Solar Mini-Grid an Ideal Product to Supply Power to Isolated Communities
Solar mini-grid is an ideal product to supply power to isolated communities and in rural areas where the grid has not reached yet.
Almost 1 billion people in the world do not have access to modern forms of energy (NYSEARCA:XLE) and almost 2 billion people do not have access to clean forms of cooking. Solar(NYSEARCA:TAN) energy particularly the off-grid products such as solar lanterns, solar home systems, and solar mini-grid can meet the problem of energy access in a much cheaper and faster way than the normal way of supply power from massive power stations transmitting power over high voltage transmission and distribution infrastructure. The distributed renewable energy products have made a huge jump in technology(NYSEARCA:XLK) and costs over the last few years and it is viable to provide energy to the poorest people on the planet through solar off-grid products.
Solar mini-grid is an ideal product to supply power to isolated communities and in rural areas where the grid has not reached yet. These localized grids can supply power to local communities in a cheap and effective manner and avoid the costs of building expensive distribution lines over long distances. Solar mini-grids have already been successfully implemented in a number of developing countries in Asia and Africa. With hundreds of millions of people in countries like Myanmar and Nigeria still without access to energy, solar mini-grids can meet the challenge of providing the last mile access to power.
India which was seeing a challenge in installing solar mini-grids, as solar electrification under the Saubhagya scheme reaching almost 100% of the population, has seen a recent resurgence with the largest private utility Tata Power deciding to form a new JV focused on solar mini-grids to develop 20,000 mini-grids in India. The biggest challenge to developing mini-grids is the problem of proper policy and regulatory framework. Solar mini-grids can suddenly become obsolete if the main grid reaches its service area and starts providing power at a cheaper rate to its consumers. The whole business model can collapse leading investors in the lurch. The policy framework on how to integrate the mini-grids with the main grid should be in place before the mini-grids can be launched in the right earnest. Besides, there should also be regulations regarding the pricing of power supplied and the subsidy support to be received from the government. The risks for running solar mini-grids are quite high and the project developers should be supported in some form of monetary or fiscal incentives.
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Given that solar mini-grids play an important role in providing energy access and also help the state to avoid investments in costly power infrastructure, some of these cost savings should be passed on to the developers of solar mini-grids.