Understanding Productive Use Of Electricity in Mini-grids

UNDERSTANDING PRODUCTIVE USE OF ELECTRICITY AND MINI-GRIDS

In previous posts, we have talked about the meaning of mini-grids and why they are being discussed so much nowadays. 

Mini-grids consist of isolated electricity generation sources that distribute power over a network (grid lines) to a localised group of people. When deploying and operating mini-grid solutions, there are two points of view. From the public and non-profits’ perspective, it is perceived as a means to foster development and improve lives. On the other hand, private sector players see it as a profit-making business coupled with the aforementioned. 

Off-grid rural communities in Nigeria face numerous challenges in Nigeria including no access to electricity, bad or non-existing road network, no access to quality healthcare and education amongst others which hampers the productive capacity of the people. With the presence of electricity through mini-grids, rural dwellers, despite the willingness to pay for electricity, usually do not have the capacity to pay. In some instances, those who pay for electricity may consume less than 1kWh a day.

On the other hand, mini-grid developers often strive to deploy commercially viable and environmentally sustainable projects as a solution to ending energy poverty in these rural communities. 

How do we increase the purchasing power of electricity users in off-grid communities and also ensure viable mini-grid projects? One solution is the productive use of electricity.

WHAT IS PRODUCTIVE USE OF ELECTRICITY? 

According to USAID, Productive Use of Electricity is an activity that uses energy to earn income or generate other non-leisure benefits. Another popular definition is thus; “agricultural, commercial and industrial activities involving electricity services as a direct input to the production of goods or provision of services.” Common productive uses of energy applications are agriculture (milling, irrigation, threshing, preservation etc) and manufacturing (welding, carpentry, tailoring etc). 

Unlike other off-grid electricity solutions such as small-capacity SHS systems, mini-grids are capable of supplying electricity for productive users of electricity. Improving the ability for businesses to run more effectively using power from the mini-grid instead of petrol/diesel generators improves the income profile and purchasing power of the owners (productive users). These opportunities for PUE vary across mini-grid host communities.  

Also, incorporating productive energy users on a mini-grid will increase electricity consumption thereby increasing revenue for the developers. 

Case in point: One productive user of electricity (e.g a miller) can consume over five times the amount of electricity a household (residential) user will in a day. Therefore, if “1 productive user = 10 rural households = more revenue”, it is only logical that developers adopt productive use of electricity into their business models. 

Achieving tangible and long-term results with productive use of electricity requires identifying local economic opportunities, training and guiding local entrepreneurs, sourcing appropriate equipment, attracting industries, innovation, knowledge sharing and exploring value-chains. 



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