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Mini-grid systems on the rise in Tanzania Status of implementation and regulatory framework conditions Workshop Mini-Gri

Mini-grid systems on the rise in Tanzania Status of implementation and regulatory framework conditions Workshop Mini-Grid Systems: Reducing risks and costs through the anchor customer business model 19 March 2014 in Berlin, Germany. Dr. Chris Greacen

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Mini-grid systems on the rise in Tanzania Status of implementation and regulatory framework conditions Workshop Mini-Gri

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  1. Mini-grid systems on the rise in Tanzania • Status of implementation and regulatory framework conditions • Workshop Mini-Grid Systems: • Reducing risks and costs through the anchor customer business model • 19 March 2014 in Berlin, Germany Dr. Chris Greacen Consultant, World BankAfrica Energy Unit (AFTEG)

  2. Policy drivers Tanzania example • Regulatory framework • Streamlined approvals process • Sell to retail or the grid • Grants • REA Connection grants (up to US $500 per new connection for mini-grids) • 3 connection grants awarded so far, $2.3 million, for 4665 connections • REA Grants for feasibility studies and environmental assessments • 28 grants awarded, US $975,000 • Availability of financing • Loans from local commercial banks supported by a US $25 million World Bank line of credit • Technical assistance • To developers, REA, utility, regulator

  3. http://hdl.handle.net/10986/16571

  4. Key features of Small Power Producer (SPP) regulatory framework • Up to 10 MW (export) • If selling to TANESCO: • Streamlined interconnection agreements • Standardized PPAs • Standardized tariffs • Up until now, based on utility avoided costs. • In 2013: $0.107/kWh main grid; $0.301/kWh TANESCO mini-grid • 2015?: Technology-specific feed-in tariffs (like German EEG)

  5. Key features of Small Power Producer (SPP) regulatory framework (continued) • If selling retail: • SPP proposes a tariff based on cost of service • Can be higher than national uniform tariff • No regulatory approval necessary for tariffs to anchor customers > 250 kW • Rights for isolated mini-grid operators “when the big grid connects to the little grid.” • Exemption from licensing and retail tariff approval for projects under 100 kW • EWURA reserves right to regulate if 15% of customers file complaint

  6. Are Cost-Reflective Tariffs Affordable for Rural Customers?

  7. Commercially viable mini-grids • Primary market… by displacing: • Kerosene + dry-cell batteries • Diesel generation • Grid power (fuel oil, gas, hydro, coal)

  8. “Kerosene +” replacement • Small PV: <1 kW • Low power appliances: • LED lighting • Cell phones • Radio / CD • “skinny grids” or “micro-grids” Kerosene

  9. Example: Devergy • Clusters of 5-6 households served by an “Enbox” • Each Enbox has 2@30 watts PV + 0.5 kWh battery • All Enboxes connected in 24 volt DC bus • Customers prepay via cell phone • realtime internet monitoring of Enboxes, meters • Several euros/kWh • About 5 euros/month

  10. Kerosene

  11. Diesel displacement • PV/Diesel… or hydro or biomass • 10s of kW to MW-scale • Grid-quality (or close) distribution system • Appliances: • Everything from lower level plus… • Refrigeration • Power tools • Grain processing

  12. Example: Ngombeni Power, Ltd • Mafia Island • 1 MW steam turbine (Coconut wood) • Sells at 11 kV to TANESCO mini-grid at $0.301/kWh. • TANESCO diesel generators kept as backup • TANESCO manages distribution

  13. Diesel displacementOther Tanzania Examples • LUMAMA – 300 kW hydro • Inensus – solar/diesel hybrids • Synchronicity – solar/diesel hybrid with cell-tower anchor • Husk Power – biomass gasifier

  14. SPPs with mini-grids that also sell to the main grid • Typically hydro or biomass • > 1 MW • Grid-quality distribution system • Generally have large industrial anchor customer(s)

  15. Example–Mwenga hydro (Rift Valley Energy, Ltd) • 4 MW hydro • Sells to TANESCO • Anchor customer tea factory (700 kW) (April 2014?) • Currently sells to 800 residential customers, expanding to 4,000 • Prepay via cell phone • Retail tariffs same as TANESCO

  16. SPPs in Operation (tiny.cc/SPPstats)

  17. SPPs with signed PPAs (tiny.cc/SPPstats)

  18. Parting questions • What disruptive technologies are shaping markets for mini-grids? • What are the markets –especially involving anchor customers? • How can the regulatory environment be improved?

  19. Thank you For more information, please contact: Chris Greacen: chrisgreacen@gmail.com Book download: http://hdl.handle.net/10986/16571

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