This peak remains for 3–4 hours per day, and the 3-phase grid mainly operates on the hydro generator.
The system works almost entirely on renewables, since the energy from hydro power and PV is large enough to cover power needs. Therefore the genset is almost never used. Batteries are not included in the system since hydro power is available for night loads, which has significantly reduced the costs of the system. Solar PV was added for the dry season, and the genset to address any unexpected demand.
Sunlabob participates in a very specific public-private partnership (PPP). Public partners funded the fixed assets (public infrastructure and village grid), even though the ownership was then legally transferred to the village community. And Sunlabob, as the private local energy provider, financed the moveable assets.
Consequently, Sunlabob owns – and is responsible – for the power generation system, and charges a fee to each household based on its consumption. The company employs two villagers to operate the system and collect the fees. This has helped them to reduce administrative costs and increase efficiency, since the salaries of these employees is linked to the fees they collect. Even though the mini grid is officially owned by the villagers, the maintenance is also carried out by Sunlabob.
Through this project Sunlabob has committed itself to a 25-year PPA with the village, giving it an internal rate of return of around 15%.
Sunlabob collaborated early on with a local NGO on both the feasibility study, and the involvement of the local community. The NGO also focuses on the development of income-generation activities to maximise the benefits of electricity access. The community also participated in the investment with ‘in-kind work’ for the construction, and therefore remains vested in the ongoing successful operation of the system.
Without public support to finance the grid infrastructure, the project would not have been possible, since the prices necessary to recover the project costs would have been too high for the rural population.
Sunlabob plans to expand its local distribution network and connect it to a nearby grid, in order to attract the interest of the utility. The company realised that small hybrid grids are an attractive solution for the main grid, since they include generation infrastructure that is already installed. It therefore makes economic sense for the national electricity provider to connect to this regional grid, and to use the local providers as additional generation capacity. The utility will then take care of the village network and the bill collection (which will significantly reduce Sunlabob's costs), whereas the generating equipment remains operated by the private company.
This presents a triple advantage: the end users benefit from the subsidised social tariff that exists for grid users (US$0.06 instead of US$0.24); the utility benefits from an additional (and already operational) power capacity; and Sunlabob will increase its revenues by using its full power capacity to sell electricity to the grid – while reducing its costs. Thus, the project would switch from a mainly private sector-based hybrid business model to a mainly utility-based hybrid model.
This project demonstrates that long-term private sector involvement is possible if the right support schemes are set up, particularly in terms of regulatory flexibility.
Simon Rolland is Secretary General of the Alliance for Rural Electrification.
Renewable Energy Focus, May/June 2011.