The business of distributed solar power: a comparative case study of centralized charging stations and solar microgrids

Abstract

How can distributed solar power best meet the energy needs of nonelectrified rural communities? In collaboration with a local technology provider, we conduct a techno‐economic comparison of three different models of distributed solar power in rural India. We compare a centralized charging station with two solar microgrids, one based on prepaid electricity purchases and the other on a fixed monthly fee. Customers report higher levels of satisfaction and fewer technical problems with the microgrids, but the capital cost of the microgrids is much higher than that of the centralized charging station. The prepaid system exhibits poor economic performance because the customers spend very little money on electricity. These results suggest that new business models and technological innovations are needed to strike the right balance between customer needs and commercial viability. WIREs Energy Environ 2016, 5:640–648. doi: 10.1002/wene.209 This article is categorized under: Photovoltaics > Economics and Policy Solar Heating and Cooling > Economics and Policy Energy Research & Innovation > Systems and Infrastructure

Rural electrification through mini-grids: Challenges ahead

“…First, households and small enterprises in rural areas of developing countries typically have a very low ability to pay. Household electricity demand in rural Africa therefore tends to be very low, given the tariffs charged and the modest income levels (see for example D'Agostino et al 2016;Lenz et al 2017;Taneja 2018). Electricity in rural areas often is used only for lighting, charging mobile phones, and operating a few small appliances plus radios and sometimes TV sets.…”

Evaluation of the reliability of solar micro-grids in emerging markets – Issues and solutions

“…Economic viability is a relevant question, because if the customers are extremely impoverished (e.g. families connected to the pico-grid earned 46 dollars/month, on average [38]), gaining business profits may be very difficult [39]. Therefore a micro-grid needs to be designed frugally and cost-consciously because the PV panel, the battery, the controlling power electronics, the distribution system and maintenance management are significant investments for the system operator.…”

“…The general insights into the micro-grid use contexts may also be of practical value for those who plan frugal energy business. Renewable power business in rural India is economically extremely challenging [39] and the pico-grid experiment echoed the same reality through the extremely low consumption levels on behalf of the customers. One result of this poverty in the communities is that the families may possess several small energy sources, such as portable batteries, solar home systems, or self-configured systems between which they alternate on a daily and hourly basis [96].…”

Power to the People

“…There have been a number of studies on Boond's products and services in recent years. These previous studies have been conducted mainly from business sustainability, economics and engineering perspectives (D'Agostino, Lund, & Urpelainen, 2016;Numminen & Lund, 2016;Urpelainen & Yoon, 2016) using quantitative methods, such as surveys, computer systems monitoring and literature reviews. Consequently, a solid body of knowledge on the system performance, business viability, and technology innovation has been developed.…”