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In countries where the energy infrastructure is under-developed and few towns are adequately electrified, extending the grid is often not financially viable, and certainly not likely to happen in the short to medium term. And so 1.4 billion people are currently living without electricity. In sub-Saharan Africa, only 8% of the population in rural areas has access to mains electricity but mini-grids – localised generation, transmission and distribution of power – could change all that.
As the cost of solar energy in rural Africa, parts of India and other countries in Asia has fallen dramatically in recent years, setting up a mini-grid powered by renewable energy has become the cheapest way to provide electricity.
The International Renewable Energy Agency (Irena) has recently awarded a $5m low-cost loan to the government of Mauritania, where just 1% of rural communities are electrified. The loan will help pay for an electricity grid to serve four fishing towns spread along Mauritania's northern coast. The people of Bellewakh, Lemcid, Loubeir and Lemhaijratt currently get by with candles, kerosene lamps and car batteries for lighting, and use costly and dangerous canisters of butane to power refrigeration units. Their new mini-grid will consist of 18 wind turbines of 15kW and will provide electricity for households, schools, health facilities, civic buildings, a desalination plant to produce drinking water and an ice-making plant.
Frank Wouters, director of Irena, says there is "huge demand" for projects like this. His organisation has $50m a year to give out in low cost loans but last year received bids for projects totalling $1bn. Irena was able to assist six projects with funding but they had to turn down over 80 others.
Where mini-grids already exist but are currently powered by diesel Wouters says it is now a no-brainer for them to switch to renewables: "Where people are using diesel to generate electricity any renewable source of energy is at the moment more cost effective."
Hydroelectricty is by far the cheapest – where it is available – followed by windpower, and then solar panels. A report by the Alliance for Rural Electrification found that towns could save up to 60% of their bill if they switched from diesel to hydroelectricity or 16% if they switched to solar.
The cost effectiveness of renewable energy has really changed the marketplace. Before, says Wouters, people thought: "solar is nice for [communities that are] off-grid, but it's expensive, but that is not true anymore. It's now cheap as well as being reliable, clean and low maintenance."
So why aren't renewably-powered mini-grids popping up everywhere?
Wouters says the first challenge has been making people aware of the falling prices. "When something halves in price every two years it's hard to catch up, but I think that we've reached the point were people understand. "There is a big focus by the Asia Development Bank on mini-grids and the Islamic Development Bank; all the development banks are looking at this as a very interesting, scalable opportunity for them to put their money to work."
Second is the reality of little or no infrastructure to begin with, which means not even diesel is getting to poor rural communities. Before rural electrification can happen there needs to be some infrastructure in place, capacity building for human resources and sustainable business models. "The bottom line is that this is less and less a renewable energy issue, now it is just a development issue," Wouters says.
The good news is that African economies are growing. Six out of 10 of the fastest growing economies in the world are in Africa. Combine that with the development banks' interest in mini-grids and suddenly the future is looking brighter. With every new installation the skills base is developed and the infrastructure grows a little. As Wouters said, all the problems that accompany any development still exist however, it is encouraging that the solution is getting cheaper and therefore just a little bit easier to reach.
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