The Nepal Weekly 
December 27, 2022
By Sanjeev Pokhrel
Globally, close to 759 million people – 1 out of 10 – do not have access to electricity. The majority of this isolated population is from rural area of developing nations. There is an enormous pressure on the government to electrify the population who are denied of such access. The expansion of the grid to the rural area is very costly. There will be massive power loss in transporting the electricity to the end users. Thus in order to overcome these challenges, a local level technology which generates, transmits and distributes the electrical power is essential for advancing lives and livelihoods. Mini grids are the reliable solutions to overcome such problems. They use local resources like hydro, solar, wind, thermal and biomass to generate electrical power.
In the developing countries efforts have been made by the government, international development agencies and other financial institutions to support energy access endeavour. These types of endeavour are not feasible without viability gap funding or subsidy. The sustainability of such projects is a big challenge for projects of developing countries. The major challenges of such projects in Nepal and other developing countries are dependent on heavy subsidies, revenue protection, difficult geographic terrain in hilly area to collect/pay tariff, power quality, issues of central grid encroachment in mini grid catchment area, bank and financial institutions reluctance in financing such projects. Without overcoming such challenges these projects will not be sustainable in the long run. The sustainability of such energy access infrastructure is a must as huge investment have been made in the sector by the developing partners, government, beneficiary end users, local communities, private sector, local bank and financial institutions. These renewable energy powered mini-grids have been an important tool to fight against power poverty, energy security, jobs creation, income generation in the developing countries and contribute to climate change mitigation. The sustainability of such projects will improve the development, quality of life, public participation and freedom within the beneficiary communities. Freedom can rightly be elaborated as political freedoms, economic facilities, social opportunities, transparency guarantees and protective securities as claimed by Amratya Sen in this book “Development as Freedom”. The energy infrastructure in this context refers to mini grids in islanding mode or grid connected mode.
Over the past decade, the digitalization trend has entered the utility sector leading to development of innovative approaches and technologies to improve utility and related services. In parallel, modern information and communication technologies (ICTs), in particular, mobile phones and smartphones, continue to spread to even remote and rural locations in the developing countries opening up new possibilities for digital connectivity between the urban and rural area. The case study mentioned below would suitably justify on how a digitalization of mini grid can improve the operational efficiency and contribute in making the project sustainable. Solu Khola Hydro Mini-Grid having installed capacity of 100kW operating in islanding mode was commissioned in the year 2018. This project is located in Kangel,Thulung Dudhkoshi Rural Municipality-2, Solukhumbu District, Nepal which is electrifying 850 Households (HHs). These consumers include domestic, industrial and small scale enterprises.
The financing structure of the project consists of subsidy, loan and equity component and completely managed and operated by the local communities. The project was operating with no metering and protection infrastructure in consumer households, the tariff was flat in nature with NRs 100/HH/Month and Rs 500/End Use/Month. The monthly collection was not more than NRs One Lakh Rupees while the operation cost was ninety thousand with hardly monthly saving of ten thousand rupees. During the operation stage, the transformers were overloaded in the evening 17:00 to 21:00 Hours due to lack of load control in household levels. This resulted in frequent power cut and unreliable power supply. The reluctance of the consumer to pay the bills in time had made the project to be financially unstained and the project was in state of being sick in less than a year of operation. In the technical and financial support of GIZ/EnDeV Program Nepal, a nationwide call was invited for entrepreneurs to come up with solutions to overcome such challenges of mini grids. The assignment was awarded to a tech-startup based in Kathmandu, Nepal which came up with customized Advance Metering Infrastructure (AMI) solutions called RUM-AMI.
RUM-AMI Solutions consists of Smart Metering Solutions in household level which has PAYG (Pay As You Go) based metering facility with load control and data storage. Recharge card was made available in the local shops, where the consumers buy the card and recharge their energy bills via mobile phones. After the intervention of a new system, load was balanced as per the generation in the mini-grid, which resulted in balance of the system where the load was equal to the generation improving the power quality. The tariff was updated and modified to energy based tariff unlike the previous scenario which was a power based tariff. In the energy based tariff the minimum monthly cost was NRs 100 for 10kWh as minimum threshold of electricity and after each unit of minimum threshold the cost of energy was NRs 9/kWh. So after the introduction of the new system the monthly minimum collection was more than 1,50,000.00, which is more than 150% than that of the previous scenario. This has improved the operational efficiency of the mini grid project. All the project records were digitized by the system, resulting in transparent good governance. In a nutshell we can conclude that digitization of the mini grid using Advance Metering Infrastructure (AMI) has contributed in improving the operation efficiency of the project and making them sustainable.
(Mr. Pokhrel is a co-founder/chairman of SSEE, a tech startup providing customized smart metering solutions for utilities. He has more than a decade long experience in renewable energy sector.)
