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What is energy access? Do these lanterns count? This presentation is specifically to alk about Energy Access and the role of Minigrids in the development of a national energy plan.

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Just look at those smiles! Look at the children studying at night under the electric lights! Don’t these photos give you the warm and fuzzies inside? For some of us, these pictures are sexier than looking at Playboy or Playgirl magazines. These are the pictures we all look for when writing our project reports, aren’t they?

Often we stop here. A lot of great work has been done. But what does energy access mean? When regulations are made for universal energy access, for 100% electrification, what do we mean?

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I have a quick story from a survey I was doing on a remote region in Indonesia where I visited many villages, both electrified and not. When asked if the lights helped the children study at night, I was met with a sea of confused looks. Imay have lost a little credibility here, because many of them said that when it’s dark they don’t make the kids study. In Indonesia, it is often still bright outside even at 6pm pretty much year round. They make the children study during daylighthours.

Yes, the lights CAN help the students study at night more comfortably. But let’s keep this question in mind. Do they need the lights for what we think they need it for?

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And that’s the point isn’t it? Energy Access is about more than the children studying at night. It is about other goals beyond the simple needs. One of those goals could be equal opportunity to the services that are accessible to everyone else at the price everyone else pays. There are arguments about how much price should be paid, the level of service needed, and just exactly what access should be available.

I would argue that the end goal should be to provide equal opportunity to increase quality of life and economic status. Electrification plans are great, but what about clean water? Sanitation/health? Communication?

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These lanterns are part of the solution. I have personally visited about 100 villages and I have data for about 300 more. In some villages, not only are these lanterns needed, for the most part, it is enough. For a while.

We should appreciate any and all honest efforts for energy access. This include lanterns, DC microgrids, low power micro and mini grids, peer to peer energy sharing, microgrids, and many other solutions out there. But what happens when more energy is needed for growth.

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Have we thought about this growth and provide a way for growth to happen (especially in the development of a national energy plan)? Can the original energy provider keep up with the growth and figure out ways to serve the growing needs? If not, is there a solution to keep up with this growth?

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But how long will these lanterns be enough for? I’ve known villages who are still happy with their lanterns or lighting only solar home systems even after 2-3 years of use. When the lanterns are still working that is. Which we know there are many programs out there that provide low quality to mediocre products at best.

If we all have done our jobs properly, they will have enough money to buy additional appliances and will require more power and energy. How long will they have to be stuck using the lanterns before needing something more?

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So what’s the real solution? Minigrids are touted as the next best thing to having available public grid (when the public grid can provide reliable power). As a matter of fact, for many cases they’re touted as the only solution since the public grid will be too expensive to bring in.

But most minigrid business models rely on at least one of the following 1. subsidy or grants 2. charging a high tariff to the community members 3. long concession periods before the grid can come in. If they don’t rely on any of the above, they usually don’t give enough power more than just lighting and other low power applications.

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Minigrids are NOT the only solution out there. Over the course of this week during Asia Clean Energy Week 2016, we’ve heard about many of these other solutions and business models. There are different challenges facing the energy access issues world wide. And these challenges require different solutions that are available out there. They are all part of the solution, we just have to acknowledge the limitations and plan for how all of these solutions can work together to serve the needs for energy access.

Be aware of anyone saying that their solution is the only solution and therefore need to be fully supported. Remember this, technology is not a barrier. There are plenty of technologically appropriate solutions out there.

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Grid extension is seen as the business model killer. That with grid extension their mini grid model breaks down. A good rural electrification plan doesn’t rely on a narrow set of technologies nor does it depend on the grid extension or specific business models. Many minigrid business models depend on long term monopoly concessions on energy sale to the community.

Will these companies be around through the duration of the concession? Will they upgrade and add capacity to promote and support economic growth? If they’re unable to, have we planned for it and be able to provide a way

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out for the communities so they can grow and not be reliant on the original electricity provider? Have we provided enough opportunities and allow different business models to thrive so that the energy providers can (and will) invest in these types of projects?

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We won’t talk about who’s going to do it, who’s responsible, etc. That’s a discussion for another week. We will focus more on how to plan to meet a national electrification goal. So how do we get started on developing this plan?

Everyone has heard this quote before. Without a plan a goal is just a dream. Here’s the kicker, many “plans” out there are just goals because they don’t contain real, actionable steps. I’ve heard of “plans” that mention a particular electrification ratio by a certain year without having any action items within the plan.

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In addition, we need a comprehensive infrastructure development goal, not just electrification. The 4 pillars of growth need to be considered at the same time, not separately. These pillars are clean water, sanitation, electrification and communication.

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Let’s get this straight, TECHNOLOGY IS NOT A BARRIER. There is enough technology available out there to overcome any challenge. Any failure on the field is not going to be the technology’s issue, but rather the implementation the different technologies.

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Often the issue is an incorrect application of the technology. Before anything else, a survey is needed to find out quite a bit of information about what we want to do. Before we make a plan, we need to know a LOT of information. The problem is not knowing what the requirements are. Not knowing what technology needs to be applied and deployed where.

What resources are there? How do we utilize what’s available? How does it compare with the needs? How much is required locally? Regionally? Nationally? How will it be delivered?

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The problem is not having enough data to formulate an actionable plan. Solar PV system deployment when hydro power is available, or lanterns and solar home system distribution when there is significant energy need for cold storage, ice making and crop processing plants. These are examples of the misapplications of technologies rather than the failure of the technology itself.

Surveys are required to assess the energy need and the availability of the resources. Even better is we can add the potential growth information, social and economic impact, etc. We can use this data to draft an actual plan, with actionable steps.

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This is the island of Lombok in Indonesia. Its daily peak load is around 200MW and the available power is around 215MW. How do we build more hotels, industry and commercial zones? Simple, MORE POWERRRR….ARGH ARGHARGH

The government has even determined a Special Economic Zone for this island. Distributed generation for the SEZ utilizing the available energy resource is a great solution. Deploying generation where it is needed is the essence of distributed generation. We know where the load center is so that the power generation plants can be installed

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nearby to reduce transmission and distribution charges. Any excess power can be sold to the grid and the power plants can be designed to ensure high level of service for the loads.

With the right planning and coordination with all of the stakeholders, distributed generation within the SEZ can be used to promote growth, and while there is excess power it can be sold to the grid as part of an overall grid strengthening strategy.

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But how do we know where the load center is when it comes to villages? The earlier example of Lombok and its Special Economic Zone was an easy one. We know where the load center is likely to be and therefore where to build the generation plant.

A village does not have a uniform distribution of population. It is simply a geographical boundary with uneven population density. Rooftop tagging help identify the high density areas and can be used to develop a least cost electrification plan.

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This is a study that was done for a few Indonesian provinces. This is just to show that this kind of planning is what’s needed to resolve electrification issues. As you can see once we know which villages (and how many households are in each village) still need electricity then we can figure out how to best serve them based on the geographical information.

But to do this study right, we really need to go one step further. And that is to do rooftop tagging to actually figure out where the population densities are. This study was done more or less with the center of the village boundary, which can be off by tens and sometimes hundreds of kilometers from the actual population density. This information can then be used for a real least cost planning method to properly design the energy access plan.

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So how can minigrids help? Minigrids play a huge role in electrification plan. Especially for developing countries where not all of the country is electrified. Even worse for countries like Indonesia and Philippines where geographically the country is not one contiguous land mass.

This also apply where the country consists of separate population centers that are too far apart to efficiently connect with the public grid. In addition, there may be issues of not having enough power plants installed to serve the loads. Here are the features of a real minigrid. We’re not talking about low capacity minigrid that can serve

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only enough power for lighting and other low powered devices. This is for a real mini grid that can serve real energy use and grow with the community as it increases its energy needs.

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Business as usual is to build any minigrid as long as people get electricity. Even if it uses no metering, small cables capable of low power only, etc.

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Neither one of these electrification systems will be compatible with the utility grid when it comes. We wouldn’t want either one to continue being installed as electrification solutions.

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No more business as usual! It wastes money, uses cheapest technology, materials and workmanship, disappointing performance, incompatible with the grid. We need to be looking 5, 10, 15 years ahead. We need to upgrade business as usual, keep what’s working well and change what’s not.

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So let’s figure out a way to electrify a nation while promoting AND supporting economic growth for the villages, for the last mile customers. Separate lanterns, small home systems, and individual grids can serve a community for only so long. If we do our jobs right, they’ll soon grow their economy and will have the opportunities to increase their income, economic and social status, and therefore energy use.

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Typically this is what gets done. Villages get electrified and everyone’s happy. The grid may never come, or it may some day. And each minigrids are its own separate system. Whether they’re powered with bio-energy, wind, hydro, solar or diesel generators, often these are separate systems, separate grids. There’s no plan to connect them together or to the public grid.

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Let’s look at Indonesia as an example. This is as of latest data used by Indonesia’s rural electrification program called Bright Indonesia

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If we only look at electrifying them via typical methods, what will we end up with? Likely in 10 years we will end up with a bunch of new minigrids performing poorly and probably still providing the same level of service as when it was first installed or worse.

There will also be the lanterns and solar home systems that were distributed and forgotten about. It is very possible that the solutions deployed for these unelectrified villages will not keep up with the growing energy needs

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Just an example of an existing minigrid set up in an island. Please note this tiny itty bitty island. The one within the circle. Can you guys even see it? Now in this case this is the “public grid”. But how will we ever support growth of the population and their economic status?

This island consists of 0.06% of Indonesia’s population or 0.15% of Indonesia’s landmass.

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Here’s the next evolution of the typical minigrid systems. Not that these systems will have to be forced and required unnecessarily, but they need to be part of the planning efforts. A national energy plan need to allow for this minigrid architecture and utilize it as needed.

With this scheme, the national energy plan can leapfrog typical electrification methods and launch the country far into the future. This is what could, and should happen when the national energy plan and its supporting regulations allow for and even encourage minigrids to connect to each other when needed.

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Beyond the typical minigrid systems is the ability to connect with each other and share the excess energy. Each minigridcan of course still act and control its own generation and storage. But now the neighboring minigrid can be treated as an additional load if they need more energy. As a neighboring minigrid have excess energy, it can sense that there is a load to be served (in this case a minigrid system). With very simple control systems we can manage several grids connected to each other.

A simple switchgear controlled with a minigrid controller that reacts to its own generation, load and storage to decide when to connect and disconnect to other minigrids. With a more complex control system, the energy sharing can become more granular to manage all of the generations, storage and load as a single system.

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Of course, what’s NOT shown here is that the public grid comes to these minigrids as an extension of an existing grid. It is serving other communities and have other power plants connected to its transmission and/or distribution system.

These connected microgrids can now connect to the grid safely without any impact to the existing grid. They will be able to operate in several modes: 1. excess power seller

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2. selling all of its generated power (on an IPP/PPA arrangement) and using the grid to buy power when needed 3. operate independently and using the grid just as a backup. However, when all of these microgrids in one region are owned by a single entity (micro IPP/micro utility) then it may be able to have another set up I’ll show in the next slide.

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This mode allows the connected to microgrids to act as a combined minigrid that is then connected to the public grid.

So why do we need to connect to the public grid? Either in this mode or in the previous mode?

In the end, having a public grid with multiple power plants and large load base is one of the most efficient way to provide electricity. Any system with storage and limited generation (solar, wind) or expensive declining fuel (gas,

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diesel), are by definition, limited. So being able to connect to each other and eventually the public grid, now the larger grid can act as “storage” of excess energy or as a “source” to cover additional growth required without each minigridhaving to add more generation and/or storage on its own.

The public grid allows the integration of these generations and provide redundancy.

So, with all of these benefits in connecting to the public grid, when planned properly, let’s go back and talk about grid extension again.

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Let’s re-examine the premise of public grid extensions as an enemy of minigrids. It doesn’t have to be. There is no need to limit growth and be stuck to a long concession period to a project developer. With the right planning and business models, the public grid can be a partner to the minigrid owners.

Many minigrid business models typically rely on long term concessions to build a minigrid as an infrastructure investment. Grid extension is not the enemy of minigrids. Why limit grid extension when in 5 years or 10 years the grid is ready to move in? Why limit grid extension when it is more efficient to build up the grids and connect the

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separate individual systems? With the right planning and business model, the public grid can be a partner for the minigridowners previously serving rural communities.

Monopolizing electricity and charging more than the public utility to the villagers least likely to afford it is not sustainable. Even if the willingness and ability to pay is there (in many cases there are), the opportunity cost of that $25/month (consisting of electricity rates upwards of $1/kWh) is much higher for the last mile communities.

For us it’s a week’s worth of coffee in the morning. For them it is the difference whether their children goes to high school or not. Or college. Or the opportunity to start a small business. We need to provide these last mile communities with opportunities of growth and increasing their quality of life.

Having said that, with the proper planning, these minigrids when connected to each other of the public grid do not rely on the public grid providing reliable electricity. Each minigrids can still be working independently, even adding capacity to meet their own demands. Having the connections to the other grids and/or public grids provide additional options for growth and to be able to develop additional sources of revenue.

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Here’s the key to make this all work. Not TECHNOLOGY, otherwise that’s what my slide would show.

How do we structure the national energy plan and business models to provide incentives for every stakeholders?

How do we promote growth of the distributed generation as part of the national plan when we can’t give security to these projects’ investments? National Energy and Electrification Planning must consider how the market will react to its plans. Financial engineering and risk management of these projects must be part of the plan.

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It must be technology agnostic and business model agnostic while at the same time being clear enough of its goals so that the plan can be executed instead of being vague and ambiguous. As an example, knowing that in micro/mini utility scheme where the company is collecting the consumer tariff directly, the risk is fully in the project’s hand.

Even I don’t have the credit rating to always get a credit card. And we’re asking the lenders to lend to projects where the offtakers are small farmers and/or fishermen?

When asking for multi-million dollar loan and the lenders asked who the offtaker is responsible for returning the money, would they lend to the project if the answer is “farmers and fishermen in remote villages”? The regulations and plans must have included this risk management and incorporate some risk management strategies.

These may include a government paid loan repayment insurance (or guarantee), having the state owned utility company sign the PPA with the project for these mini IPPs, or even provide a viability gap funding scheme. We can look at the example in India for Uttar Pradesh where they have a great example for off-grid electrification.

Just be aware that each country has their own set of criteria and framework. We can NOT say that something works in another country therefore it must work in another. Philippine and Indonesia is a great example. Two big differences that doesn’t allow one’s regulations to simply work in another: 1. Indonesia only has 1 utility company and it is state owned, Philippines has many. 2. Indonesia’s utility company’s only income is the basic consumer tariff and subsidy. There is no additional taxes to support renewable energy efforts.

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The end result is that we want 100% electrification planning that provide equal opportunity for everyone to grow. No, we do not need to RELY on the public grid to do this, but we also cannot stifle infrastructure development. When it does make sense, the public grid and connecting the minigrids together to make a larger ecosystem must have been considered in the electrification planning. All of the different options available should be planned to be utilized when it needed.

For a national energy plan, we cannot be arrogant and say that we have to stop there. In the end, universal energy

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access is what we want to achieve. And this is currently best served by making sure that the minigrid systems (and dare I say even small home systems) need to be grid friendly.

Don’t be afraid of connecting to the grid to take advantage of it. We can maximize the use of the public grid by connecting the minigrids to it when needed. We don’t have to rely on the grid and the electricity it provides (in some cases less reliable than the minigrids). But we need to utilize it when we can, not shun it.

Last but not least, we have to consider the financial engineering and risk management. We aren’t playing monopoly. The money has to come from somewhere and despite what many people think, it isn’t an infinite resource for the government to keep printing.

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