In Latin America, there are still 22 million people who do not have access to electricity. They live in remote and poor areas that are difficult to access, where the electric grid remains out of reach due to the costs of grid extension. These communities usually use kerosene, candles or diesel generators to light their homes and businesses, which is often detrimental to health, the planet and their livelihood (or the state, in case of subsidized systems). An increasingly more viable alternative to this problem is the mini-grid.
What is a mini-grid? “A mini-grid is an aggregation of loads of one or more energy sources operating as a single system providing electric power and possibly heat isolated from a main power grid. A modern mini-grid may include renewable and fossil fuel-based generation, energy storage, and load control. Mini-grids are scalable so that additional generation capacity may be added to meet growing loads without compromising the stable operation of the existing mini-grid system” according to the definition of the International Electrotechnical Commission (IEC) 62257.
One of the main technical challenges of the mini-grid is how to control the generation systems connected to it, to balance supply and demand and ensure supply security. However, thanks to technological advances in communication and control systems, this challenge has been overcome as there are better control systems, more efficient solar panels and batteries.
Mini-grids can operate directly connected to a larger central grid but can also operate disconnected from that grid. For example, hundreds of hospitals, universities, military installations and industries have installed their own mini-grid generation systems, obtaining better reliability than the pre-existing central grid. Mini-grids are a way of making electric power continuous, reliable, and at an accessible cost for rural economies. In these economies, the population is away from the main distribution network. However, at the main distribution network a low population density can prevent additional funding to extend the transmission lines to the underserved rural areas.
The future of the mini-grid is very encouraging. According to the International Energy Agency, almost half of the energy to be installed in the future will be based on mini-grids, which will allow us to achieve universal access by 2030 and finally close the “energy” gap for millions of Latin Americans who don’t have access to electricity.
Solar-powered mini-grids, especially hybrid ones (those that run on a diesel generator or batteries at night) are a great solution to this problem. However, we must be flexible in its implementation. There are many difficult institutional challenges that can quickly surpass the technological ones. Strong state institutions, smart local regulation, private sector investment, local workforce training, and investment assistance are all tools that can be used to surmount challenges that may lay ahead.
The Role of Governments in the Region
Latin American governments, along with multilateral institutions such as the IDB, can contribute to the expansion of mini-grids by ensuring investments, facilitating access to electricity, educating potential users, contributing to project sustainability through “off-take”, and organizing and grouping villages or rural villages. These efforts increase the number of potential customers, though training opportunities and other incentives.
Governments and multilaterals can contribute by developing and approving the necessary regulation for mini-grids, as well as identifying potential locations where local communities can be set up and trained to become partners, and not just consumers.
Finally, governments together with multilaterals can help simplify the process of developing mini-grid installation, speeding up the entry of equipment to the country (if imported), facilitating quick work authorization, inspections, commissioning, and the required state and departmental governments procedures. That is, to cut the red tape, reduce bureaucracy and improve transparency in the processes. All the above opens the door to utilities´ business development, and it represents a unique opportunity as new customers require the service.
Latin America has a lot to do to achieve 100% electrification, yet mini-grids can be one viable and high-impact alternative. Mini-grids shrink the welfare gap, boost productivity, and promote regional development, thus improving lives!
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