Mini-grids: Planning and Design

1.0. Introduction: Fundamentals to mini-grids

Overview of what the to expect in the module (i.e. content covered, time requirements, important dates / deadlines / assessments) and what is expected of them

1.1. Scientific studies (geological survey, hydrological, etc.); Social and Environmental Impact Assessment (SEIA)

Social and Environmental Impact Assessment for Mini-Grids

SEIA: The assessment is normally a regulatory required by the relevant environmental authorities in most countries, for all major projects including energy projects.

1.2. Relevant National Electrification policy and planning of mini-grids; Grid arrival options (interconnection issues); institutional frameworks

Electrification policy for mini-grids

National Electrification Policy: A deliberate system of guidelines to guide decisions and achieve rational outcomes pertaining to a country's national electrification programme. A policy is a statement of intent and is implemented as a procedure or protocol. Policies are generally adopted by a governance body within an organization.

1.3. Regulations: Licensing, land acquisition and other Permits, Tariffs, Tax and Subsidies, Occupational Safety & Health Standards (OSH). bureaucratic red tape that developers face, and strategies to reduce or eliminate this red tape. Please see Chapter 10 of the ESMAP handbook. Institutional frameworks

Licensing, permits, tariffs, tax, subsidies, arrival options, OSH and their corresponding regulations; regulatory bodies

Occupational safety and health: aims to protect workers and local the community from harm during the mini-grid installation e.g death and injury (safety) or diseases and illnesses (health). Developer should oversee health and safety of the project work force. Financial and reputational risks for not complying with OSH legislation are significant. Licenses / Permits: Installers and supervisors need to have the necessary licenses and permits to install the power systems. Some countries have their own standards and regulations while some have adopted international / regional ones. Must conform to all relevant standards and regulations.

1.4 Mini- Grid Contracting (Contacts between private sector and goverment)

Contracts; Discuss all required national documents: * Implementation / Concession Agreement * Generation License * Loan Agreement

Contract: An agreement that specifies certain legally enforceable rights and obligations pertaining to two or more mutually agreeing parties. A contract typically involves the transfer of goods, services, money, or a promise to transfer any of those at a future date Concession Agreement: A contractual arrangement between a public authority and an economic operator (the concession holder) Generation License: A license granted to allow an entity to generate electricity and to connect electricity generation facilities to the transmission and distribution grids at specified receiving Points

1.5 Conclusion. Reviewer comment: compare the number of modern renewable energy mini grids that have been built through a contract approach like concessions, compared to the number of modern renewable energy mini grids that have been through a market-driven approach (tender system) where the developer gets a license, permit, or registers with the authorities and does not have to have a concession contract.

Compare countries that have used a one-stop shop model (e.g. REIPP in SA) to countries where the developer has to go through the process step by step.

2.0. Introduction

Overview of what the to expect in the module (i.e. content covered, time requirements, important dates / deadlines / assessments) and what is expected of them

2.1. Physical Site Selection and Resource Assessment & Forecasting (geographical data)

Physical site selection, geospatial tools and methods, resource potential and assessment

The technical renewable energy potential estimates the achievable installed capacity and generation of specific technologies based on the topographic limitations, land use constraints, and system performance. This step identifies areas with abundant renewable energy resources that are technically developable. The ultimate output is renewable energy resource maps that show the theoretical resource potential for the technologies considered within each region of interest. Ideally, ground measurements should validate the modeled data. The modelled data layers should allow for calculation of power density (W / m^2) or potential electricity generation per unit of area over a given period of time (kWh / m^2 / day) for renewable energy resources under consideration. At a minimum, annual average resource data are needed to identify study areas; however, higher temporal resolution data provide additional insight for decision makers. Solar resource layers ideally consist of direct normal irradiance, diffuse horizontal irradiance, air temperature, and wind speed. Wind resource layers ideally consist of wind speed, wind direction, air pressure, and air temperature. Local sources for these data may include energy ministries, environment ministries, or research institutes. Where local data is not available, high-quality, global data sets are publicly available.

2.2. Demand Assessment & Load Forecasting; through role-play: End-user characteristics and requirements

Demand assessment of a community - eliciting their needs, expectations, and desires; Load forecasting for future energy needs

Demand Assessment: an analysis of existing electricity demand and potential demand growth in a community before a mini-grid is built Load Forecasting: Minimizes utility risk by predicting future consumption of commodities transmitted or delivered by the utility

2.3. PUE and Possibilities of Demand Stimulation; Energy Efficiency and Conservation

Productive Usage of Energy in communities, Manipulation and stimulation of demand

Productive Usage of Energy (PUE): Those uses of energy that increase income and / or productivity Demand Stimulation: A process of actively influencing electricity demand on mini-grid systems (e.g. through financial incentives or education), so it tallies electricity generation

2.4. Final site selection (Guest lecturer / Case study)

2.5. Conclusion

3.0. Introduction

Overview of what the to expect in the module (i.e. content covered, time requirements, important dates / deadlines / assessments) and what is expected of them

3.1. AC & DC Technology for Mini-Grids; Central vs Distributed Architecture; Hybrid system; grid-tied mini-grid

AC and DC technical considerations, ecosystem, components, and compatibility

AC and DC: Electric current flows in two ways as an alternating current (AC) or direct current (DC). The main difference between AC and DC lies in the direction in which the electrons flow. In DC, the electrons flow steadily in a single direction, while electrons keep switching directions, going forward and then backwards in AC

3.2. Mini-Grid System Design (system sizing, modularity, generation, energy storage, distribution, smart metering) using an appropriate Software package (such as HOMER). Logostics of SMART metering should be considered. Mesh grids. Levelised Costs of Electricity. Please see Chapter 1 of the ESMAP handbook for detailed costing data based on a survey of more than 400 mini grid systems worldwide; Simulation and performance prediction

optimised smart mini-grids design (system sizing, generation, energy storage, distribution, metering, control and monitoring) - usage of relevant software packages (such as HOMER);

Key Metrics: The most important metrics that a business tracks. Also known as a key performance indicator, or KPI, a key metric is a statistic which, by its value gives a measure of an organization or department's overall health and performance

3.3. Key Metrics (Reliability / maintenance,, costs); how much energy is being consumed during daytime hours -- such as load factor, or capacity utilization factor, or some other metric; Elastic Loads (i.e. water pumping) ----> Standalone: Analysis of Reliability vs Costs

System design for mini-grids, component selection, generation capacity, energy storage, sytem sizing

3.4. Protection Systems and power evacution; Technical Codes, Compliance & Quality of Service Standards

Technical codes and standards;

Technical Codes and Standards: Standards are a set of technical definitions and guidelines that function as instructions for designers, manufacturers, operators, or users of equipment. Codes are laws or regulations that specify minimum standards to protect health and safety.

3.5. Conclusion

4.0. Introduction

Overview of what the to expect in the module (i.e. content covered, time requirements, important dates / deadlines / assessments) and what is expected of them

4.1. Business Models & Ownership Structures; Tariffs; billing and payment options; subsidies)

Business delivery models & ownership structures (build-own-operate, Public Private Partnership, cooperative, Anchor Business Consumer (ABC), key-maker model, etc);

Business model: a plan for the successful operation of a business, identifying sources of revenue, the intended customer base, products, and details of financing. (Build-Own-Operate, Public Private Partnership, Cooperative, Anchor Business Consumer (ABC) model, Key-Maker model) 3-step process for business model development * Define: What is the new business model? * Challenge & Improve: Where do the key risks lie and how can it be improved? * Execution Planning: What do we need to execute the business plan? The Business Model Canvas can be used to define and improve the business model Business Model Canvas: A strategic management template used for developing new business models and documenting existing ones KeyMaker Model: The KeyMaker company operates mini-grids, processes and trades goods, provides all required management and logistics expertise. The model exploits electricity generated by mini-grids to process local goods and resources. It can help lower transport costs and improved quality of the goods sold. Tariffs calculations: Ability and willingness to pay, Projected demand, Tariff must cover costs (Fixed costs, Variable costs); Provide justification for different tariffs between different customer types Types of tariff: Energy-based, Power-based, Flat rate or service tariff, Pay in advance (the norm) or after usage, Limited or unlimited power consumption

4.2. Funding and Financing Models

Project financing models & risk assessment;

Funding Model: a systematic and institutional approach to creating a reliable revenue base to support an organization's core programs and services Financial Model: the task of building an abstract representation of a real world financial situation. This is a mathematical model designed to represent the performance of a financial asset or portfolio of a business, project, or any other investment

4.3. Productive Use and Demand Management

setting tariffs; billing and payment options; subsidies;

Productive Use of Energy (PUE): agricultural, commercial and industrial activities that generate income, increase productivity, enhance diversity and create social and economic value through the consumption of electricity. Demand Side Management (DSM): the process of actively influencing electricity demand on mini-grids so it matches electricity generation. It is generally cheaper to adjust demand than supply. * It is important for the project economics of mini-grids, particularly for intermittent sources such solar mini-grids which generate electricity only in daylight hours. * A common DSM strategy is to shift demand to times of higher renewable resource availability (e.g. high solar irradiation) and away from times of lower availability.

4.4. Project Stages (procurement, installation, commissioning; risk management; Monitoring and Evaluation)

Demand Side Management (DSM) - community engagement processes; ethics; productive use of energy (PUE)

Procurement, installation and commissioning, are usually governed by national and / or international laws, regulations and standards, with procurement occasionally regulated by investors’ preferences. Procurement: There are 2 procurement models that developers can use: • Tenders for individual components of the mini-grid. The developer then installs and commissions the system themselves. • Tenders for a turnkey solution where the Engineering, Procurement & Construction (EPC) contractor delivers a fully operational project. Transport & delivery; Insurance; storage Customs, duties and taxes Installation: Involves the following three activities. The developer should lead these even if they are using a contractor for installation: Planning & scheduling; Interface management; and Quality management System Installation: Generation system; distribution system; metering system; and data logging system. Commissioning: It should ensure: • The power plant is structurally and electrically safe • The power plant is sufficiently robust to operate for the specified lifetime • The power plant operates in line with pre-determined design parameters • Physical and technical tests need to be carried out on the mini-grid by either an independent party or a combination of the installer and the client (i.e. the mini- grid developer) working together. • All these tests should be carried out in line with the applicable national and international standards and guidelines. • Final payments to the EPC contractor are made after successful commissioning. • Relevant specialized tools and testing equipment should be used during this process and all results documented. • Comparison of results against design simulation results should be done and any variations explained.

4.5. Conclusion