Transcript Slide 1

Integrated Rural Energy
Utilities and some other issues
Introduction and invitation to
comment/contribute
Douglas Banks,
Restio Energy
www.restio.co.za
A REEEP funded project
www.reeep.org
October 2007
1
Current Situation
•
•
•
•
Vast majority of rural households un-electrified (>90%)
About 30 to 40% of rural hh in South Africa unelectrified
Wood and charcoal main energy resource
Kerosene, dry cells, car batteries, candles, gensets
Grid is first choice, but
people still use other fuels,
and wood
SHS is a significant off-grid
technology
Significant interest in minigrid (SA, Zambia, Uganda..)
2
3
Existing frameworks for delivery
•
PREPS and LIREPs
– Grid distribution (fed from national
grid)
– Independent grid power based
distribution
•
Private sector led PV sales
– Micro-credit/Village Banks
– Cash
– Supported by ERT (UG), UNDP,
SIDA, SSMP
•
Institutional Electrification
– Ministry of Health, Education and
others (often using PV)
•
Thermal energy delivery
–
–
–
–
–
•
Fuel wood collection/use
Charcoal production and sales
Improved stove programmes
Biogas programmes
LPG distribution – private sector
Productive use
– MFP’s/PURE/PUC’s etc
4
Key challenges of rural energy delivery
•
•
•
•
•
•
•
•
Affordability
Location/Logistics
Scale of enterprises delivering services
Scalability/replicability of operations
Access to government/international resources
Efficiency of the overall delivery framework
Skilled personnel
Sustainable business model that
– Ensures delivery
– Ensures long term presence, maintenance, advice,
support
– Financial sustainability
5
The IREU Roadmap
•
•
To build a case for rural integrated energy service utilities, serving grid
and off-grid households, thermal energy needs, social sector energy
needs (education, health, water, ICT) and business needs, and raising
awareness of energy options and efficiency
To develop best practice guidelines for these utilities, including business
models and implementation and regulatory frameworks
• REEEP funded project, implemented by Restio Energy
•Integrates planning, and
manages planning risks
•Simpler funding and
implementation management?
•Improves scale / viability,
especially for management
•Manages grid/off-grid tension
•Focus on best technology for
service in given application
•Solid infrastructure, potential
to service other development
needs
•Operate in a ‘service territory’
6
Partially achieved already?
•
•
Many elements of the vision presented
above have been tested
In concession models
– South Africa and elsewhere.
– Senegal: SHS, mini-grid and grid as part of
single bid
•
Priority Rural Electrification Projects
(Uganda, several other countries)
– Exclude thermal, do not deal fully with SHS
•
Sustainable Solar Market Packages
(Tanzania, Uganda)
– –exclude grid/thermal
•
Integrated Energy Centres (SA)
– but these are ‘single entities’, exclude grid
and SHS at present
•
•
Utilities such as EDF, and even Eskom have
included grid and off-grid
Seldom specific thermal attention
– (e.g. SA concessions, but these exclude grid)
•
Seldom specific regional focus
– (development of a implementation
organization with robust capacity at a ‘district’
or multi ‘district’ level)
7
Non-grid energy service delivery is a
working reality (SA concessions as
an example)
•
•
•
•
•
•
•
33 400 installations done and being
maintained
6 operating companies, some 6 years old, 4
of which have significant BEE shareholding
Attracted > R50 million (estimated) private
sector investment
DME capital of R3500/connection (No
generation, bulk supply etc required) (About
R118 million)
Some munics have provided operational
(FBE) subsidy (approx R600 000/month)
142 Employees, 54 subcontractors during
routine operations, 100 more during
installations
Significant LPG sales
–
•
•
•
•
•
(e.g. NuRa 60 000kg/month)
Reach close to customers (Energy Stores)
International funding for additional
concession attracted (approx R100 million)
1.67 MW of renewable capacity
2 GWh/annum of RE generation
CO2 & TREC benefits not yet being realised
8
Energy Stores: The heart of the operation
•
•
•
•
•
•
•
•
•
•
•
Is the heart of the Utility
Staffed by people from the area
Customer liaison and development (marketing, education)
Installations (currently use centrally managed team and
contractors)
Maintenance, revenue collection
Stocks spares, some non-grid appliances
LPG sales and appliances
Resource for energy and development in the community (e.g.
workshops with schools and clinics)
Information and sales of energy efficient globes (for grid)
Over time will become independent business unit, franchised
to Utility and owned by store manager/staff/local
entrepreneur
Will support local ‘service points/agencies’
9
10
Business model options
•
PPP ‘Utility’
•
•
•
•
•
•
•
•
•
•
•
purchase in bulk from national or other bulk supplier
Distribute to customers in ‘territory’
Supply and maintain off-grid
Where appropriate, mini-grid using renewable and other
Incorporate distributed generation
Facilitate or supply thermal energy services (biomass, biogas, LPG)
Energy stores operating as part of a utility (possibly as separate
businesses)
Smaller operators (working under a franchise or similar
agreement, supported by a regional management services
company)
Public sector utilities with a widened mandate
Rural Energy co-operative associations with robust ‘association’
Two or more entities working in a structured collaboration (e.g.
biogas dissemination, and off-grid electrification)
11
Which energy services to include?
•
•
•
•
•
•
•
•
•
Grid
Distributed generation
Micro-grids
Off-grid
LPG?
Biomass?
Biogas?
Bio-fuels?
Appropriate choices will depend on:
–
–
–
–
Consumer needs
National policies
Status in operational regions
Operational capabilities
12
Grid costs / connection
•
•
•
•
•
•
Usually within reasonable limits, but costs increase under certain
conditions
Distance from supply lines with sufficient capacity
Cost of bulk supply
Small settlement size
Low household density/low take up rate
Domestic connections also have impact on generation capex/peak loads
13
Key challenges
• Overcoming regulatory and institutional hurdles to
integration of grid and off-grid
– Permission for PPP to distribute grid
• Addressing concerns regarding the establishment of
‘monopolies’ for energy service (regulation)
• Achieving the breadth of vision need from funders,
investors, authorities, implementers and employees
– (people tend to pay lip service to integration but feel more
comfortable with ‘focus’)
• Staff training at range of levels
• Finding way to ensure that ‘less commercial’ activities
(e.g. biomass energy, energy education) can be
accommodated, sustained within a framework that retains
business viability
• Fee-for-service or other model for Solar home system
delivery?
14
Where next?
• Significant interest when I have talked to
people
• But- is it realizable? Does it really make
sense?
• REEEP IREU project allows us to explore
the issues:
• Focus on:
– South Africa
– Tanzania, Uganda
15
Project team
• Doug Banks, Robert Aitken, Alix Clark and Katherine Steel
(MIT) will work on this project from Restio Energy.
• Partners for this project include:
– Chris Purcell of the Energy & Development Group
• South African and East African rural energy planning,
experience with grid, off-grid technologies and thermal
technologies
• Sifiso Dlamini , (General Manager of NuRa)
– will contribute his experience of off-grid PV and LPG
delivery. (D Banks of Restio Energy is also a Director of
NuRa)
• External review will be provided by
– Xavier Lemaire (SERN) and Dr Ekkehart Naumann, AEDB
(Pakistan)
• Stakeholder involvement is structured into the project
– REA (Uganda), DME (RSA), others…
16
Project Activities
•
•
Review: based on experience, literature on rural energy entities:
Document outcomes, problems, lessons learned in context of IREU. In
this process identify most suitable project as reference/test case for
development of best practice IEU ‘business case’ rationale. Candidates
include NuRa, East African Priority Rural Electrification Projects (PREPs)
or similar.
Includes meetings in RSA, UG, TZ
•
•
•
•
•
•
•
•
Develop guidelines and reference material
IEU partnership and investor criteria
Regulatory models, institutional framework
Finance mechanisms
Capacity requirements – particularly for rural implementation
Costing of fuel and service options
Business models for IEUs – including path from current to proposed
Financial/economic models for investors (including governments)
•
•
•
•
Documentation and dissemination
Linking of stakeholders around identified case
Includes planned workshop late 2008 (RSA, UG, TZ)
Targeted dissemination to key stakeholders
17
Grid planning issues (in a country with 4% rural electrification!)
18
Decision tools are available
• Master planning
• Network Development
Plans
• Energy Service
Development Pans
• Electrification modelling
tool
• Cost benefit analysis
(simplified)
• Detailed economic
analysis
19
Option three: Mduda mini-grid
Mduda north
Mduda south
20
Option five: Mduda mini-grid
21
Cost and benefits of different options
45000
40000
35000
30000
25000
20000
15000
10000
5000
0
Mini- Mini + SMG
Grid SHS DD +SHS
only AA
Capex/bp (R)
SHS
Diesel
Grid
Opex/bp x 10 (R)
Extract from a draft final report prepared for the DME on mini-grid CBA
22
Summary of key advantages
• Large enough, and ‘dense’ enough to justify significant
district based ‘energy service provider’
• Connection specific technology decisions
• Grid growth risk management
• More flexible accommodation of distributed generation
• Shared management and field resources
• Higher utilization of customer service points
• Integrated funding/implementation framework
• Lower cost access to capital (compared to consumer
finance)
• Procurement efficiency
• Development infrastructure in rural areas
23
Key issues for Debate
•
•
•
•
Can you see potential for IREU’s?
Main barriers/opportunities
Who can we engage with?
Are there particular areas where
– You are aware of current compatible work?
– You feel we should place more emphasis?
– Planned developments that could
accommodate IREU’s
24
Thank you for your participation and
contribution!
25
Productive use of Renewable Energy
•
•
Key concern is that off-grid limits productive activity
Note: economic activity does not automatically follow grid
electrification
– Access to markets, finance, skills, entrepreneurship development,
logistics, business support
•
Productive use with renewable energy is being demonstrated
– Concessions: shops, cell-phone charging, sewing, extended work
hours
– Tourist facilities
– Productive use container project – micro-enterprises established in
rural communities, bring a range of services and enabling
livelihoods: sewing, ICT, retail, refrigeration, shoe repair, hair
salons…
» Renewable and Hybrid Energy Access for
Productive Use (CEF/SANERI funded work on
frameworks/ strategies for Prod Use of Renewable
Energy (see www.restio.co.za productive use
projects)
26
Productive Use Containers
• Nuon/DGIS/Novib
• RESTIO Energy/Rural
Wealth Creation Project
• 6 ‘PUC’s in northern KZN
• www.restio.co.za for more info
27