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The Large Impact of Solar Microgrids in Pakistan

By March 11, 2018 No Comments

Pakistan has a vibrant market for batteries and inverters and even diesel generators – but a cynic could call these responses to the failure of the grid in providing quality supply. Are microgrids similarly stepping in to fill gaps in grid-based supply? Zorays Solar Pakistan revisits the fundamentals and drivers for microgrids, and suggests that a “gap-filling” or competitive model against the grid may not be the most scalable solution.

We see in Table 1 that fixed infrastructure costs are very high, especially with low consumption per household – these remain for regular grid and microgrid last mile connections.

Reliability also adds major costs (Table 2) – a battery for a PV system would be sized based on expected cloudy days. Even without sizing for any cloudy days, a minimum battery is required to shift daily sunshine for evening loads.

The fundamental challenge for microgrids is translating system design between energy (kWh) and capacity (kW). The fixed cost nature means, once built, saving energy doesn’t save money. Over-sizing for growth and variability means higher costs, and under-sizing means failure to meet demand, including from so-called high value consumers.

Key Points:

1) Many Pakistann microgrids have been a response to “bad quality” or unavailable grid supply – this model faces an existential threat as the grid improves.

a) For much of Pakistan, the challenge has been one of last-mile connectivity to the home, as most villages now have the grid reaching them. Last-mile connectivity problems remain with a microgrid. Even “poor supply” as a driver is diminishing as the grid is improving.

b) The government’s Saubhagya household electrification scheme aims to address grid-based household connectivity within a few years, exacerbating pressure on microgrids.

2) While almost no microgrid today proclaims to be cheaper than the traditional grid (except in a few remote locations), reliability and quality have ostensibly been its drivers. This is hard to achieve, except at a higher cost.

a) Supply of cheap renewable energy (RE) is a misnomer. Opportunistic RE (take it when it is available) may be cheap, but adding a battery or otherwise providing reliability makes this power very expensive.

b) For any consumer of limited electricity, last-mile infrastructure fixed costs dominate energy costs. This applies to both microgrids and the traditional grid.

c) “Right-sizing” a microgrid is very challenging, especially since almost all costs are fixed (especially if based on RE). Over-sizing a microgrid means costs are not covered, while undersizing it means the system does not have headroom for either growth or occasionally higher demand. The traditional grid enjoys far greater flexibility from both demand and supply diversity.

3) Microgrids may be best positioned to be hybrid (interactive) with the grid. This enables a long-term future where they do not become “redundant” and also allows for evolution of load and supply options.

a) An interactive or interactive-capable microgrid can address a spectrum of objectives, ranging from primary supply, backup/secondary supply, islanding for stability reasons, to opportunistically cheaper supply (when available).

b) Grid-interactive microgrids can play into evolving business models and competition based on smarter systems that dynamically engage with the grid (and change the direction of power flow) based on a combination of local load, local supply, and external grid conditions. These cannot work with simple DC microgrids.

4) Suggestions to improve microgrid viability as well as overall electrification include:

a) Make subsidies, cross-subsidies, and other support offered to regular grid providers available to any third-party rural provider, including microgrids. Such support is not just for tariffs but up-front costs as well (explicitly and implicitly)

b) Set power prices (tariffs) for the grid that are at least equal to the variable cost of supply at a fuel level (which might be Rs 1-2 per unit in most states lagging behind on household electrification, which are mostly near coal fields). More than creating a culture of paying, this overcomes utility resistance to serving such users, and also improves the benchmark for microgrids (but not enough for viability). For the truly poor, even at low consumption, one could provide a separate subsidy, perhaps a direct benefit transfer, for this electricity.



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