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whose participation is only realistic if a project is profitable and therefore attractive. Output–based aid and long-term concession, when well designed, can be attractive schemes to increase private sector participation; and a certain level of standardization is advised to reach a certain degree of replication and economies of scale. Strong and targeted marketing around the call for tenders and the program are key to attract private sector participation. However, operators should be the main designer of their system based on costs and quality, but including consumer health and the environment as criteria. Private providers present the advantages of having some investment capacity and should have technical capacity, so that they can handle all operational issues. However, to be developed extensively in rural areas this model requires significant training, both on technical and business issues. Also, this approach requires community involvement and a proactive private sector development component to build demand for electricity services.
The utility-based model is another option which has been widely used around the world. Utilities generally have more experience, financial resources, and technical capabilities to carry out rural electrification projects. They can realize economies of scale and use their central position to take advantage of financing options, but many of them are also inefficient and lack commitment at the local level. If this model is to be successful, it has to follow a business oriented approach. Because of their capacities and experience, utilities should have a role to play in the future; however, partnering with private sector and community-based organizations will allow them to avoid the barriers linked with their centralized management structure and size. This type of hybrid, public-private model is probably the most interesting structure, but is also the hardest to define because it can encompass many different approaches. Hybrid business models tend to be very site specific and thus can be
ACKNOWLEDGEMENTS
This study would not have been possible without the great commitment and work of Simon Rolland, ARE Policy and Development Manager (lead on business models and on business, economic, and social factors) and Carlos Guerrero (lead on technologies and cost calculations).
The Alliance for Rural Electrification (ARE) is grateful for the contributions of the following experts: Xavier Vallvé (Trama Techno Ambiental, Spain), Andy Schroeter (Sunlabob, Laos), Mike Bergey and Charlie Dou (Bergey Wind Power), Lars Koerner (SolarWorld, Germany), Martin Bölli and Matthias Wiget (Entec AG, Switzerland), Balthasar Klimbie (Fortis Wind Energy, The Netherlands), David L. Seymour (Asian Phoenix Resources, Canada), Anjali Shanker (IED, France) and Fabian Jochem (Juwi Solar, Germany).
quite diverse with changing ownership structures, O&M contracts, and other variables.
Conclusion
Continuing and adapted capacity building and training on technical, business, financing, and institutional aspects of project and program development is necessary at every point of the project chain and must include every stakeholder. Lack of financial, institutional, and technical capacity is still one of the main reasons for unattractive programs and misunderstandings between the public and the private sector, including the financial sector.
General training on rural electrification should therefore be provided to all stakeholders. At the local level, detailed technical training for end-users (i.e., customers) must cover both electricity uses (energy efficiency, load management) and technical limitations of the mini-grid. The personnel responsible for O&M should also be trained right from project implementation, with follow-up training over the long term.
For the sake of project sustainability the involvement of all the local stakeholders of the project is fundamental: Local authorities should be involved from the inception regardless of the business model chosen for the project. They can help assess electricity needs, conduct good project monitoring, help organize the community, enforce the rules, help develop local productive enterprises or added-value activities, etc.
The participation of the local community can take different forms but is key to long term integration and can include participation in the investment, connection fee, monthly payment etc. It is also fundamental that the disconnection policy be clear and enforced. The involvement of the local personnel responsible for the O&M can be increased by tying salaries with performance.
© 2011 Angel Business Communications. Permission required.
www.solar-pv-management.com Issue V 2011
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