| Title | Evaluating the impact of productive uses of electricity on mini-grid bankability |
|---|---|
| ID_Doc | 66855 |
| Authors | van Hove, E; Johnson, NG; Blechinger, P |
| Title | Evaluating the impact of productive uses of electricity on mini-grid bankability |
| Year | 2022 |
| Published | |
| Abstract | Mini-grids are discussed as a cost-effective and sustainable solution to provide electricity to populations lacking access, of which the majority reside in sub-Saharan Africa. Projects struggle to be fiscally solvent, however, in part because electricity demand from rural households is low relative to installed mini-grid generation and distribu-tion capacity, making it difficult to recoup investment costs. This paper explores how productive uses of electric-ity may increase electricity demand and evaluates impacts of increased electrical load to the technical and economic metrics of mini-grid projects. A full cashflow analysis is completed to evaluate business model efficacy for mini-grid developers and investors for a case study of a township in Sierra Leone. Productive uses of electricity are shown to have minimal improvement to the financial viability of residential mini-grid projects, and subsidies are required to reach financial metrics suitable to attract private investment. Of the productive uses investigated, year-round loads had the most positive impact to payback periods. Seasonal loads offer only small improvements to payback period and internal rate of return because they require extra generation assets to meet peak demand in the high season that are left idle or heavily under-loaded during the low season. Overall, the study finds the most effective way to improve financial outcomes through productive uses is to increase the mini-grid load factor with productive uses of electricity that operate year-round.(c) 2022 Published by Elsevier Inc. on behalf of International Energy Initiative. |
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