Minigrids Are the Best Way to Provide Electricity to Consumers in Remote Areas

Mini-grids can become the main source of providing sustainable electricity to rural areas that are scattered across the land in different places. And according to the new “State of the Global Mini-grids Market Report 2020,” which was recently published by BloombergNEF and Sustainable Energy for All, PV is the best option to be implemented in these areas.

According to the report, there are 7,181 mini-grid projects as of March 2020. Almost 5,545 of the said projects are operational and 63% of them are solar or solar hybrids. These projects are in Asia, Sub-Saharan Africa, and some smaller island nations. Asia has the highest number of completed projects with 60%, Sub-Saharan Africa is second with around 39% and the remainder goes to Latin America and smaller island nations.

According to the researchers, solar and solar hybrid power is the best option to provide electricity in these areas. Most electrical appliances are used during the day so irradiation hours coincide with load profiles for the most part. And if not, using battery storage is also possible because the price of lithium-ion technology is coming down.

There are other generating methods included as well, like hydropower stations or diesel and heavy fuel oil generators. They respectively account for 21% and 11% of all minigrid projects. Solar will likely maintain its lead for application in minigrid projects in the future. Solar minigrid projects have increased from 60 in 2010 to 2099 in February of this year.

The cost of electricity is an issue because customers in those areas mostly lack purchasing power. They also don’t have high load appliances thus consume very little energy. The levelized cost of using hybrid solar power minigrids for customers in remote areas is somewhere between $0.49/kWh to $0.68/kWh.

Currently, there are about 789 million people without electricity in the world. Out of the 789 million people, more than 600 million alone are from Sub-Saharan Africa. Currently, big international companies like EDF, Enel, Engie, Iberdrola, Shell, and Tokyo Electric Power Co. are trying to invest in these minigrid projects. 

The investment required for providing electricity for 111 million households, almost half of the 238 households (620 million people), is about $128 billion. The cost of all 238 million households to have electricity access is about $243 billion.

According to the frontier power lead analyst at BloombergNEF “As the market matures, funding deployment must be quicker, This is linked to the policy and regulations of the countries where recipients of funding are located. Governments need to promote robust regulatory frameworks that support the development of minigrids.”

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