What is a Microgrid? - IUCNAEL Colloquium 2014

Jessica Wentz and Chiara Pappalardo
IEA 2013: More than 1.3 Billion without access to electricity
What is a Microgrid?
“A microgrid is a group of interconnected loads and
distributed energy resources within clearly defined
electrical boundaries that acts as a single controllable
entity with respect to the grid. A microgrid can connect
and disconnect from the grid to enable it to operate in
both grid-connected or island-mode.”
– U.S. DOE Microgrid Exchange Group, 2010
Microgrid Load Management
Technologies and Strategies
Microgrids and the Evolution of the Smart Grid
Source: Marris, Upgrading the Grid, 454 NATURE 570 (2008)
Renewable Microgrids: Benefits
• System can be scaled to fit local needs
– Reduced upfront and operating costs
– Rapid deployment
• Designed to manage intermittent renewables
• Can operate in isolation or connect to grid
– Versatile application: rural areas, islands, cities, etc.
– Grid connected systems can provide generation, storage
and other ancillary services
• Potential to transform energy service models
Faial, Azores Islands (Portugal)
-
5 wind turbines (4.3 MW) connected to 17 MW oil-powered microgrid.
Automated system controls and monitors all generation sources to balance electrical
supply and maximize use of wind energy.
What Makes a Successful Microgrid?
Source: UN Foundation, Microgrids for Rural Electrification (2014)
What Makes a Successful Microgrid?
Source: UN Foundation, Microgrids for Rural Electrification (2014)
Microgrids with Development Co-Benefits
• Local Participation, Management and Ownership
– Likelihood of project success significantly increased when end
users contribute ideas and resources
– Variety of models for local ownership and management
Customer
Model
Community
Input
Community
Contribution
• Fixed fees
• Per KwH tariffs
• Pay for service
• Project design
• Project operations
• Payment scheme
• Monetary
• In-kind
• Construction, O&M
Full Community
Ownership
• Microfinance
• Rent to Own
• Grant
Microgrids with Development Co-Benefits
• Efficient and Sustainable Design
– Scaled appropriately
– Caters to end user needs, wants, and ability to pay
– Effective use of renewable generation resources
and energy efficiency resources
Microgrids with Development Co-Benefits
• Local Training and Capacity Building
– Create local jobs, cultivate domestic energy expertise
• Support Productive Uses
– Facilitate job creation, small business development
• Support Use of New Technology
– Improve communications (mobile phones)
• Anchor tenants
– Enhance financial viability and promote productive use
Nicaragua: Orinoco/Marshall Point (ENEL)
Christian Casillas explains the energy
savings from compact fluorescent light
bulbs during a participatory workshop for
Orinoco residents. (Maite Niels photo)
Employees of the NGO blueEnergy and the Nicaraguan electricity
company ENEL discuss energy efficiency and replace light bulbs in
Marshall Point. (Christian Casillas photo)
Nicaragua: Orinoco/Marshall Point (ENEL)
Save
money
and
reduce
GHGs
Credit: Daniel Kammen, Christian Casillas/UC Berkeley
Senegal: Public-Private Partnerships
INENSUS GmbH, GIZ and the Senegal Rural Electrification Agency
Malaysia: Community Owned Micro-Hydro
Green Empowerment, TONIBUNG, PACOS (GE/T/P)
Figure: Mobile can provide energy access through three channels
Source: GSMA
What is an “Enabling” Legal Framework?
• Remove any pre-existing regulatory barriers
• Provide certainty for investors and other stakeholders
with clear policies and rules
• Leverage public funds to attract external capital
• Accommodate variety of business models
• “Scale up” successful models
Policy and Public Support
• Clear policy goals accompanied by long-term
implementation plans
• Specific program for renewable microgrids that
leverages public resources to “scale up”
external investment in successful models
Policy and Long-Term Planning
• Plan Examples
– Rwanda’s Sector-Wide Approach (SWAp) to
Extending Access to Energy
– Cape Verde 100% Renewable by 2020
– Nepal’s National Rural Energy Policy, 2006
Successful Planning
• Integrate energy access goals with other development goals
– Identify how renewable micro-grids and other distributed generation
solutions can help achieve those goals
– Emphasis on local development benefits, community involvement
• Long-term perspective with multiple planning horizons
– Clarify plans for grid extension, interconnection of microgrids
– Identify how institutional support can be used to “scale up” successful
projects, while also gradually reducing subsidization of energy projects
• Context-specific electrification strategies / support mechanisms
• Needs assessment: money, institutions, expertise
Program to Attract External Finance
• Multiple sources of finance and support
– Government expenditure
– Other public investment
– Private investment
– Risk reduction products
• Leverage government resources to attract
external investment
Pre-Tax Electricity Subsidies: Sub-Saharan Africa, 2011
% GDP
% Total Gov’t
Revenue
Value (USD)
Sub-Saharan Africa
1.12
3.85
$13.5 billion
South Africa
0.55
2.01
$2.21 billion
Uganda
1.32
8.95
$204.5 million
Malawi
1.60
5.43
$89.9 million
Tanzania
2.10
9.5
$501.3 million
Cape Verde
2.17
8.66
$40.4 million
Senegal
2.26
10.08
$326.3 million
Ghana
2.86
14.7
$1.13 billion
Zambia
4.85
21.59
$931.2 million
Mozambique
4.93
16.4
$619.7 million
Zimbabwe
14.52
47.02
$1.29 billion
0.22
0.64
$150 billion
World Total
Source: IMF, Energy Subsidy Reform: Lessons and Implications (2013); World Bank, GDP Estimates (2011)
Program to Attract External Finance
• Competitive program – project proposals reviewed
by public entity (e.g., Rural Electrification Agency)
– Mechanism for aggregating projects into portfolios to
attract large-scale public and private finance
– Match projects to appropriate funding or credit sources
• Accompanied by efforts to strengthen banking sector,
improve access to credit (including microfinance)
Appropriate Regulation
• Remove barriers to market access
• Clarify legal status of microgrid operators
• Flexible rules for tariff / fee collection
• Standards for interconnection, service quality,
and utility contracts
Regulatory Barriers: Tariffs
• Rules restricting the amount that can be charged (e.g.,
uniform national tariffs) or the manner in which a
micro-grid operator can collect payments
• E.g., Ghana’s 2014 residential tariffs start at ~6¢ / kWh
• Delays caused by regulatory review of tariffs or
negotiations with utilities and/or regulators
• E.g., Cape Verde and Senegal
Flexible Tariffs and Fee Structures
• Recommendations
- Allow agreements to be negotiated between service
providers and customers
- Provide flexibility with respect to both the price paid for the
electricity, and the manner in which the payment is made
(e.g., fixed monthly fee, per kWh charges)
- Allow for innovative business arrangements – e.g., fee for
service, or a modified “rent-to-own” program which allows
the end users to eventually take control of their assets
Thank you!
Jessica Wentz
[email protected]
Chiara Pappalardo
[email protected]
Community of Practice:
The Legal Aspects of
Sustainable Energy for All
[email protected]
www.law.gwu.edu/gwl/se4all

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