System,
Mini-Grid / Grid
Solar Home System,
Mini-Grid / Grid
Solar Home System,
Mini-Grid / Grid
Rechargeable Battery, Solar
Home System, Mini-Grid /
Grid
Solar Lantern, Rechargeable
Battery, Solar Home System,
Mini-Grid / Grid
Stefan Opitz Challenges in Rural Electrification
Source: SE4All Global Tracking Framework
> 16h AND
>4h evening supply
> 22h AND
>4h evening supply
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� Year 5 after Mini-Grid installation in Tanzania: (representative range of villages)
� Average consumption: 147 kWh per person per year
� Household connection rate: 60%
� Infrastructure connection rate: 90%
� Population growth rate: 3%
� Households specific consumption growth rate: 5%
� Infrastructures specific consumption growth rate: 7%
Stefan Opitz Challenges in Rural Electrification
Socio-economic impacts from electrification via Mini-Grids
Source: IREP Project, Tanzania
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On-going and planned GIZ projects on Rural Electrification
Pico-PV, Solar Home Systems Mini-Grids
BangladeshBoliviaBurundiEthiopiaHondurasKenyaMaliMozambiqueNicaraguaPeruSenegalUganda
AfghanistanBenin
BoliviaGhana
HondurasIndia
IndonesiaKenya (in planning)
MadagascarMozambique
NepalNigeria
NicaraguaPakistan
PeruPhilippines
RwandaSenegal
Tanzania (in planning)
Uganda
Stefan Opitz Challenges in Rural Electrification
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Example I: Energising Development (EnDev) Peru
� Objective: Sustainable Access to Modern Energy Products and Services
� Financing: EnDev
� Partner: Ministry of Energy and Mines, regional governments, private companies
� Achievements:
� 414 pico PV systems for households were installed
� 30 SHS for households and one SHS for a social institution were installed
� Training courses for local technicians on installation and maintenance of SHS was developed
Stefan Opitz Challenges in Rural Electrification
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Example II: Senegalese-German program PERACOD
� Objective: 80% of the SN population have no access to electricity � improve access, involve private sector
� Financing: BMZ & EnDev
� Partners: Senegalese Rural Electrification Agency (ASER), Electricity Regulatory Commission (CRSE), private operators (INENSUS West Africa, EnergieER, etc.)
� Achievements:
� 18 mini-grids operational; further 50 in implementation
� Improvement of the regulatory framework for private operators
� PPP with Inensus West Africa piloting Micro Power Economy Model with smart pre-paid meters
Stefan Opitz Challenges in Rural Electrification
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Example III: Kenyan-German cooperation on PV-Hybrid Mini-grids (Deutsche Klimatechnologieinitiative)
� Objective: Provide access to rural households in Northern Kenya
� Financing: BMZ
� Partners: Kenyan Rural Electrification Authority (REA), Ministry of Energy (MoE), Energy Regulatory Commission (ERC)
� Envisaged activities (starting Q4 2013):
� Greenfield PV hybrid mini-grid pilot projects
� Support the enhancement of rural electrification policy
� Mechanisms for off-grid rural electrification (tendering, private sector participation)
� Strengthening the capacities of the local private sector for off-grid electrification
Stefan Opitz Challenges in Rural Electrification
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Challenges in Pico PV & Solar Home Systems
� Typical income per household in East Africa: $500 per year
� Money spent on lighting services: $6-$15 per month
� Expenditure on lighting about 25% of monthly income
� High-upfront cost require long-term financial planning
� From selling products to selling services, e.g. Leasing (Mobisol), Charge Payments (Solar Kiosk)
� Poor system design and installations brought miscredit to solar energy
� PV installations in remote villages with no after-sales service providers
� Trained local partners & service provider network
Stefan Opitz Challenges in Rural Electrification
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Challenges in Mini-Grids (I)
� Utility model (public procurement)
� Requires capable utility
� Technically sound tender documentation � quality and sustainability
� Transparent and integer tender process
� Can attract only public financing (!)
� Private operator model
� Requires a sound policy framework: cost-covering tariffs, permits, concessions
� Bankability is an issue: anchor customers with predictable load & revenue
� Hybrid model (e.g. outsourcing of generation to an IPP)
� Bankable projects require solid standardized PPA’s � guaranteed tariff over a long time period (!)
� Tariff setting is a critical factor � avoided-cost methodology vs. technology specific tariffs
Stefan Opitz Challenges in Rural Electrification
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Challenges in Mini-Grids (II)
� PV hybridization of existing diesel grids
� Diesel generators in publicly owned mini-grids usually highly oversized in relation to demand � incorporating PV is often limited
� Solar Mini-Grids
� Transition from a demand-driven diesel mini-grids to supply-driven PV Mini-Grids � active demand shifting (e.g. load limiters) vs. indirect demand shifting (e.g. corresponding tariffs)
� High transaction costs
� Different policy framework conditions in every country
� Lack of market information and collected data in rural load locations
� Tendering of small capacities in public procurement
Stefan Opitz Challenges in Rural Electrification
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Quo Vadis Mini-Grids?
Business Model When? Market Potential Example country
Public procurement
Fully private schemes
IPP‘s for rural power
generation
now
medium-term
short- / medium-term +++
Kenya
Senegal
Tanzania
+??
++
Countries with high
diesel prices+++now
Industrial consumers
(e.g. Mining)
Stefan Opitz Challenges in Rural Electrification
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GIZ Portfolio - Cooperation with the Private Sector
� Sponsoring und equipment provisions
� Cooperation with German associations
� EZ scouts
� Bilateral energy partnerships
� Integrated development partnerships
� develoPPP.de Competition of ideas
� develoPPP.de Strategic alliances
� Project development programmes
� Technology supportprogrammes
Sponsoring and
equipment
provisions
Multi-
stakeholder
dialogue and
networks
Development
partnerships
with the
private sector
Market
development
and
penetration
Stefan Opitz Challenges in Rural Electrification
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Thank you for your attention!
Contact
Stefan [email protected]
Stefan Opitz Challenges in Rural Electrification