Solar-Home Systems & Mini-Grids: Same, Same But Different!

Posted on: September 12, 2019

By: Thomas Hillig

More than a billion people around the globe do not have access to electricity. In the vast majority, this is not because of a traditional lifestyle, so not by choice.

Generally, many developing countries have insufficient power generation infrastructure. Often only the major metropolitan areas are connected to the national grid and only urban inhabitants have a chance to access electricity. To include remote villages requires much more investment per connection. Building long transition lines to distant settlements can be extremely expensive.

In addition, many villages are scattered across large areas. Families live in huts or small houses and not in multi-story buildings like in urban regions. This means that also the costs of connecting several households within a village is much more expensive than in cities. Many poor countries do not dispose of the necessary financial means for extending their centralized power system to more decentral locations.

The solar power revolution has initiated an evolution that could overcome this unsatisfying situation. Solar allows for a more decentralized concept of power generation. Large solar power plants are also possible, but an attractive characteristic of solar power is that small generation units can be built in a relatively inexpensive way.

This gives hope for electrifying remote areas all over the world. No expensive grid extension projects are needed to reach remote areas. Decentralized power generation often does not require an infrastructure type of investment.

Solar-home systems (SHS): unconnected & completely autonomous electricity supply for individual households

SHS are micro-power plants with integrated energy storage that provide electricity to individual buildings or households. SHS typically provide DC power that can be used without any problems for lamps and mobile phone charging. For newly electrified households, these are typically the main power needs. The electricity from SHS is not fully comparable to AC power that we know in developed countries.

More sophisticated appliances like television, fridges or air conditioning typically require AC power. To overcome these limitations, SHS providers pursue two different solutions:

  1. Development and provision of DC appliances
  2. Conversion of DC power to AC power

DC solutions for television, refrigerators, or air conditioning are typically much more costly than standard AC appliances — comparing new to new. Already existing AC appliances cannot be used directly. Also, the new-to-new comparison is typically not very relevant in many developing countries as second-hand appliances play an important role.

Converting from DC to AC adds substantial extra costs and requires a certain size of the solar generator. Finally, some conversion losses need to be taken into consideration.

Certain voices in the international development community insist that developing countries merit the same power quality than western nations and that SHS would not be enough. These voices often pursue a different approach by favoring mini-grids.

Mini-grids: Miniature power plants, storage, & distribution on village-level

AC mini-grids resemble a miniature version of the power infrastructure that we know from western countries. Today, on the generation side, mostly solar power plants plus battery energy storage are used, often combined with diesel generators or biomass plants for securing the energy supply during bad weather periods or as a cheaper option during night time.

In comparison to standard grid infrastructure, mini-grids are much smaller: typical plant sizes are in the range of 10–35kWp solar and less than 100kWh battery energy storage for 150–400 connections. Another difference is the missing interconnection through transmission lines between different units. Mini-grids are typically isolated and completely autonomous. AC mini-grids provide electricity of high quality that can be used by private, commercial and small industrial off-takers. Well-designed mini-grids are considered to provide electricity of a quality that is comparable to sophisticated national grids.

The downside is that mini-grids require investments in a rather complex and stationary power generation and distribution infrastructure.

Innovation is driving the development of SHS & mini-grids: a new generation of smart meters

A new generation of relatively inexpensive smart meters that can be coupled with mobile money solutions allows for remotely controlling energy sales in an automated way. Pay-as-you-go (PAYGo) systems allow for setting up payment methods for decentral energy sales that imitate pre-paid mobile phone solutions. The end-customer must “top up” his energy account before consuming the electricity. This approach enables SHS- or mini-grid-operators to manage the payment behavior in an automated way and to optimize the money collection process. The approach avoids losses due to failure of payment. The downside is that the solar power output is determined at the moment of the investment when the technical parameters of the plant are specified. If the electricity from a system is not consumed it cannot be sold elsewhere. Forecasting future electricity needs is a key discipline — above all for mini-grid developers as mini-grids can hardly be removed after construction. SHS companies face more flexibility. In case of non-payment, it is relatively easy — at least from a technical point of view — to dismantle, remove and relocate SHSs.

Solar! Electricity for all? Leaving no one behind?

The business case is however not easy. Both SHS and mini-grid companies have to choose their customers carefully in order to come up with an economically viable business case. SHS providers choose the best customers on a country level or from certain regions in which they operate. Not everyone can afford solar energy. Minigrid developers make two choices: first, they choose a village, then they chose in a particular village the customers that can pay for electricity and that are easy to access. Often, within the village, they are less demanding than SHS providers.

As a certain willingness and ability to pay for solar power is required, both approaches have the tendency to address primarily the rural middle class. Subsides that are often incorporated in both approaches do not reach the poorest of the poor. It becomes obvious that development efforts must be undertaken beyond electrification.