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English and Chilean Investors November 2017 | Conference Edition Public Disclosure Authorized A REPROSPECTIVE ANALYSIS OF THE ROLE OF ISOLATED AND MINI GRIDS IN POWER SYSTEM DEVELOPMENT Public Disclosure Authorized Public Disclosure Authorized Public Disclosure Authorized ESMAP Mission The Energy Sector Management Assistance Program (ESMAP) is a global knowledge and technical assistance program administered by the World Bank. It provides analytical and advisory services to low- and middle-income countries to increase their know-how and institutional capacity to achieve environmentally sustainable energy solutions for poverty reduction and economic growth. ESMAP is funded by Australia, Austria, Denmark, the European Commission, Finland, France, Germany, Iceland, Italy, Japan, Lithuania, Luxemburg, the Netherlands, Norway, The Rockefeller Foundation, Sweden, Switzerland, and the United Kingdom, as well as the World Bank. Copyright © November 2017 The International Bank for Reconstruction and Development / THE WORLD BANK GROUP 1818 H Street, NW | Washington DC 20433 | USA Written by: Castalia Cover Photo: © Sunita Chikkatur Dubey. Permission required for reuse Energy Sector Management Assistance Program (ESMAP) reports are published to communicate the results of ESMAP’s work to the development community. Some sources cited in this report may be informal documents not readily available. The findings, interpretations, and conclusions expressed in this report are entirely those of the author(s) and should not be attributed in any manner to the World Bank, or its affiliated organizations, or to members of its board of executive directors for the countries they represent, or to ESMAP. The World Bank and ESMAP do not guarantee the accuracy of the data included in this publication and accept no responsibility whatsoever for any consequence of their use. The boundaries, colors, denominations, and other information shown on any map in this volume do not imply on the part of the World Bank Group any judgment on the legal status of any territory or the endorsement of acceptance of such boundaries. The text of this publication may be reproduced in whole or in part and in any form for educational or nonprofit uses, without special permission provided acknowledgement of the source is made. Requests for permission to reproduce portions for resale or commercial purposes should be sent to the ESMAP Manager at the address below. ESMAP encourages dissemination of its work and normally gives permission promptly. The ESMAP Manager would appreciate receiving a copy of the publication that uses this publication for its source sent in care of the address above. All images remain the sole property of their source and may not be used for any purpose without written permission from the source. [i] ACKNOWLEDGEMENTS This study was enriched by email exchanges and personal interaction with key professionals in the energy field, from academia, the public and the private sector. We would like to sincerely thank Mr. Jon Exel (The World Bank) for the opportunity to conduct this work. His guidance was essential throughout. A number of excellent reviews were received from: Mr. Dan Waddle (NRECA), Mr. Chris Greacen (Independent Consultant), Mrs. Liliana Vivanco (The World Bank), Professor Mark O'Malley (University College Dublin), Mr. Michael A. Toman (The World Bank), Mr. James Knuckles (Independent Consultant), Dr. Constantinos Taliotis (Kungliga Tekniska högskolan), Ms. Gabriela Peña Balderrama (Kungliga Tekniska högskolan & Universidad Mayor de San Simón) and Mr. Ioannis Pappis (Kungliga Tekniska högskolan). This study would not have been possible without their generous and insightful cooperation. None of these individuals, should be held responsible for any erroneous facts or interpretations. Any remaining errors are solely the responsibility of the authors. [ii] GLOSSARY AC: Alternating Current MV: Medium Voltage ARECA: Alaska Rural Electric Cooperative MW: Mega Watt Association NRECA: National Rural Electric Cooperative AVEC: Alaska Village Electric Cooperative Association BOOT: Built – Own – Operate – Transfer PGCIL: Power Grid Corporation of India Limited BPA: Bonneville Power Administration PPA: Purchase Power Agreement CEB: Central Electricity Board REA: Rural Electrification Administration Co-op: Cooperative RVEP: Remote Village Electrification Program DC: Direct Current SA: Systemas Aislados (Island Systems in Bolivia) EDC: Electricité Du Cambodge (Electricity of SDG: Sustainable Development Goal Cambodia) ENDE: Empresa Nacional de Electricidad SEB: State Electricity Boards (National Electricity Company in Bolivia) SIN: Sistema Interconectado National (National GW: Giga Watt Interconnected System in Bolivia) HV: High Voltage SPD: Small Power Distributors IEA: International Energy Agency TVA: Tennessee Valley Authority kW: kilo Watt MV: Medium Voltage kWh: kilo-watt-hour MW: Mega Watt NRECA: National Rural Electric Cooperative LV: Low Voltage Association [iii] KEY TERMINOLOGY Centralized generation: Refers to the large-scale generation of electricity at centralized facilities, located usually away from end-users and connected to a network of high-voltage transmission lines (US EPA 2017a). Distributed generation: Refers to a variety of technologies that generate and distribute electricity at or near where it will be used. It may serve selected loads in the vicinity or it may be part of a greater system (regional and/or national grid)(US EPA 2017b; Pepermans et al. 2005). On-grid electricity systems: Systems (either centralized or distributed) that are connected to the main national power grid (IEA and The World Bank 2015). Off-grid electricity systems: Systems that are not tied to the national grid, operate autonomously on island mode, and can satisfy electricity demand through local power generation and distribution (IRENA 2015; Mandelli et al. 2016). Under this perspective and for the purposes of this paper we define the following: Mini-Grids: Isolated power generation-distribution systems that are used to provide electricity to local communities (power output ranging from kilowatts to multiple megawatts) covering domestic, commercial and/or industrial demand. Mini-grids can exist in one of three states: ● Isolated (off-grid): The mini-grid, consisting of one or more generators, serves a local population and is not connected to a larger grid system. ● Grid-Connected (or on-grid): The mini-grid has its own generation facility, serves local needs but is also connected to a large grid. It can feed excess energy into the grid or can take energy from the grid when needed. ● Integrated: A mini-grid that previously operated in state 1 or 2 but which has now become integrated into the grid system both technically and operationally. It may or may not continue to have operational generation facilities. [iv] TABLE OF CONTENTS Acknowledgements ........................................................................................................................................ i Glossary ........................................................................................................................................................ iii Key terminology ........................................................................................................................................... iv Table of Contents .......................................................................................................................................... v Introduction .................................................................................................................................................. 1 Historical approach to power systems development ................................................................................... 2 Country case studies ..................................................................................................................................... 6 USA ............................................................................................................................................................ 6 a. Historical context .......................................................................................................................... 6 b. Reflections................................................................................................................................... 14 UK ............................................................................................................................................................ 15 a. Historical context ........................................................................................................................ 15 b. Reflections................................................................................................................................... 18 Sweden .................................................................................................................................................... 20 a. Historical context ........................................................................................................................ 20 b. Reflections................................................................................................................................... 22 China ....................................................................................................................................................... 23 a. Historical context .......................................................................................................................
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