Private Sector Led Off-Grid Energy Access - PowerPoint PPT Presentation

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Private Sector Led Off-Grid Energy Access

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  1. Private Sector Led Off-Grid Energy Access The A-B-C Business Model and How Third Parties Can Support the Development of Energy Access Solutions Feb 20, 2013 Incubating Innovation for Rural Electrification: The Telecom Energy Initiative Speaker:Mohua Mukherjee

  2. Structure of the Presentation • Why does the off-grid space represent a promising area for small power providers to invest in? • What is the A-B-C Model? • How can external parties (like donors, financing institutions, foundations and challenge grant providers) provide support to create a better eco-system in which private energy supply companies (ESCOs) can grow?

  3. Why is the off-grid space attractive to private investors now? • Off-grid customers rely on fuel (kerosene, diesel) to meet their energy needs • Their fuel costs have been rising while solar panel costs have been falling • So the cost to supply an energy solution on a commercial basis is falling • The power consumption of household appliances, for example bulbs, television sets and refrigerators – has decreased drastically in just the last couple of years • So a small amount of low-cost power supplied commercially can go a long way to improving the access picture

  4. Why is the off-grid space attractive to private investors now? • Electrification technologies can range from a few watts for solar lighting and phone charging stand-alone PV, to full grid connections or isolated mini-grid electrification that gives 24/7 access to a sufficient amount of power. • Most small investors’ initial focus will be at the lower wattage end of this scale, of getting 1-50W of electricity (micro-energy) to households, for 4-12 hours of power per day, rather than 50-500W of 24/7 access at first • Familiarity with the customer base and increase in customer income and loads will allow for scaling up at a particular location

  5. What is the A-B-C Model? • This model seeks to reduce risks for small private power producers in the off-grid space • It identifies three sets of customers: • Anchors • Businesses and • Community members • Anchors represent daytime load, predictable in nature, requiring continuous delivery • Businesses are local commercial establishments, for whom power is a critical input • Community members: affordability is a major issue; may have many other pressing needs in addition to power

  6. How Does the A-B-C Model reduce risks?

  7. Barriers to Growth Of Mini-grids • Market Information and Data Collection, Mapping of Load Locations and Daily Fluctuation in demand • Information on latest available technologies to reduce transactions costs e.g. ICT enabled pre-paid smart meters • Information on potential financing partners (equity, debt, R&D, grant) for investment and working capital • Information on Policy and Regulatory environment—new incentives, how to access government grants, required paperwork, reporting formats • Information on identifying local entrepreneurs in new areas for replication of a business model

  8. How Can Third-Party Supporters of Mini-grids help? • Reduce transaction costs for mini-grid operators • Identify and train high quality professional services required by them • Identify technological inputs and make the information accessible • Mini-grid operators can then spend less of their scarce time and hard-earned money chasing up these services which effectively reduce their focus on O&M • With proper support, we can increase the mini-grid operators’ “bandwidth” and allow them to do more in their area of core competence

  9. How Can Third-Party Supporters of Mini-grids help? • There are many resources to support energy access—how to resolve the mismatch? • Public sector Rural Electrification Agencies have delivered very limited results • Difficult for donors to channel funds to individual private companies • How can support be delivered where it is needed, “just in time”? • One idea is for these funds to be invested in creating a common “eco-system” for all mini-grid operators in a given region or country, to lower transaction costs

  10. How Can Third-Party Supporters of Mini-grids help? • “Mini-Grid Development Company” to reduce transactions costs for a large number of its “member mini-grid operators” • It would pro-actively identify and disseminate market information on un-electrified areas, and available technology providers • It would identify and train a roster of professional service providers for mini-grid operators and • It would cost-share the payments required for professional services to mini-grid operators