NEW DELHI — Among the most pressing problems affecting the lives of the poor today is lack of access to electricity in rural areas. Recently, development and distribution of a new technology in the renewable energy sector have substantially improved the living standards of the poor in certain regions: mini-grids.
In a report published in 2012, the International Energy Agency (IEA) proposed that at least one-third of the more than one billion people without access to electricity should be served with mini-grids, because the cost of providing electricity through grid expansion is too high. Mini-grids, which can be either connected to or independent of the grid, provide a number of competitive advantages that neither off-grid systems nor grid connections can easily offer.
Their first strength lies in their efficacy and the level of energy they can deliver. For instance, off-grid solar lanterns, which have already been distributed widely in Africa’s remote rural areas, do have the capacity to supply lighting, phone charging, and occasional television; however, if these devices cannot be utilized for more large-scale and productive purposes, such as powering rice mills and irrigation pumps, they can hardly contribute to the region’s economic growth. Mini-grids can provide the level of electricity that is required to facilitate this progress.
So far, these renewable energy mini-grids have produced perceptible changes in a number of rural villages. Last year in Atrauli, a small village in northern India, a company named OMC Power started to provide solar mini-grids to households, at an affordable price of 110 rupees ($1.70) a month for a basic home package. Not only have these dramatically increased the households’ access to electricity, but these have also enabled petrol stations to operate regularly for longer hours.
Overall, prospects seem to be generally positive. Experts say that installation of mini-grids should be accompanied with technical training of the local people, which will equip them with professional skills to manage and maintain the systems. This process could gradually improve the living conditions of the poor by creating opportunities for human capacity-building and growth of local enterprises, as well as new sources of income.
Despite these numerous benefits that mini-grids could bring to the rural poor, they are still few in number. The reasons include policy environments that are not investor-friendly, lack of regulatory framework and some unanswered questions regarding their future, such as how to deal with them after the national grid finally gets extended to the region.
Fortunately, efforts are being made to overcome these barriers. For example, the World Bank’s Energy Sector Management Assistance Program (ESMAP) has recently launched the Global Facility on Mini Grids, through which it seeks to establish adequate regulations, improve access to finance, and develop flexible and innovative payment models. To date, it has allocated more than $90 million for mini-grid programs in Kenya, Liberia, Mali, Nepal and Tanzania. These efforts on the international level, together with each government’s effort to enhance the enabling environment in the domestic sphere, promise a positive future for the mini-grids industry.
– Minh Joo Yi