May 29, 2018
Regulating Beyond the Grid
Access to safe, reliable and affordable electricity has a transformative impact on consumers and businesses across the world. Yet, many rural communities in sub-Saharan Africa face complex challenges to receiving quality electricity service. Uganda offers one clear example of the divide between urban and rural. Roughly 51 percent of urban households have access to electricity, most of which comes from the national grid. Yet, only 10 percent of rural households have electricity, with some connected to the grid and others using off-grid solutions.
The need is clear, but how do we support Uganda and other countries across sub-Saharan Africa as they work to electrify remote areas? What dependable options are available for mountainous regions, island communities, or other areas where grid access is not a feasible option in the foreseeable future, if at all? And how do we support efforts to bring this electricity in a cost-effective manner, so that consumers have affordable power and developers receive the price signal they need for investment?
Mini-grids offer great potential for meeting these challenges for rural and isolated communities. Mini-grids can be designed to provide service levels ranging from basic lighting for homes to some industrial uses. Mini-grids can run on a variety of fuel sources and provide excellent opportunities for countries to shift toward renewable energy sources, such as solar, wind and hydropower. With the right standards and policies in place, they also offer a somewhat future-proof option for grid electrification, as they can be designed to stand on their own and/or be made ready to connect to a larger grid.
Deployment of mini-grids is expected to accelerate in the near future. Globally, the International Energy Agency projects that “off-grid and mini-grid systems will provide the means for almost half of new access” by 2030 (https://www.iea.org/access2017/). Uganda recognizes this potential and is actively pursuing a national plan to electrify rural areas. It is piloting several mini-grid projects over the next 18 months.
Despite the momentum, challenges remain that could slow progress on mini-grid deployment. First, few mini-grid systems have proven to be commercially viable. Even though mini-grids can offer people the opportunity to use more energy-intensive appliances (e.g., clothing irons and electric cooking) than what household solar systems might permit, those energy-intensive uses can prove to be expensive. On the regulatory front, many countries do not have clear processes for reviewing and licensing mini-grid projects. In some cases, countries use the same standards for mini-grids as they would for larger grids, even when those rules may not be aligned with the particular attributes of mini-grids.
That’s why the National Association of Regulatory Utility Commissioners (NARUC) worked with USAID’s Energy Division to develop the Practical Guide to the Regulatory Treatment of Mini-Grids. The Guide offers regulators and other policymakers ideas and tools for creating an enabling regulatory framework for mini-grid development. It focuses on the policy and planning framework, retail service regulation, and standards.
In Uganda, with Power Africa support, NARUC has and continues to support the regulator, the Electricity Regulatory Authority (ERA), to develop effective licensing and standards for mini-grids. Using the Practical Guide to the Regulatory Treatment of Mini-Grids and NARUC’s unique peer-to-peer regulator model, bolstered by support from the National Renewable Energy Laboratory on the Quality Assurance Framework for Mini-grids, ERA has developed a clearer understanding of the policy and regulatory considerations needed to increase flexibility and clarity for mini-grid developers. With the Guide in hand, the regulator is now preparing to develop key regulatory frameworks that will provide greater certainty to investors and developers on the required standards for mini-grids.There are hundreds of mini-grids operating across Africa today, and a clear legal and regulatory framework is key for accelerating this market. Power Africa continues to provide direct, tailored assistance to regulators across the continent, as well as mini-grid developers (see our previous blog on Driving Micro-Grid Standardization), to ensure the promise of mini-grids is delivered.
The upward trend in mini-grid interest and deployment is encouraging, and we are hopeful that the potential of mini-grids will come to fruition, facilitated in part by strong regulation. If we can realize this promise, many doors will be open to brighter worlds for communities beyond the grid.
The National Association of Regulatory Utility Commissioners (https://www.naruc.org/) is a non-profit organization representing public service commissions in the United States. NARUC’s members regulate utilities that provide essential services, such as energy, telecommunications, power, water and transportation. Globally, NARUC seeks to empower the global community of regulatory decision makers to drive meaningful change in their energy sectors through dialogue, collaboration and engagement with U.S. and international partners. In partnership with Power Africa, NARUC supports regulators in Ethiopia, Kenya, Nigeria, Rwanda, Senegal, Tanzania, Uganda, Zambia.
