The bottleneck of renewable energy electrification system: System sustainable operation

Implications: Electricity contributes not only to the improvement of education, health and living conditions, it also contributes to the development of economic activities and to the generation of wealth. However, two billion people still do not have access to electricity. Using renewable energy to power those population in remote rural areas are in the high priority for most developing countries. But its sustainable operation is a bottleneck to approach its basic goals.
The report provides four renewable energy rural electrification programs carried out by EDF:
One in South Africa targeting 100K people (SHS);
One in Morocco targeting 100K people(SHS);
Two in Mali ( Korayé Kurumba and Yeelen Kura) targeting 40K people (PV/Diesel and SHS)

Local RESCO are developed. By 2007, after full rollout, EDF aims to touch 670K beneficiaries through the program.

Lessons learnt:
RESCOs are very sensitive to cash flow problems; 
A lack of visibility on the institutional frameworks of the countries concerned;
Start-up costs need to be controlled; 
A general lack of local skills and training;
A lack of risk-covering mechanisms (institutional risks for example);
Fee-for-service business model is viable and sustainable

Detailed case study information are available.

Analysis:

Using renewable energy, especially mini hydro, wind and solar power to electrify remote rural areas, are mature technically and widely adopted by many developing countries.

Based upon current developed technology, except mini hydro without the construction of dam or reservoir, wind and solar are still expensive compared with traditional utility power generation, and solar is the most expensive one. This requires significant amount of up-front cash investment. Without government or international donors financial support or subsidy, it is very difficult to develop its application. This is the major barrier for renewable energy rural electrification now.

SHS (Solar Home System) is a good solution for matching remote household’s electricity needs, but it only can provide very lower level of electricity since its high cash investment. It definitely can’t provide power for productive and income-generation activities. This is a limitation for SHS. For poverty alleviation and improve local economy, mini-grid based renewable energy village power system shall be developed. Wind system, wind/PV, wind/diesel and wind/PV diesel hybrid system will have much better viability than SHS.

Thousands of renewable energy village power systems have been developed in the world, most of them are in developing countries. Financially sustainable operation is the major bottleneck to block its development. The major factors related with financially sustainable operation for renewable energy village power systems are:
1)System ownership;
2)System management mechanism
3)Tariff level
4)Technical support after system operation and operator training
5)Funding source and funding management and distribution mechanism for later O&M expenses.
These issues have not been clear understood by government officials and policy makers, nor answers.

Sustainable operation financially is a key for renewable energy village electrification. Funding source and funding management and distribution mechanism for later O&M is one of the most difficult problems which has no solution yet and the distribution is even more difficult than preparing funding. It worth great efforts of entire international society to explore effective and feasible mechanism. This will not just benefit few remote villages but most un-electrified population in developing countries.