There are currently 840 million people around the world living without electricity. By 2030, this figure will rise to 1.2 billion as the global population expands and electricity grids remain the same. However, this could change by marrying solar with mini-grids, a new report from the World Bank says.
At the moment, some 47 million people in remote locations have been connected to mini-grids, most of them in Asia. There are 19,000 of these mini-grids, and most of them run on diesel or hydropower. However, in light of the global sustainability drive, diesel is not the best option. Solar, on the other hand, could be, according to the World Bank.
Unlike hydropower and wind, solar panels can be installed in various locations. They are not so tightly bound by the availability of the resource they use: sunlight. Also, the costs of solar panels are falling and so are the costs of the batteries that will provide the necessary storage capacity for such installations.
According to World Bank figures, the cost of a so-called hybrid solar system, which means generation plus storage capacity, currently averages US$3,908 per kW. However, by 2030 this will fall below US$3,000. The cost of PV modules will drop a lot more substantially, from US$690 per kWp to US$140 per kWp. Lithium ion battery costs are also set for a dramatic decrease, from almost US$600 per kWh today to as little as US$62 per kWh in 2030. Finally, PV inverters needed for these systems, will cost just US$58 per kW in 2030 versus US$264 per kW now.
The World Bank says these cost estimates are optimistic but not naïve, and indeed there has been a lot of reporting on how the costs associated with solar power installations are continuously falling, making renewables increasingly competitive with fossil fuel-powered systems.
The typical mini-grid, the WB writes, has a generation capacity of between 50 and 100 kWp with storage capacity of 200 to 500 kWh. The average investment in such a mini-grid would be between US$500,000 and US$1 million with between 200 and 800 clients connected to it. The world, according to the World Bank, will need 210,000 of these mini-grids, with the total investment at some US$220 billion. Related: Gasoline Prices Soar As Largest East Coast Refiner Is Set To Close Shop
The figures support WB’s statement that mini-grids are the most viable option for remote areas where expanding the main grid would be too expensive for both utilities and customers. And while most of these currently rely on hydropower and diesel, the falling costs of solar installations will change that without compromising the affordability of the electricity produced from these systems, according to the World Bank.
It seems mini-grids are a neglected part of the energy industry that needs more attention if not for the good it would do for the lucrative opportunities it offers. According to the WB report, the payback period of such installations begins less than a year after installations and the total profits to be reaped from new mini-grids by 2030 comes in at US$25 billion. Most of these billions would go to solar developers: those among them who are quick to see the profit potential of mini-grids as costs continue to fall in the industry.
By Irina Slav for Oilprice.com
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