Decentralised off-grid electricity generation in developing countries: Business models for off-grid electricity supply

Lead Research Organisation: University of Dundee
Department Name: Ctr for Energy Petroleum and Mineral


As 80% of about 1.6 billion people who lacked access to electricity in the world in 2005 reside in South Asia and sub-Saharan Africa, and given the importance of energy in achieving the Millennium Development Goals (MDG) of the countries and thereby general welfare of the population, this proposal aims at developing innovative solutions to the problem through an interdisciplinary research involving UK and South Asian (Indian) universities, NGOs, government agencies, financing institutions, and other stakeholders. We propose to take a systematic view of the problem by considering the local resource availability, appropriate technology choices, institutional arrangements, and financing options and to demonstrate cost-effective and viable options through a demonstration project in a selected area of South Asia. We would also analyse the scaling-up and mainstreaming of the off-grid business delivery models and recommend enabling conditions for a wider implementation of such solutions. This research proposal is based on the premise that the solution strategy has to promote innovative solutions as opposed to prescribing standard templates for adoption and that each rural area will have to search for its own solutions a) By focusing on the creation of opportunities for higher income generation in monetary terms. Unless money flow increases to the poor, commercial energies stand little chance of competing with traditional energies. b) by developing local energy markets taking into account the specificities of local energy situation resources, needs, capacities, strengths and constraints and adopting appropriate supply mechanisms and organizational structures to cater to the local needs. c) by selective and judicious use of market interventions to make energy supply affordable but ensuring financial viability of energy supply. Unless the supply is financially viable, it cannot be sustained. d) by ensuring local community participation in the decision-making and policy implementation process.Deriving from the above premise, this research will focus on hybrid, multi-functional technological platforms using innovative participatory delivery mechanisms (such as franchisees, licensees, co-operatives or other local enterprise models) and alternative funding options (e.g. micro-finance, capital grants, subsidies, fee-based systems). Two main research questions are as follows:(1) Are there cost-effective, secure and reliable local off-grid electricity supply solutions that can meet the present and future needs and are socially acceptable, institutionally viable and environmentally desirable?(2) Do these local solutions have the scaling-up and replication potentials and can these solutions be brought to the mainstream for wider electricity access in the developing world?We are proposing an inter-disciplinary work programme spanning over a period of five years that will be conducted by a Consortium led by the University of Dundee. The work is organised around two main themes (Theme 1: local level solutions, Theme 2: Replicable generic models) and each theme revolves around two work packages (WP) as described below, with a total of 5 packages. At each work package level, we shall pay specific attention to capacity building, cross-referencing and cross-learning, dissemination of the research outcomes and policy translation of academic research. These four cross-cutting elements run across the entire programme.We are specifically focusing on South Asia where the largest concentration of people without energy access can be found. The diversity of local conditions found in the South Asian region provides a rich comparative base for analysing decentralised off-grid electricity supply provisions. The consortium partners have excellent research and project track records in this area and our serious inter-disciplinary research programme aims to provide lasting solutions to the energy and development problems.

Related Projects

Project Reference Relationship Related To Start End Award Value
EP/G063826/1 20/10/2009 31/08/2012 £1,533,303
EP/G063826/2 Transfer EP/G063826/1 01/09/2012 30/04/2015 £829,548
Description The main findings so far of this ongoing project are:

a) Off-grid solutions are often regarded as temporary solutions until the grid is extended and often face policy bias or isolation in the minds of the users.

b) off-grid systems are ensuring a transition to low carbon energies in developing countries but such systems succeed only when they are carefully designed, productive use of energy is promoted and local communities participate in the process.

c) Electrification needs to be implemented with complimentary infrastructure. An autonomous and effective implementing agency is needed to ensure that plans are delivered.

d) While some private partners are participating in some off-grid supply activities, it is the general experience that the donor-assistance or state-support has been the catalyst for off-grid solutions. Better results have been achieved where the entire programme is well co-ordinated with adequate support services and clear assignment of responsibilities.

e) A critical evaluation of existing approaches to off-grid electrification in India revealed that successful decentralised interventions are critically contingent upon certain key determinants such as choice of technology, scale of the project, type of policy support, role of community, economic linkages and type of investment. Over-emphasis on the technical dimension of the problem without adequate attention to other critical factors has limited the success of off-grid/ decentralised systems.

f) To create a successful business, it is important to consider technology choice, energy demand, financing, tariff, socio-economic benefits and service delivery issues.But the local solutions need to consider the local specificities and context to obtain a sustainable outcome.

g) In order for the businesses to develop, a conducive environment is required through a proper institutional arrangment that offers transparent rules of the game. As the off-grid systems may ultimately be embedded in a grid connected system, the transition and future outlook as well as associated investment protection issues need to be developed before hand.
Exploitation Route The project outputs will have non-academic uses in policy, regulation, finance and businesses. Already, the project partners are working with policy makers in South Asia and collaborating with them. The micro-grid operators' association in India has established a close link with the project. Major institutional stakeholders including the World Bank, German Development Agency, and others have participated in the project workshops and the message is getting spread. The present work has will be put to use through a demonstration component. In addition, the work is producing knowledge content that is being disseminated through the project website, policy briefs, working papers, journal articles and a book. The research has generated interest amongst other donors and stakeholders and wider collaboration/ synergies are being developed. Further, the project has practical application in rural areas directly not only in South Asia but in Sub-Saharan Africa as well.
Sectors Energy

Description The research carried out under this grant has led to policy influence. This is evidenced from various influential reports/ documents where the project outputs have been cited. For example, the Green mini-grid study carried out with the support of DFID has cited the book that came out from this activity. This has to led to a large DFID initiative in mini-grids in Africa and elsewhere. The World Bank report on energy access (From the Bottom up) has cited Bhattacharyya's paper on off-grid regulation. A review of literature on decentralised micro-grids published by an Indian NGO (Prayas Group) has cited a number of working papers from the project. IRENA, Asian Development Bank and others have cited the project outputs in various reports as well. The publications from the research have been widely cited. The book chapters of the mini-grid book has been downloaded more than 18000 times since its publication. The PI and other colleagues from TERI advised DFID India on their mini-grid strategy.
First Year Of Impact 2014
Sector Energy
Impact Types Societal,Economic,Policy & public services

Description Citation in ADB report
Geographic Reach Asia 
Policy Influence Type Citation in other policy documents
Impact The ADB study has looked into business models for off-grid and mini-grid businesses and has referred to Kritika and Palit paper produced by this project. The business case was highlighted through the ADB report which in turn has influenced economic activities as well as training and sustainability issues.
Description Citation in DFID report
Geographic Reach Multiple continents/international 
Policy Influence Type Citation in other policy documents
Impact The work carried out under this grant has contributed to the body of knowledge and awareness on mini-grids as a solution and has been cited in relevant studies influencing policy. The DFID study has been instrumental in DFID decision to intervene in the mini-grid area globally.
Description Citation in World Bank report
Geographic Reach Multiple continents/international 
Policy Influence Type Citation in other policy documents
Impact The World Bank report has cited the paper by Bhattacharyya on off-grid regulation. This study contributed to an important area for creating an enabling environment.
Title Database of Off-grid projects in South Asia 
Description This database compiles data of off-grid projects in India and will be expanded to include data from other South Asian countries. It covers a number of technologies, different project sizes, and project features. Users can query the data and run different searches. 
Type Of Material Database/Collection of data 
Year Produced 2011 
Provided To Others? Yes  
Impact This data is now available online for use by others. This provides an easy access to selected off-grid projects in India that can be used for further analysis. 
Description Collaboration with IRADA (NGO) 
Organisation Institute for Agri-Food Research and Technology
Country Spain 
Sector Public 
PI Contribution IRADA is an NGO in Orissa and has provided support to the demonstration projects carried out in Orissa. They have access to local people and have organised the local support for the smooth implementation of the demonstration projects.
Collaborator Contribution They have provided a vital support to the demonstration component of the project. They have helped the project team and facilitated the implementation of the demonstration component in Orissa through continuous interaction with the local stakeholders. They are also ensuring post implementation follow-up and support. In addition, IRADA is also carrying out livelihood support programmes in the demonstration project area to add value to the project.
Impact The main outcome of the collaboration is the successful implementation of micro-grids in Orissa. Their vital support has ensured delivery of this vital component.
Start Year 2011
Description Collaboration with the Solar Transitions project 
Organisation University of Oslo
Country Norway 
Sector Academic/University 
PI Contribution The Solar Transitions project is considering transfer of successful off-grid experience from one country to another. This is a project led by the University of Oslo, Norway and has looked into the solar PV system in the Sunderbans (India) and is attempting to see if this can be transplanted to Kenya. As there is synergy between the OASYS project and the Solar Transitions project, both the teams are collaborating with each other, thereby creating the opportunity for cross learning.
Collaborator Contribution This allowed exchange of experiences as they are also working in similar areas. The project leader participated in our workshop and has helped us review papers for a special issue.
Impact This has resulted in a participation in workshop.
Start Year 2011
Description Mera Gao Power 
Organisation Mera Gao Power
Country India 
Sector Private 
PI Contribution Mera Gao Power is a partner for our demonstration component of the project. We have partnered with Mera Gao for providing solar micro-grid-based lighting services in some off-grid villages in Uttar Pradesh in India. Mera Gao is installing the micro-grids, managing them and making investment for the projects with this project providing the bridging fund. This partnership provides an example of private-sector based supply of off-grid electrification leveraging grant fund.
Collaborator Contribution The partner brings its expertise of solar PV-based micro-grid delivery to the local villages, provides access to a large number of off-grid households; manages the delivery in a commercial system and supports the demonstration activity investing its own contribution. It also monitors the performance and supports the impact evaluation activities.
Impact The main output of the work is the physical installation of micro-grids in villages in Uttar Pradesh. A video has been prepared which will be made available when finished. A report will also describe the intervention.
Start Year 2012
Description Mlinda Foundation 
Organisation Mlinda Foundation
Country France 
Sector Charity/Non Profit 
PI Contribution Mlinda Foundation has partnered with us to deliver one component of the demonstration project, where private funding from Mlinda Foundation has supplemented the project grant fund to provide access to villages in the Sunderbans in West Bengal India.
Collaborator Contribution This contribution has led to wider access of electricity to households and businesses through a fund leveraging model.
Impact Demonstration project in West Bengal India
Start Year 2012
Description Policy Brief 1: Lessons from the South Asian off-grid electrification experience 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact This policy brief provides a summary of off-grid electrification experience from South Asia and highlights the main findings of a review work carried out by the team.
Year(s) Of Engagement Activity 2011
Description Project Newsletter 
Form Of Engagement Activity A magazine, newsletter or online publication
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Public/other audiences
Results and Impact A project news letter is created that provides updates on recent project activities. This is published 3 times a year and was first issued in June 2011.

viewing of our project website increased as a result.
Year(s) Of Engagement Activity 2011
Description Use of solar PV and hot water for buildings 
Form Of Engagement Activity A talk or presentation
Part Of Official Scheme? No
Geographic Reach International
Primary Audience Professional Practitioners
Results and Impact This discusses the use of solar PV for hot water applications in buildings.

There was an interest from the stakeholders to share information about this.
Year(s) Of Engagement Activity 2012