Delivery_models for Decentralised Rural Electrification, 2012

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Executive Summary

Delivery Models for

Decentralised RuralElectrificationCase studies in Nepal, Peru and Kenya

Dr Annabel Yadoo

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This publication is based on the authorsdoctoral work that was conducted at theUniversity of Cambridge (Centre for SustainableDevelopment, Department of Engineering)between 2008 and 2011.

Access to Energy seriesSeries Editor Emma Wilson

First published by International Institute forEnvironment and Development (UK) in 2012Copyright International Institute forEnvironment and DevelopmentAll rights reserved

ISBN: 978-1-84369-868-5

For further information please contact:International Institute for Environment and

Development (IIED), 8086 Grays Inn Road,London WC1X 8NH, United Kingdom

[email protected]/pubs

A catalogue record for this book is available fromthe British Library

Citation: Yadoo, A. 2012. Delivery models fordecentralised rural electrification: case studies

in Nepal, Peru and Kenya. International Institutefor Environment and Development, London.

Designed bySteersMcGillanEves 01225 465546Printed byCalverts Cooperative www.calverts.coop

This report is printed on FSC certified paperusing biodegradable inks

Edited by Tom Hickman

Disclaimer:This paper represents the view ofthe author and not necessarily that of IIED.

All photography: Annabel YadooCover photo: The hydro plant at ThibaMaps: Wikimedia Commons
mailto:[email protected]://www.iied.org/pubshttp://www.iied.org/pubsmailto:[email protected]


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Executive Summary

Table of Contents

Executive summary 03Chapter 1: Rural electrification in developing countries 07Chapter 2: Background to electrification in Nepal, Peru and Kenya 10Chapter 3: Case studies 15Chapter 4: The impact of different delivery models 29Chapter 5: Reflections and lessons learned 41References 48

Appendix 1: Indicator results 55Appendix 2: Interviews conducted 60

Delivery Models

for DecentralisedRural ElectrificationCase studies in Nepal, Peru and Kenya

Dr Annabel Yadoo

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List of abbreviations

ADINELSA AdministrativeCompany for Electrical Infrastructure.Created in December 1994 by thePeruvian government, ADINELSA isresponsible for the operation andmaintenance of non-profitableelectrification projects (normally inrural areas) that are implemented bythe government.

AEPC Alternative Energy PromotionCentre. Government institution that

oversees local and international donoroff-grid electrification programmes inNepal. The AEPC also coordinatesresearch and development, sets andadministers the renewable ruralenergy subsidy policy and supervisesthe Rural Energy Fund.

AGECC Advisory Group on Energyand Climate Change. Advisory Groupto the United Nations Secretary-General.

CBO Community-basedorganisation.

EILHICHA Chacas Local InterestHydroelectric Company. ElectricityCompany in Peru established by DonBosco, an Italian missionaryorganisation.

ESAP Energy Sector AssistanceProgramme. Danish, Norwegian andNepali government energyprogramme in Nepal.

ESMAP Energy SectorManagement Assistance Programme.Administered by the World Bank.

GDP Gross Domestic Product.

GIZ Deutsche Gesellschaft frInternationale Zusammenarbeit,German Development Agency.

HDI Human Development Index.United Nations endorsed assessmentof life expectancy at birth, gross

national income per capita, mean andexpected years of schooling.

IEA International Energy Agency.Intergovernmental organisationestablished by the Organisation forEconomic Co-operation andDevelopment.

KPLC Kenya Power and LightingCompany.

MEM Peruvian Ministry for Energyand Mines.

MFI Micro-financing institution.

Institution that provides finance to lowincome clients.

NACEUN National Association ofCommunity Electricity Users in Nepal.Support network for community-based organisations involved inextending the national grid in Nepal.

NEA Nepal Electricity Authority.

NGO Non-governmentalorganisation.

OSINERGMIN OrganismoSuperior de Inversin en Energa yMinera. Government regulatory bodyresponsible for energy and mining inPeru.

PV Photovoltaic.

REA Kenyan Rural ElectrificationAuthority.

REDP Rural Energy DevelopmentProgramme. United Nations

Development Programme, WorldBank and Nepali government energyprogramme in Nepal.

SEF Solar Energy Foundation.Non-governmental organisationworking in Ethiopia. Also known asStiftung Solarenergie.

SHS Solar Home System.

T&DTransmission and distribution.

UNIDO United Nations Industrial

Development Organisation.

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Access to affordable, reliable and clean energyis fundamental for poverty reduction andsustainable development; without it, the

Millennium Development Goals cannot beachieved. Electrification, along with access tomodern cooking fuels and mechanical power, isa catalyst for improvements in the fields ofpoverty reduction, food security, health,education and gender equality. Nevertheless,1.3 billion people still lack access to electricity,over 95 per cent living in sub-Saharan Africa ordeveloping Asia and 84 per cent of them living inrural areas.

There are many different ways to electrify ruralareas, not only with regard to the differenttechnologies used, but also to the types ofdelivery models applied. Common ruralelectrification technologies include gridextension, community mini-grids, stand-alonehousehold systems, multifunctional platforms,and central charging stations with battery banks.This report will focus on the delivery modelsused for community mini-grids, as there isevidence to show that mini-grids can be one of

the cheaper forms of electrification (on a per unitbasis, calculated over the systems lifetime) andalso potentially offer a 24 hour AC service thatcan power a wide range of appliances.

The purpose of this report is to analyse theimpact of delivery models on the creation ofsustainable welfare benefits. Three case studiesare selected, one renewable energy mini-gridproject or programme from each of Nepal, Peruand Kenya. Although rural electrification poses agreat challenge to all three countries (only 32per cent of rural Nepalese, 23 per cent of ruralPeruvians and 10 per cent of rural Kenyans have

access to electricity in their homes), theirdifferent physical, institutional, economic andsocio-cultural contexts have led to different

approaches to rural electrification. Theseapproaches, alongside some of the countriesmajor electrification challenges, are described inChapter 2. The case studies are compared andanalysed in terms of their ability to generatesustainable welfare benefits for their intendedbeneficiaries (Chapter 3). A series of 43Sustainability Indicators (based on fivedimensions of Sustainability Economic,Technical, Social, Environmental andInstitutional Sustainability) are designed andused to assess the projects impact and theirlikely sustainability. The key findings from thecase study analysis are as follows:

A holistic approach to sustainability that is,consideration of its technical, economic,social, environmental and institutionaldimensions should be adopted in the projectplanning and implementation stages in orderto create sustainable welfare benefits. Neglectof one or more dimension will detract not only

from sustainability, but also developmentimpact and resilience.

The broader a projects remit (for example, notonly focusing on electricity access but alsointroducing toilet assisted biogas, raisingawareness on environmental issues andimproving the local gender balance), thegreater its potential to improve a communitysoverall development.

Project management can be made more

efficient, transparent and effective when it isclearly separated from ownership and a formal

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system of checks and balances is established.

Effective management can also improveresilience to internal and external shocks andstresses.

Wherever possible, practitioners should aimto future-proof systems by including demandgrowth margins in the original project design.Project resilience can be enhanced if detailedrisk analyses are conducted and contingencyplans agreed by all the key stakeholders apriori.

The second stage of the analysis focuses onexamining which elements of a projects deliverymodel are particularly important for the creationof sustainable welfare benefits. Delivery modelsgenerally comprise several variables. For thepurpose of this research, these have beensubdivided into the interventions technologychoice, implementation process andsurrounding support infrastructure (its enablingenvironment) and include the followingelements: the assessment of community needs,

desires and availability of local resources;management models; productive end uses; theimplementing agencys approach; ownershipand governance; local skills and training; localjob creation; financing; dissemination strategies;and the projects interaction with hardwaresuppliers and the various financing, regulatory,legal and political institutions and policies thatform its enabling environment. The findings,presented in Chapter 4, are based on analysisof the data generated by the three main and

several less in-depth satellite case studies, 67expert interviews and a literature review.

Three cross-cutting themes are identified ashaving a particularly strong influence over thecreation of sustainable welfare benefits:responsibility, impetus and scope. Differentelements of a projects delivery model feed intoeach of the themes and their boundaries are notentirely discrete. Their key features aresummarised thus:

Responsibility: The extent to which a sense ofduty for the off-grid electricity system among

users, managers and local support staff (such

as implementing agencies, governments,manufacturers or financiers) has been created.Responsibility is arguably the most importantfactor that will influence the likely sustainabilityof a project or programme.

Ownership is only important to the extent thatit encourages key stakeholders to takeresponsibility for the effective management ofthe electricity system. As the perception ofownership can increase responsibility, it canbe more relevant than legal ownership.

Financial contributions, sweat equity, projectshowcasing and local participation in planningand decision-making can create a sense ofownership and responsibility for users.Responsibility in management can be instilledthrough rigorous training, selection tests,ongoing monitoring and communitymobilisation.

A community mobiliser can provide guidanceand external objectivity.

More formalised management, a wider groupof owner-stakeholders and a clear auditingprocess can improve transparency andaccountability to users and financiers.

Impetus: The need for incentives that willencourage users, managers and investors toprovide ongoing support for the electricitysystem, as well as to scale-up and replicate theprojects activities.

It may not be necessary for users to haveinitiated the electrification process, or shownparticularly proactive leadership in the firstinstance, provided that their interest anddesire for the project can be aroused throughfacilitation (for example, by a communitymobiliser).

The interest of users is only likely to besustained if the system meets their needs anddesires, and generates additional welfarebenefits, income and, wherever possible,

employment for the local community.Therefore, the development of productive

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Executive Summary

uses could play a significant role, as could

community mobilisation processes thatencompass training and support acrossdifferent development areas. Where there islocal impetus for a project or programme,users may independently attempt to scale-upactivities or replicate them elsewhere (orencourage other communities to do sofollowing demonstration).

A systems managers and operators should bepaid an appropriate wage for their services inorder to maintain their drive and motivation.

Impetus from local authorities such as districtgovernments can be better sustained acrosssuccessive changes in administration if theproject has adopted a non-partisan approach.

External investors and entrepreneurs willusually require a degree of financial impetusbefore they are willing to invest in a ruralelectricity system. Therefore, sustainablebusiness models should be sought toincentivise private sector involvement.

Scope: The extent to which holisticdevelopment benefits are achieved and aprojects institutional environment isstrengthened so as to create a sustainablesector and increase a projects chances to besustained, scaled-up and replicated.

A broad range of welfare impacts, income-generating uses of electricity and localemployment opportunities should be created.

Awareness-raising, training, seed capital andinvestment in surrounding infrastructure maybe needed to develop productive uses andincrease their ability to alleviate poverty.

It is recommended that mobilisationprocesses be used to create welfare impactsthat are not exclusively linked to energy,thereby widening a projects scope andmaking it more holistic.

The enabling environment can be improved by

increasing access to financing and technicalsupport networks, improving monitoring

practices, raising awareness of off-grid

technologies among local governments anddevelopment planners, and working alongsidenational governments to improve policies andinstitutions.

The report considers a number of strategies toencourage the scaling-up and replication ofsuccessful interventions, most notablystrengthening the enabling environment andincentivising private sector approaches to ruralelectrification (Chapter 5). It proposes a

sample hybrid business model for mini-griddevelopment that capitalises on the comparativeadvantages offered by the differentstakeholders: a private companys greateraccess to the necessary financing and technicalskills for the hardwares installation andcontinued maintenance, and a communitysgreater willingness to engage in, and oftengreater efficiency (lowered instances of theftand improved tariff collection) to manage, thedistribution side of the system.

The model proposes that a private companycould finance and service rural electrificationinfrastructure (or subcontract a qualified firm todo so), and a local management committee suchas a cooperative or local micro-enterprise couldbuy the energy in bulk and manage thedistribution to local residents. The privatecompany could be a designated energy servicesprovider or a nearby telecommunicationsoperator or factory that requires off-gridelectrification for their own use. The use of an

anchor load (such as a factory or anothercommercial end user) should improve financialsustainability. However, adequate institutionaland financial support is likely to be requiredbefore a private company will be interested inthe business venture. The government shouldensure that effective regulation is in place tomonitor its activities. Likewise, an auditing body composed of the user group and the externalcompany investing in the generation equipment should be established to improve theeffectiveness of the local managementcommittee. The rights and obligations of each

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Executive Summary

party (the external company, local management

team and users) should be transparent,formalised and enforceable by law.

The majority of the reports conclusions are notcountry specific, despite the deliberate selectionof case studies from three continents to reflectdifferent physical, institutional, economic andsocio-cultural domains. Nevertheless, theenabling environments in the three countriesvary considerably, impacting upon the types ofprojects encountered, their sustainability and

potential to be scaled-up and replicated. At thecommunity level, the largest difference betweencountries relates to the choice of managementmodel employed: micro-enterprises find it moredifficult to gain traction in Nepal than in Kenya orPeru, as they are regarded with some distrust.Conversely, due to a strong tradition ofcooperation and more closely-knit communities,cooperatives are generally considered moreeffective in Nepal than in Peru or Kenya wheresuch traditions are not predominant. A decision

support tree is presented (Figure 5) toincorporate the results of the research for thebenefit of rural electrification practitionersworldwide.

In summary, the report presents the followingcore recommendations for the benefit ofpractitioners and institutions involved in theprovision and implementation of ruralelectrification projects in developing countries:

During a projects planning and

implementation stages, overriding focusshould be placed on generating a sense oflocal responsibility for the electricity systemand its upkeep across all key stakeholders,

growing local desire for the electricity services

provided and stimulating providers to expandtheir business, and extending the scope of theproject across different development arenasto create maximum welfare impact.

A number of concrete steps can be taken toachieve this, many of which fall under thecategories of ownership, management,productive uses, training and job creation,financing and implementing approach (seeFigure 3).

Rather than focusing exclusively on a projectsmicro level, attempt to influence and build theinstitutional framework and environment inwhich the project takes place (raisingawareness of renewable energy off-gridtechnologies, training technicians, improvingaccess to finance, establishing regulation andnational support policies). In so doing, theability for a projects benefits to be scaled-upand replicated should increase.

Try to engage the private sector through moreinnovative partnerships and hybrid businessmodels, provided a supportive institutionaland financial environment is already in place. Ifsuccessful, private sector involvement shouldhelp accelerate scaling-up and replication.

Be aware that there is no one-size-fits-allsolution. Take care to tailor the ruralelectrification system to cater for the specificneeds, desires and cultural specificities ofdifferent communities. This will be particularly

relevant with regard to the choice ofmanagement model.

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This section sets the broader context ofrural electrification in developingcountries. Its key points are that:

Access to affordable, reliable and cleanenergy is fundamental for poverty reductionand sustainable development; without it, theMillennium Development Goals cannot beachieved.

Increased electricity consumption, economicgrowth and improved human developmentappear to be strongly linked; however, thedirection of causality for the improvements isunclear and electricity access alone is unlikely

to raise local incomes. The United Nations aims to achieve universal

energy access by 2030, yet political will andcommitment are needed for this to be met.Currently, 1.3 billion people still lack access toelectricity, over 95 per cent living in sub-Saharan Africa or developing Asia and 84 percent of them living in rural areas. Based onpresent policies, over 1 billion people will stilllack access to electricity in 2030, of whom 85

per cent will live in rural areas. Climate change is a pressing global concern

that is predicted to most severely affect thedeveloping world where communities are leastresilient. However, achieving universalelectricity access would only increasegreenhouse gas emissions by 1.3 per cent,even if all the additional power were providedby fossil fuels.

Grid extension, community mini-grids and

stand-alone household systems are examplesof rural electrification. Community mini-gridscan be one of the cheaper forms of

electrification and have the potential to offer a24 hour AC service that can power a widerange of appliances.

Access to modern energy services is intrinsic toachieving the Millennium Development Goals(DFID, 2002). Electrification, along with accessto modern cooking fuels and mechanical power,is a catalyst for improvements in the fields ofpoverty reduction, food security, health,education and gender equality (GNESD, 2007).Due to the higher cost of traditional, lowerquality energy sources such as candles,kerosene lamps and batteries, on average the

poorest people in the world spend almost 30per cent of their household income on energy(Gradl and Knobloch, 2011). This expenditure isoften reduced when households are electrified:in Guatemala, 1kWh of light costs USD 13 fromcandles, USD 5.87 from kerosene and USD0.08 from the grid (Foster et al., 2000). In ruralareas, electricity is most commonly used forlighting, entertainment and education (radio,television, computers and electronic learningmaterial in schools), telecommunications

(internet and mobile telephones, which providelocal market information for farmers, greatersocial connectivity, banking and medicalservices), cooling (refrigeration of vaccines andfood storage), water pumping and purification,and small household and business appliances(irons, blenders, sewing, cutting machinery,woodworks and food processing).

The links between economic development,human development and electricity access are

strong. Clear correlation can be observedbetween electricity access and gross domesticproduct (GDP) in all countries undergoing rapid

1Rural electrification in

developing countries

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1 Rural electrification in developing countries

growth in the 1980s and 1990s; electrical

energy was the leading driver of growth inBrazil, Turkey and Korea (IEA, 2004). Similarly,plotting per capita energy consumption againstthe Human Development Index (HDI) anassessment of life expectancy at birth, grossnational income per capita, mean and expectedyears of schooling reveals a strong, non-linearrelationship. Those countries whose citizensconsume the least energy per capita (totalelectrical and non-electrical energy expressed inkWh) also have the lowest HDI values.

Moreover, electrification bestows the greatestincremental benefit upon those with the lowesthuman development, levelling out onceapproximately 35,000kWh/capita/year isreached (IEA, 2004). The firm links betweenenergy and human development, including theircentrality to an adequate standard of living, haveled some, including the government of SouthAfrica (IEA, 2005), to consider access to basicenergy services as a right (Cloke, 2010; Tully,2006; Bradbrook and Gardam, 2006).

However, the relationship between electricityconsumption and human development is farfrom simple: it is uncertain whether education,income or other environmental factors play alarger role in determining the quantity and typeof energy consumed. Evidence surrounding thedirection of causality between increasedincomes and energy consumption isinconclusive (Aqeel and Sabihuddin Butt,2001), with some arguing that energy is a

derived demand of economic development andnot its instigator (Foley, 1992). Although avicious circle between a lack of energy accessand poverty can be identified as a result ofreduced income-earning capability andpurchasing power (this in turn limits access toenergy, which could improve incomes), theinverse is not always true. As a result, electricityaccess alone is insufficient for increasingincomes; other interrelated factors includeaccess to markets, local roads and

transportation, communications, access tofinance, local skills and competition (WorldBank, 1995).

In recognition of the importance of energy

services to economic and human development,in September 2010 Ban Ki Moon, Secretary-General to the United Nations, launched anambitious goal: universal energy access by2030. The year 2012 is also the United NationsInternational Year for Sustainable Energy for All.Currently, there are over 1.3 billion people(approximately a fifth of the worlds population)without electricity access in their homes andapproximately 2.7 billion still rely on traditionalthree-stone fires for cooking (IEA, 2011). The

vast majority are located in rural areas ofsub-Saharan Africa and developing Asia:worldwide, 84 per cent of people withoutelectricity live in rural areas (IEA, 2011). Despitethe United Nations goal, the International EnergyAgency (IEA) projects that based on currentpolicies and future demographics, over 1 billionpeople will still lack access to electricity in 2030,of whom 85 per cent will live in rural areas,mostly in sub-Saharan Africa, India and otherparts of developing Asia (excluding China) (IEA,

2011). The absolute number for those withoutelectricity is even expected to increase insub-Saharan Africa over the next two decades.In order for the 2030 universal energy access tobe met, annual investment needs to averageUSD 48 billion per year, equivalent to less than 3per cent of global investment in energy-supplyinfrastructure projected under current policies(IEA, 2011). The United Nations Secretary-Generals Advisory Group on Energy andClimate Change (AGECC) stressed that the

goal of universal energy access can be met by2030, as long as political will and commitment isshown (AGECC, 2010).

Achieving universal electricity access isestimated to increase global greenhouse gasemissions by 1.3 per cent above current levels,even if all the additional power were to beprovided by fossil fuels (IEA, 2009). Low carbonelectrification options could be prioritised overfossil fuel alternatives provided that they would

anyhow represent the best solution for thecountry in question (Nygaard, 2009). Althoughclimate change is a pressing global concern that

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1 Rural electrification in developing countries

is predicted to most severely affect the

developing world where communities are leastresilient (Zerriffi and Wilson, 2010), from thepoor peoples perspective, energy access fordevelopment takes priority over the choice oflow carbon technology (Practical Action, 2010)and achieving universal energy access shouldbe de-coupled from other agendas (Wilson andGarside, 2011). Given that industrialised nationshave principally caused climatic change,developing countries do not feel that they shouldpay the price of fixing the climate problem

either directly (by paying the additional cost oflow carbon technologies) or indirectly (by notdeveloping at a speed they would haveotherwise achieved through higher carbontechnologies) (Zerriffi and Wilson, 2010).

Rural electrification can take the form of gridextension, individual household systems,community mini-grids, multifunctional platformsand central charging stations with battery banks.Due to the large distances, difficult terrain and

low projected levels of consumption, gridextensions may be too costly to install or operateefficiently (Gouvello, 2002). In rural areas thathave had the grid extended, the service may bepoor or even non-existent. In rural India there arepower cuts of 1416 hours a day, on almost alldays of the year (Krishnaswamy, 2010). Thismay be due to poor transmission infrastructure,generation capacity shortages ormismanagement of the central grid that result infrequent black-outs or brown-outs (large

voltage drops that can damage appliances),

particularly for rural customers at the ends of thenetwork. The unreliability and shortage of gridpower in many areas can severely hampereconomic development. This economic cost hasbeen estimated as 4 per cent of GDP inTanzania, 5.5 per cent in Uganda and 6.5 percent in Malawi (Foster and Briceo-Garmendia,2010).

In many places off-grid electrification solutionsrepresent the optimal means of extending

electricity provision to rural populations in termsof the required investment, efficiency and qualityof service (Yadoo and Cruickshank, 2012).Although each type of off-grid technologypresents its own set of advantages anddisadvantages, community-level mini-grids havethe potential to be among the cheapestelectrification methods available for rural areason a per unit basis (calculated over the systemsexpected lifetime) (ESMAP, 2007), at the sametime as providing an as good as grid 24-hour

AC service capable of powering a wide range ofapplications (Yadoo and Cruickshank, 2012).They also give the opportunity for additionallocal benefits to be accrued such asempowerment through local management,payment for feedstock or, if grid-connected at alater stage, income from feed-in tariffs and thepotential to leapfrog into a more resilientelectricity network (Yadoo and Cruickshank,2012).

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Nepal, Peru and Kenya are all countries wherethe challenge of rural electrification remainsgreat. Only 32 per cent of rural Nepalese, 23 per

cent of rural Peruvians and 10 per cent of ruralKenyans have access to electricity in theirhomes. Hailing from three continents andincorporating varying physical, institutional,economic and socio-cultural features, thecountries adopt different approaches to ruralelectrification. This chapter will provide anoverview of electrification as experienced in thethree different nations. Its key points are:

Grid electrification can be unreliable in all

three countries: instances of load sheddingare particularly high in rural Nepal and Kenya,the quality of service offered to grid-connected rural customers in Peru is often farinferior to their urban counterparts, and thegrid fails to reach the most impoverished inrural areas. In Kenya, grid electricity tariffs andconnection fees are unaffordable forthousands in both rural and urban areas.

There is a clear institutional structure forelectrification in Nepal. The centralisedelectricity authoritys difficulty to administerthe grid network has opened space forcommunity-led grid extensions and these havebeen reasonably effective at increasingaccess in rural areas. After a dubious past,off-grid electrification has been rapidlygrowing in Nepal and its institutionalenvironment is well developed.

The privatisation and liberalisation of thePeruvian electricity market in the 1990s has

created a complex legal and institutionalframework that incorporates many different

actors. Rural electrification is predominantlygrid-based in Peru; both planning and fundingmechanisms are biased in its favour. However,

over 10 per cent of non-electrified householdsare not expected to receive grid power undercurrent technical and economic constraints.Although many different organisationsimplement off-grid electrification projects inPeru, their actions are much less integrated orsystematic than in Nepal. It is hoped that thedevelopment of regional and district levelMaster Plans will improve this situation.

Kenyas power sector has also undergone

several reforms over the past 15 years andthere are ambitious targets to accelerate thepace of rural electrification. Grid extensionsare the preferred option and there has beenlimited government-led off-grid electrificationin Kenya to date. The majority of off-gridelectrification takes the form of solarphotovoltaic systems and is propelled forwardby the private sector. However,telecommunication companies, tea estatesand sugar industries have started installing

off-grid technologies to meet their own powerneeds. A small number of decentralisedrenewable energy power projects have alsobeen installed by non-governmentalorganisations (NGOs), local communitygroups and other institutions.

Extending the grid remains the most commonform of electrification in Nepal, Peru and Kenya.However, grid-based electrification presents anumber of problems in each country. A lack ofgeneration capacity and heavy reliance onhydropower has led to frequent power cuts orload shedding in both Nepal and Kenya,

2Background to electrification

in Nepal, Peru and Kenya

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particularly during the dry seasons. Householdsin Kathmandu were denied electricity for up to16 hours a day in the pre-monsoon months of

2008 and there were daily blackouts of 812hours in the capital during the authors ownfieldwork the following year. In Kenya, weaktransmission and distribution (T&D)infrastructure has further exacerbated capacityproblems (T&D losses surpassed 16 per cent in2008/09) and as year-on-year hydropowergeneration dropped by 18.4 per cent in2008/09 following three successive years ofdrought, increased thermal generation has led toa concomitant rise in consumer energy bills(KPLC, 2009). This increase, together with highconnection fees, has made grid electricityunaffordable for many Kenyans in both rural andurban areas; it is estimated that hundreds ofthousands live within grid-connected areas butare unable to afford a connection. As a result, ashort-term (one year) loan has been introducedthat provides up to 80 per cent of the cost ofconnection at 15 per cent interest. This loan isbelieved to be partly responsible for over200,000 new connections in 2008/09 (KPLC,2009).

In Peru, the quality of grid service in rural areasis often far inferior to that in urban zones as boththe installation and management of ruralelectricity grids is unappealing to the distributionconcessionary companies that are mandated tomaximise profit. Due to their isolation, it is oftenmore difficult and costly to isolate and fix anyproblems that might occur in rural areas. Giventhe higher installation, operating and mainten-

ance costs of rural grid extensions, there is littleeconomic incentive for concessions to extend

access to rural areas within their zones, even ifthey are legally obliged to do so. As a result,concessions tend to prioritise the electrification

of areas that are closest to existing grid lines,that is, those with the lowest marginal cost, asopposed to selecting areas on the basis ofsocial factors such as poverty indicators asencouraged by their Ministry of Energy;therefore, grid extensions do not tend to reachPerus most impoverished rural areas (Mirandaand Soria, 2006).

Nepal

The electrification sector in Nepal is clearlydefined. The Nepal Electricity Authority (NEA)has overarching responsibility for grid-basedelectrification, whereas the Alternative EnergyPromotion Centre (AEPC) coordinates andoversees the majority of off-grid electrificationthat occurs within the country. In 1992, theElectricity Act was passed and independentpower producers were allowed to generate andsell power to the NEA, increasing the countrysgeneration capacity. However, as noted for Peru,

conflicting pressures (the need to maximiseprofit, capital resource scarcity and an inabilityto control electricity theft) severely restricted theNEAs willingness and ability to pursue ruralelectrification. Therefore, in 2003, amidstparallel efforts to unbundle the generation anddistribution functions of the NEA, theCommunity Electricity Distribution Bylaw waspassed. This bylaw allows any organised ruralgroup to buy electricity in bulk from the grid andretail it among its users. Communities must

contribute 20 per cent of the total cost of gridextension (via labour, household donations, bankloans or loans and grants from the local Village

2 Background to electrification in Nepal, Peru and Kenya

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Development Committee and District

Development Committee) and are responsiblefor any non-technical losses (theft) occurringwithin their distribution area. The NationalAssociation of Community Electricity Users inNepal (NACEUN) was established in 2006 tosupport, train and facilitate community groupsinterested in power distribution. NACEUNcurrently represents 187 member community-based organisations (CBOs) in 42 districts andhas facilitated the electrification of 180,000households. Reminiscent of rural electric

cooperative-led grid extension seen inter aliainthe United States, Bangladesh, Costa Rica andthe Philippines, this form of community-leddistribution has been reasonably effective atincreasing access, lowering the cost of supplyand reducing the incidence of electricity theft inrural Nepal (Yadoo and Cruickshank, 2010a).

At the outset, off-grid electrification mainly tookthe form of micro-hydro plants installed byNGOs during the 1960s, 1970s and 1980s.

However, a mixture of technical failures and loandefaults significantly lowered interest to invest insuch projects. Momentum behind off-gridtechnologies only resumed from the mid-1990s.Solar Home Systems (SHS) started beinginstalled from 1992, the AEPC was establishedin 1996, a new subsidy policy was put in place, asupport programme focusing on end userapplications (such as ropeways) was instigatedby NGOs, and the Agricultural DevelopmentBank of Nepal started lending money for off-grid

electrification projects. The AEPC currently actsas the apex organisation for several donor-ledoff-grid implementation programmes includingthe United Nations Development Programmeand World Bank Rural Energy DevelopmentProgramme (REDP) established in 1996, theDanish and Norwegian governments EnergySector Assistance Programme (ESAP)established in 1999, and the European Unionfunded Renewable Energy Project. The AEPCalso coordinates research and development on

wind power in Nepal, sets and administers the

Renewable Rural Energy subsidy policy and

supervises the Rural Energy Fund, an institutionestablished to assist with the mobilisation ofexternal funding for community energy projects.Furthermore, there are a number of NGOs whowork on off-grid rural electrification outside ofthe AEPC such as the World Wide Fund forNature and Practical Action, albeit on a smallerscale. By 2009, over 1,885 mini-gridelectrification schemes (mini- and micro-hydroand peltric sets1), amounting to an installedcapacity of 26.85MW, had been commissioned

and there was an approximate installed capacityof 3.09MW from SHS (Practical Action, 2009;AEPC/ESAP, 2008). Two-thirds of ruralhouseholds that gained access to electricitybetween 2001 and 2005 were supplied byoff-grid solutions (REP, 2009).

Peru

Perus electricity sector underwent reformsduring the 1990s aimed at privatising andliberalising the sector. As a result, there arecurrently many different institutions involved inrural electrification in Peru. First, there are thestate institutions such as the Ministry for Energyand Mines (MEM), the Administrative Companyfor Electrical Infrastructure (ADINELSA),regional and local governments and the nationalregulator, OSINERGMIN. Second, there is theprivate sector that comprises the largedistribution concessionary firms and small ormedium-sized enterprises (which mainly providestand-alone solar-based solutions toelectrification). Third, there is the non-profitsector made up of NGOs such as PracticalAction and some leading Peruvian universities.The introduction of a series of new ruralelectrification laws since 2002 has also begunto strengthen the sectors regulatory framework.Nevertheless, Peru is second from bottomamong Latin American countries in ruralelectrification and still faces many physical,financial and institutional barriers (DEP, 2007).These include the remoteness and low

1 Peltric sets are a type of water turbine connected to an electric generator

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population densities of some non-electrified

communities, a lack of financing and creditarrangements, inadequate subsidy and planningstructures, poor transparency in some stateinstitutions, insufficient training andempowerment of local authorities andcommunities, and insufficient regulation fordecentralised systems.

Rural electrification predominantly takes theform of grid extension and over 87 per cent of allinvestments described in the governments

National Plan for Rural Electrification for20092018 are grid based. The World Banksupported Revolving Fund (for newconnections) and the Electrical SocialCompensation Fund (a nationwide consumerinternal crossover tariff subsidy) are also biasedin favour of grid extensions. Energy planners(such as those in regional governments and staffof the National System for Public Investment)and distribution concessions tend to favourgrid-based over off-grid proposals, owing to

their greater familiarity with the technological,operational and management infrastructureinvolved. Government policy states that off-gridprojects using renewable energy technologies(solar, wind, hydro) should only be consideredfor those villages where grid extensions wouldcost over USD 1,000/household; a recentMaster Plan report, however, estimated that over10 per cent of non-electrified households(33,700 villages or 361,800 households) willnot gain access to the grid network given

current technical and economic constraints andare therefore in need of off-grid electrification byway of solar or hydropower (JICA, 2008). Windenergy was not considered in the Master Plan,yet both the government and NGOs (such asPractical Action) have begun to install wind-based off-grid systems in rural areas. Althoughseveral actors are involved in the off-grid ruralelectrification sector (for example, MEM,ADINELSA, university research centres,Practical Action, Engineers Without Borders

(Catalonia), Green Empowerment, Action Aid,Don Bosco, private enterprises and regionalgovernments) their actions are much less

integrated or systematic than in Nepal. It is

hoped that this may improve following aPractical Action initiative to develop regional anddistrict level Master Plans for RuralElectrification using (mainly off-grid) renewableenergy systems at the request of, and in tandemwith, the local authorities and other relevant localbodies.

Kenya

Kenyas power sector also underwent a processof unbundling as a result of the Electricity PowerAct of 1997 and further reforms (includingsemi-privatisation and the creation of newinstitutions) followed the passing of the EnergyAct in 2006. Kenya Electricity GeneratingCompany (KenGen) now has principalresponsibility for generation and ownsapproximately 75 per cent of total installedcapacity (independent power producers canalso sell power onto the grid and feed-in tariffswere introduced in 2008 to encourage moreinvestment in renewable energy), KenyaElectricity Transmission Company Limited(Ketraco) is in charge of developing newtransmission projects, Kenya Power andLighting Company (KPLC) is responsible forexisting transmission lines and all distributionover 3MW. The Rural Electrification Authority(REA), established in 2007 to accelerate theoverly slow pace of the governments RuralElectrification Programme that had started in1973, is tasked with increasing access toelectricity in rural areas. Rural electrificationunder the REA predominantly takes the form ofgrid extension as 75 per cent of the countryspopulation is concentrated in 10 per cent of itslandmass. The Ministry of Energys RuralElectrification Master Plan details its intention toelectrify all public facilities (such as districtadministration headquarters, market centres,schools and health facilities) by 2012 and 40per cent of rural households by 2020.

The former Rural Electrification Programme had

invested in 13 off-grid power stations, all ofwhich were diesel-powered. Ownership of all

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but two of these has now been passed to REA

and KPLC is contracted to operate, maintainand manage the distribution side of thebusiness. Despite the countrys limitedexperience with off-grid power, the RuralElectrification Master Plan stipulates thatoff-grid systems (powered by wind, solarphotovoltaic and dual-fuel diesel units) will beused to electrify 330 public facilities and serve66,000 connections in approximately 200localities. REA will also run a small number ofpilot demonstration projects involving other

types of off-grid renewable energy: biogas forcooking and electricity generation in schools,biomass gasification for electrification of off-gridcommunities and community micro-hydro plants.However, the majority of off-grid powergeneration has been deployed by the privatesector and other independent groups. The solarphotovoltaic (PV) market is private sector-led

and has created one of the largest markets for

SHS in the world; there are an estimated300,000 SHS in use in Kenya and solar lanternsare increasingly being used. Telecommunicationcompanies have started to install hybridwind-solar-diesel generation systems for theiroff-grid base stations, often providing a chargingpoint for locals to recharge their mobiletelephones free of charge. Two GlobalEnvironment Facility initiatives (Greening the TeaIndustry in East Africa and Cogeneration forAfrica) will include an off-grid rural electrification

element to their renewable energy tea and sugarindustry power generation programmes. NGOs,United Nations institutions, research institutionsand local community groups have alsoconducted decentralised renewable energyschemes although their activities are few and farbetween.

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Although only able to provide analytic (and notstatistical) generalisation, case study researchcan help to decipher complex social

phenomena by retaining the contextualconditions and the holistic and meaningfulcharacteristics of real-life events (Yin, 2003).This chapter provides a description of the maincase studies examined in this report, along withthe methodology used and sustainabilityassessment results. Its main findings are that:

A holistic approach to sustainability that is,consideration of its technical, economic,social, environmental and institutional

dimensions should be adopted in the projectplanning and implementation stages in orderto create sustainable welfare benefits. Neglectof one or more dimension will detract not onlyfrom sustainability, but also developmentimpact and resilience.

The broader a projects remit (for example, notonly focusing on electricity access but alsointroducing toilet-assisted biogas, raisingawareness on environmental issues andimproving the local gender balance), thegreater its potential to improve a communitysoverall development.

Project management can be made moreefficient, transparent and effective when it isclearly separated from ownership and a formalsystem of checks and balances is established.Effective management can also improveresilience to internal and external shocks andstresses.

Wherever possible, practitioners should aimto future-proof systems by including demandgrowth margins in the original project design.

Project resilience can be enhanced if detailedrisk analyses are conducted and contingencyplans agreed by all the key stakeholders apriori.

Overview

As described in Chapter 1, the purpose ofelectrification is not access to electricity per se,rather the ability to benefit from the energyservices it can provide. Therefore, it is importantto assess the extent to which a project is able togenerate sustainable welfare benefits for itsintended beneficiaries, the rural poor. To do this,

three main case studies of renewable energymini-grids were conducted, one in each ofNepal, Peru and Kenya. The choice of casesfrom different countries affords the opportunityto compare and contrast examples of ruralelectrification projects implemented against abackdrop of different institutional and culturalcontexts. Although cultural differences within acountry cannot be ignored, the variety is likely tobe greater across nations and continents, thuscoverage of three continents provides an

interesting (although still not comprehensive)wide-angle view of rural electrification practicesand experiences worldwide. In order for theemergent hypotheses to lay claim to wideranalytical generalisability and greater externalvalidity, the three main case studies weretriangulated against a series of less in-depthsatellite case studies in each country and theseresults were included in the subsequent analysis(see Chapter 4). Nevertheless, this chapter willfocus on the three main case studies conducted

between May 2009 and October 2010.

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Summarised in Table 1, the three electrificationprojects all relied on the same technology(micro- or mini-hydro mini-grids),2servedapproximately the same number of customers(around 210 households) and werecommissioned in approximately the sametimeframe (510 years prior to fieldwork).However, although all projects wereindependently managed and operated from

within the community, the type of managementmodel employed (cooperative or micro-enterprise) was deliberately chosen to vary.Projects that involved a more holistic approachfrom the implementing agent (reflected in thepromotion of non-energy related activities aspart of the overall project) were also contrastedwith more narrowly focused electricity projects.Finally, although none of the projects required

Table 1Key similarities and differences between cases

POKHARI CHAURI(NEPAL)

TAMBORAPAPUEBLO (PERU)

THIBA (KENYA)

Technology Micro-Hydro Micro-Hydro Mini-Hydro

Size 22kW 40kW 135kW

Year commissioned 2000 2000 2005

No. customers 239 households 218 households 180 households

Ownership Community Municipality CommunityManagement Cooperative Micro-enterprise Cooperative

TechnicalOperations

Local employees Local employees Local employees

% of capital costspaid by users

Labour and 7.5% (bankloan repaid over 2years)

Labour only Labour and 50%approx

% of operating

costs paid by users

100% 100% 100%

Productive Uses Some Lots None

Non-energy relatedactivities promoted

Yes No No

2 Hydro mini-grids were chosen as they have a longer history of use than other low carbon mini-grid technologies and a

thorough sustainability assessment requires the technology to have been installed several years before the assessmenttakes place. Moreover, hydro mini-grids have often reached cost parity with (or are sometimes already cheaper than)diesel powered mini-grids on a levelised cost basis (ESMAP, 2007).

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3 Case studies

external financial assistance to meet their

running costs, the third community (Thiba)contributed substantially more towards thecapital costs.

Different data collection techniques wereemployed during the field visits. These includedtransect walks, semi-structured interviews withusers and managers, observations andphotographic evidence. Villagers perspectives(those of households/users, system managers,community leaders, school teachers, health

workers, and so forth) were triangulated againstthe results of semi-structured interviews heldwith the implementing agencies, enablingdifferent levels of analysis to be embedded ineach case study (Yin, 2003) and improving bothconstruct and internal validity (Leonard-Barton,1990).

Pokhari Chauri, Nepal

Pokhari Chauri is a rural settlement of 239households in Kavre district, central Nepal. Thearea had had no access to electricity andhouseholds relied on candles and kerosenelamps for their basic lighting needs. However, inJuly 2000 a 22kW run-of-river hydro plant wasinstalled by the United Nations DevelopmentProgramme-led Rural Energy DevelopmentProgramme (REDP). The project was mainlyfunded by the REDP, national and local

government subsidies, but the community

contributed money (via a bank loan equivalent to

7.5 per cent of total capital costs) and unpaidlabour. Households have been fitted with a100W mini-circuit breaker. Those with largermachinery (for example carpentry tools or mills)have had meters installed. Electricity is suppliedevery day between 4am and 4pm and againfrom 6pm until 11pm. Two community membershave been trained as system operators and oneas manager, thereby improving local skill setsand providing additional employment. Userelectricity tariffs are used to maintain the system

and to provide members with micro-loans; theseare normally repayable within six months and areoften used to establish small cottage industriesor build toilet-assisted biogas plants. Following acommunity consensus, approximately 2 per centof the households are provided with electricityfree of charge due to their lower economicstatus. The system rarely needs to be shut down,other than to conduct repairs or during heavystorms (this occurs approximately five times ayear). Interviewed households expressed

satisfaction with the service provided, attestingthat repairs, when necessary, were carried outquickly and to a high standard.

The community have greatly benefited from thearrival of affordable electricity. Schoolchildrennow study for an average of 12 hours more perday and teachers believe them to be betterinformed from increased radio and televisionaccess at home. At school, electricity is mainlyused for cassette players and listening exercises

in language classes, though it is sometimesused for lighting if the day is particularly overcastor rainy. Electric light aids the local health workerwhen conducting examinations (particularly ear,nose and throat examinations) and duringnight-time births. Both the school and healthpost now receive their electricity free of charge,thereby saving precious funds. Householdsavings from the displaced cost of kerosene andbatteries vary between approximately 0.7 andUSD 12/month depending on their family size,

disposable income and number of children ineducation. Migration away from the community

Approximate position of Pokhari Chauri in Nepal

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is relatively low, other than of children continuingtheir studies to tertiary level.

Traditional agro-processing techniques havealso improved following the installation of threerice mills, one flour mill and an oil grinder, allpurchased by the community. The use of suchmachinery especially benefits the local womenas it used to be their job to grind the produceand it would cause hand pain. Whereaspreviously grinding used to be done at home, thecommunal space created to house thecommunity-owned mills provides an additionalpoint of social interaction for the women andgirls. Moreover, approximately 25 per cent ofinterviewed households reported that the timeand effort saved by these mills allow them toprocess extra crops and sell them in themarkets, giving their family an additionalseasonal income of approximately USD

3 Case studies

135270/month. New private businesses havealso emerged, for example three carpentryworkshops and a milk chilling unit that providesother local farmers with the ability to store andmaintain the quality of their milk prior to its sale inKathmandu.

In 2002, the community formed a cooperative the Chauri Khola Micro-Hydro Cooperative Ltd. to manage the electricity system and theincome it generates. All members meet on ayearly basis, when the seven-member executivecommittee (which meets monthly and is electedevery three years) informs them of thecooperatives finances and plans for thefollowing year. To keep members informed andinvolved in a wide range of communitydevelopment activities throughout the year, 22community organisations were formed 11 maleand 11 female (gender segregation was found to

Assortment of mills in Pokhari Chauri.

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boost female participation) by the REDP (all

community members belong to one of thesegroups). A representative from each of these 22groups attends the executive committeesmonthly meetings, reports back and participatesin one or two of the five subcommittees,organised according to different thematicinterests (loans, education, legal, communitymobilisation and advisory). The REDP alsofacilitates other trainings (for example in incenseand soap-making, off-season vegetables,poultry farming, bee keeping, forest nursery and

the environment, and the building of pit latrines,permanent toilets and garbage pits) so thatinterested members can diversify their incomestreams and contribute to the development ofthe community. Community members are nowmore aware and proactive about environmentalissues, and the local surroundings are betterkept as a result.

Tamborapa Pueblo, Peru

In the year 2000, a 40kW micro-hydro mini-grid

was installed in Tamborapa Pueblo, northernPeru (then a community of 160 households) bythe Peruvian branch of Practical Action(Soluciones Prcticas) as part of the InterAmerican Banks Fund for the Promotion ofMicro-Hydro Power Stations. All capital costswere met by various national and localgovernment bodies, with the communitycontributing in kind by way of unpaid labour. A24-hour electricity service is provided and allhouseholds have metered connections, allowing

them to pay according to usage. Housholds areforbidden to use non-energy saving light bulbs inorder to improve system efficiency. As thedevelopment of productive uses was deemedimportant by both the managers and theimplementing agency, a block tariff system wasintroduced with the intention of favouring thosewho aspired to use electricity for income-generating activities (the unit cost of electricitydecreases in stages as consumption increases).The cost of managing and maintaining the

system is met by the income generated throughthe collection of this tariff and users are fined 1per cent of the outstanding amount per month iftheir payments are late; their service issuspended if three months pass withoutpayment. This is a rare occurrence and users aregiven at least one days notice before plannedsuspensions of service. There have been fewproblems with the system; nevertheless, whenthey are needed, repairs are conducted relativelyquickly due to the availability of funds (collected

tariff payments) in the bank account.Electricity is used for a wide range of productiveand non-productive uses. Street lightingimproves the security of the area and makeswomen feel more comfortable when visiting theirneighbours at night. The lighting of a local sportsfield creates an additional source of eveningrecreation for the local youth. There have beenimprovements to the health service and thefollowing electrical equipment is now in use: two

refrigerators, a radio transmitter, a freezer, asteriliser, a suction machine, three computers,lamps, a centrifuge (for laboratory work), a

Approximate position of Tamborapa Pueblo in Peru

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3 Case studies

Doppler machine (powered by re-chargeablebatteries) and a stereo (used during prenatalclasses). Women no longer need to travel 5hours by minibus to receive check-ups when

pregnant, making it much more likely that theywill see a specialist and thereby lowering the riskfor both mother and baby. Teachers believe thatthe quality of education has improved andhomework is of a higher standard due to electriclighting in homes. Children have access to sixcomputers (there is an additional machine foradministrative purposes), a photocopier, fivemicroscopes, two televisions with DVD, twoprinters and a stereo (used for dances). Pupilsare now benefiting from the use of educational

videos and CD-ROMs such as Encarta.Moreover, since August 2007, an externalbusinessman has established a computing

school in Tamborapa Pueblo offering three-month courses on basic computing skills. Thereare a total of 120 people enrolled on the coursesand the centre has eight computers and two

teachers. A secondary school teacher remarkedthat access to these new teaching aids hasstimulated pupils interest in continuing theirstudies around 20 per cent of pupils now entertertiary education, against the previous figure ofaround 2 per cent.

Communications and entertainment have alsoimproved. As well as domestic use of electricityto power televisions, radios and mobiletelephones, the village now has the services of alocal radio station whose transmitter is powered

by the electricity produced by the micro-hydroplant. The radio station functions as a private

The radio station at Tamborapa Pueblo

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3 Case studies

micro-enterprise, employing five people and

charging listeners to post advertisements orpersonal messages. Although its principal use isto provide entertainment, it also acts as a sourceof information and on occasion is used to postimportant announcements (such as notificationsof the suspension of the electrical service).Other uses of the electricity include mills andcoffee processing machines, lighting, videosand music during church services, and thedomestic use of refrigerators, irons and foodblenders. Several hundred people have

migrated to the area since the micro-hydro plantwas installed, seeking to improve their livingstandards: the local population effectively tripledin size between 2000 and 2009 when it reached490 households. This population rise hascreated surplus demand for the electricityservice; not all households who seek it can beconnected (only 218 households are) andworkshop owners are prohibited from usingelectrical machinery after 6pm.

Remarkably, since the electricity service beganin 2000, 55 businesses have been establishedin Tamborapa Pueblo and over 42 per cent oftheir owners consider the availability ofelectricity to be important, if not essential, totheir enterprise. The enterprises include acomputer school, 26 shops (two with publictelephones, one that sells DVDs, one thatprovides photocopying services and onepharmacy), 12 restaurants (one with a publictelephone), 9 carpentry workshops, 3

mechanics workshops, 1 electronics workshop,1 radio station, 3 bakeries, 2 battery chargingproviders, 2 fuel dispensers, 2 hostels and 4kiosks that are only run at weekends. For thevast majority of these business owners, theirprofits only supplement basic living costs,although their childrens education is the secondmost frequent use of the income, specificallymentioned by 25 per cent of the entrepreneurs.The businesses are often run (or at least jointlyrun) by female members of the household; many

of these women mentioned that they consideredit a welcome respite from the hard manual labourof farm work.

Initially, as official owners and guarantors, the

municipality had wanted to manage themicro-hydro plant. However, the villagersresisted, believing that the municipality wouldreallocate the funds collected from the tariffpayments into other projects and not set asideenough with which to maintain the system intimes of need. Thus, with the help of PracticalAction, a local micro-enterprise was establishedto maintain and manage the system and anoperator-administrator team was chosen andtrained (they are paid for their work from the user

tariffs). Although the project has not beenproblem-free (one of the administrators allegedlymisused the systems maintenance funds), aformal accountability mechanism (an auditingcommittee composed of users and municipalitystaff that evaluate the micro-enterprisesperformance every two years to decide whetheror not to renew its contract) identified thisproblem and the administrator was replaced.The experience shows that the necessaryregulatory and legal structures were in place to

ensure that a fair system would prevail.

Thiba, Kenya

The community of Thiba initiated their ownmini-hydro project. KPLC had started extendingthe grid nearby as early as 2002, but notransformers were being installed within 600metres of Thiba; it would have cost eachhousehold over USD 1,500 to be connected.This was prohibitively high the average annualsalary of local tea farmers. The communitychairman had the idea of generating power forthe community via their local hydro resourcesbut he did not have the technical expertise toexecute the project. He therefore approachedGPower, a local non-governmental organisationworking in electrification, for technicalassistance.

There are 800 members in the Thiba project andall were expected to contribute approximatelyUSD 150, unskilled labour and two poles (from

local Eucalyptus trees) for the distributionsystem. In return, they would receive shares in

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3 Case studies

the project and would be paid dividends oncethe system started generating a profit. Fivehundred members are fully paid and somemembers paid more than the required USD 150(for example, up to 500 USD), thereby entitlingthem to more shares. GPower installed thegeneration system (a 135kW modified Kaplanturbine) and trained four local men to look afterthe operation and maintenance of the system.These men had to pass the Certificate inElectrical Engineering exams in Nairobi.

However, following a dispute, in 2005 thechairman broke off the relationship with GPowerafter the NGO had only installed part of thedistribution system and connected only 10households to the network.

Currently, the mini-hydro system distributeselectricity to 180 households within a 1.6kmradius of the generation equipment andoperates from 6am to 8pm every day. Onehundred and seventy of these households are

members and 10 are member clients (memberclients have to pay approximately USD 200 overfour months for connection; however, as they

had been unwilling to contribute at the beginning

of the project they are therefore not entitled toshares). All users pay a flat tariff of approximatelyUSD 3/month (to pay for repairs and thetechnicians salaries) and their connections arenot metered. In comparison, KPLC charges ruralhouseholds approximately USD 7/month fortheir metered usage. There is surplus energy onthe system (peak demand is around 100kW)and therefore, for the time being, householdscan even use electric cookers or irons. Nostep-up or step-down transformers were

installed in the distribution system so themajority of households (particularly those furtheraway from the point of generation) experienceregular voltage drops (brown-outs) that damagetheir appliances. Electricity is not provided toinstitutions such as schools or health centres.

There have been problems with the turbine sinceinception: its shaft becomes bent and bearingsare worn down on a regular basis (once or twicea month) causing blackouts. There is a lack of

funds to do rigorous repairs or purchase higherquality components. The constant need toreplace the bearings and seals and reshape theshaft is consuming all the revenue accumulatedfrom the tariffs. Connected householdsexperience three to four days of blackouts amonth as each problem generally takes one ortwo days for the technicians to fix (including thetime required to buy the replacement parts). Theregularity of the blackouts frustrates customers.The system can barely sustain itself financially at

present. This self-reinforcing relationshipbetween the lack of funds and ongoing technicalproblems is a major hindrance to the projectssustainability.

The Thiba project is managed by a 17 membercommittee. Elections are held every three yearsbut people have so far retained all those whowere originally elected. Once elected onto thecommittee, the committee members decideamong themselves who will be the chairman,vice chairman, treasurer and secretary. In reality,

these positions often go to those who financiallycontributed the most towards the building of the

Approximate position of Thiba in Kenya

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3 Case studies

project. In addition to the four technicians, the

committee also employs a female projectmember to collect the monthly tariff payments.There is a general meeting every three or fourmonths to outline how the committee has beenspending these payments. Although thecommittee claims to be making an effort to be astransparent and accountable to its members aspossible, it is unclear how well the project isbeing managed, particularly as GPower believesthat internal corruption caused the disintegrationof their partnership.

Despite its numerous difficulties, the communityof Thiba as was also the case with PokhariChauri and Tamborapa Pueblo are proud oftheir mini-hydro plant and pleased that peoplefrom different communities (and even countries)visit them out of a desire to replicate the project.They are particularly proud of progressing so farwith relatively little external financial assistance(although they did receive some loans andgrants, Thiba contributed approximately 50 per

cent of total capital costs in addition to unpaidlabour). The community are now looking forexternal financing to improve the system(through turbine replacement, the installation oftransformers and improvements to thedistribution network) and hope one day togenerate excess power that they can feed intothe national grid in return for feed-in tariffs (thegrid network has now reached the edges of thecommunity).

Application of assessmentmethodology

A series of 43 Sustainability Indicators wasdeveloped with which to assess the projectsability to generate sustainable welfare benefitsfor their intended beneficiaries. Sustainabilitywas defined in its holistic sense of technical,economic, social, environmental and institutional(or organisational) sustainability, as proposed byIlskog (2008). The indicators were originallybased on a smaller set of indicators developed

by Ilskog (2008) and were then adapted to meetthe researchs specific needs, drawing on the

authors prior experiences in the field. The full list

of indicators can be found in Table 2. As far aspossible, indicators were chosen that wouldreflect the wide-ranging concerns of differentstakeholders involved within a given project. Anabsolute value of one point was awarded eachtime the indicator was met within a case, 0.5was awarded if the indicator was only partiallymet and none where the indicator was not met.The greater the score for a particular dimensionof sustainability, the more sustainable welfarebenefits produced.

Table 3and Figure 1present the results of thesustainability assessment. A more detailedbreakdown (including explanations as to whyfewer points were awarded for certainindicators) can be found inAppendix 1. Effortwas made to make the process as objective andtransparent as possible, however the authorschoice of indicators was ultimately subjective, aswas her assessment of the case studies with thecorresponding allocation of points. Similarly,

although each indicator receives an equalweighting (Environmental Indicator 6 is theexception), certain issues are given greateremphasis through the assignation of multipleindicators (for example, Social Indicators 1 and2 both relate to improvements to education).

Key findings and assessment ofresilience

The results show that micro- or mini-hydromini-grids can produce sustainable welfare

benefits provided all dimensions of sustainabilityare considered in the planning andimplementation stages. Whereas the systems inPokhari Chauri and Tamborapa Pueblo bothscored relatively highly, Thibas low scores werelargely the product of insufficient financing,which prevented the technicians from investing inhigher cost components and conducting betterquality repairs. This prevented the electricityservice from having a greater developmentimpact (which particularly limited the range of

socio-economic benefits) and detracted from thesystems overall sustainability. Nevertheless, its

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3 Case studies

Table 2Sustainability Indicators used in the research

Sustainable Development

TECHNICALDEVELOPMENT

ECONOMICDEVELOPMENT

SOCIAL/ETHICALDEVELOPMENT

KeyVariables Operation and

Maintenance

Technical Client-Relation

Financial

Productive UsesEmployment

Generation

Improved Service Availability

Credit FacilitiesEqual Distribution

Indicators

1. Service is reliable,disruptions are minimal

2. Service meets demandcapacity requirements

3. System is efficient andtechnical losses areminimised

4. System is compatiblewith future grid service

5. Support infrastructure(expertise, supply parts) isreadily available

6. System is wellmaintained

7. Advance notice aboutplanned service disruptionsis given to users

8. Service is safe to useand operate

1. Service is affordable forusers

2. System breaks even (O&Mcosts are met)

3. System is profitable, excl.capital costs

4. System is profitable, incl.capital costs

5. A share of the profits isre-invested in the electricityservice

6. Electricity is used by localindustries

7. Electricity is used by abroad range of micro-enterprises

8. Electricity is used toimprove agricultural activities(irrigation, food processing,refrigeration of goods)

9. Local employmentopportunities have increaseddue to electricity

10. Profits from micro-

enterprises or livelihoods haveincreased due to electricity

1. Electricity is used inschools

2. Education has improveddue to electricity

3. Electricity is used inhealth centre

4. Healthcare has improveddue to electricity

5. Electricity is used incommunity centre

6. Existence of street lights

7. Telecommunications haveimproved due to electricity

8. Womens burdens have

reduced due to electricity9. Micro-credit (oralternative) possibilities areavailable for electricityservices connection andtariff payment wherenecessary

10. All households who wantit have access to electricityservice

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Table 3

Sustainability assessment results

POKHARICHAURI(NEPAL)

TAMBORAPAPUEBLO(PERU)

THIBA(KENYA)

Technical Dimension (max. 8) 7.5 7 2.5

Economic Dimension (max. 10) 8 8 2.5

Social Dimension (max. 10) 7.5 8 1

Environmental Dimension (max. 6) 5.5 4 3Institutional Dimension (max. 9) 6.5 6.5 4

Figure 1Spatial representation of the indicator scores

Technical Dimension

Economic Dimension

Environmental Dimension

Institutional Dimension

Social Dimension

Tamborapa Pueblo (Peru) Thiba (Kenya) Pokhari Chauri (Nepal)

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technicians displayed great resourcefulness to

keep the system in operation. The community inThiba had also shown great leadership andinitiative to bring about the hydro plantsconstruction in the first place.

Although their scores were broadly similar, theREDPs holistic approach (including the creationof separate male and female communityorganisations, the introduction of toilet-assistedbiogas and awareness-raising on environmentalissues) gave Pokhari Chauri marginally higher

scores than Tamborapa Pueblo. Moreover,migration to Tamborapa Pueblo dramaticallyincreased following the introduction of an

electricity service (a testament to the high

demand for electricity in rural areas), whichplaced a heavy strain on system capacity andnegatively impacted upon its score. Not all newhouseholds could be connected to the electricityservice and businesses using electricalmachinery (such as carpentry workshops andwelders) were not allowed to use their machinesafter 6pm. Nevertheless, the most efficient andeffective management system was the micro-enterprise in Tamborapa Pueblo; this was theonly case in which detailed financial accounts

were kept. Thibas management was the leasttransparent and potentially the most vulnerable

The micro-enterprise electricity service company at Tamborapa Pueblo.

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The concept of project delivery models is usedvariously by different agents and a consistentdefinition has yet to be established.

Nevertheless, a Department for InternationalDevelopment funded project has defined aprojects delivery as the way that a projectdesign or a business plan aims to overcome thebarriers to scale up and sustainability in energyaccess and development projects (PracticalAction Website, 2010). This report furtherexpands that definition by explicitly incorporatingthe interventions technology choice,implementation process and surroundingsupport infrastructure (its enablingenvironment). Several different variables arecontained within a delivery model: theassessment of community needs, desires andavailability of local resources; managementmodels; productive end uses; the implementingagencys approach; ownership and governance;local skills and training; local job creation;financing; dissemination strategies; and theprojects interaction with hardware suppliers

and the various financing, regulatory, legal andpolitical institutions and policies that form itsenabling environment (see Figure 2).

This chapter examines which elements of aprojects delivery model are particularlyimportant for the creation of sustainable welfarebenefits. Given the greater amount of existingresearch on pre-implementation assessmentand technology selection methodologies, focuswas placed on a projects implementationprocess and interaction with the enablingenvironment. Findings are based on the datagenerated by the three main and several less

in-depth satellite case studies, 67 expertinterviews and a review of existing literature. Afull list of interviewees is provided inAppendix2. Wherever possible, the interviews wererecorded and transcribed. In accordance withthe categorisation used during the codingprocess, the results will be discussed under thefollowing sub-sections: ownership,management, productive uses, training and job

4The impact of different

delivery models

Technology

Choice

Assessmentof CommunityNeeds, Desires& Availability

of LocalResources

Enabling

Environment

Financing,Regulation,Legality,Suppliers,

Governments &Institutions

Figure 2Variables pertaining to project delivery

Implementation Process

Management models,Productive End Uses,Implementing AgencyApproach, Ownership andGovernance, Local Skills

and Training, Local JobCreation, Financing Issues,Dissemination Strategies

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4 The impact of different delivery models

creation, implementing approach, dissemination

and scaling-up, enabling environment andfinancing. This chapter describes the key pointsrelevant for each of these areas and providesexamples from the field and secondary literature.

Ownership

It is important to engender a strong senseof local ownership to obtain local supportand buy-in for the project, and for users totake responsibility for a systemsmaintenance (where required).This wasstressed repeatedly in all countries of research.Communities need to accept, internalise andadopt a new project as their own; without this,they may continue to see the intervention asexternal and take less interest in its development(pers. comm. Odada, 2010). Communities thathave a strong sense of ownership for the projecthave been known to support the implementingagency and put pressure on local politicians toprovide planning approval (ibid.).

It can help if users participate in theplanning and decision-making process andcontribute their own funds towards theinitial set-up costs. A renewable energy ruralelectrification toolkit reports, Participation frombeneficiaries during all stages of the projectcycle is important in encouraging a sense ofownership and increasing their understanding ofthe technology (PAC, 2010). Closecoordination between planners, projectcoordinators and villagers should be

established, including villagers participation inthe implementation stage, in order to avoid asituation whereby the villagers would see theproject as introduced from outside andsubsequently not feel responsible for itsmaintenance (Kivaisi, 2000). Remarkably,during the Nepali civil war (19962006), wherecommunities had a strong sense of ownership,their systems withstood attempted destructionby Maoist forces. In some REDP communities,people are said to have challenged rebels to kill

them first: the micro-hydro plant belonged to

them, not the government (pers. comm.

Neupane, 2009).Obtaining community consensus duringthe planning stage could strengthen acommunitys ability to resolve disputes infuture, as well as increase local buy-in. InNepal, it is recommended that full consensusshould be sought as a priority even where thismay cause delays in the planning andimplementation stages (pers. comm. Subedi,2009). This is to ensure that everyone in the

community (including the disadvantagedgroups) feels involved and responsible for theproject. Addressing concerns and achieving fullconsensus during the implementation stageshould increase community buy-in, improve localorganisational capacity and put the communityin a better position to settle disputes by itselfafter the project facilitator has left (Yadoo andCruickshank, 2010b; Yadoo et al., 2011a).

External facilitation may be required toensure that decisions are taken on the

basis of well-informed judgements.Practitioners warn that without appropriateguidance, communities may take decisionsbased on friendships or neighbourly alliancesrather than on the basis of well-informedjudgements (pers. comm. Escobar, 2009). Asimilar trend has also been noted for rural watersupply projects where there is a need to balanceparticipation and ownership with good decisionmaking (Taylor, 2009).

If communities are too poor to provide aninitial payment, they could be asked toprovide unskilled labour or sweat equity;this does not necessarily detract fromsustainability. A study performed by the JudgeBusiness School (albeit on a limited data set)found little correlation between the amount offinancial contribution provided by the communityfor a project and whether or not it operatedsuccessfully (Harley et al., 2011a). Otherfactors, such as the communitys initial level of

proactiveness, better reflected its willingness to

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ensure that the project functioned in a

sustainable fashion (ibid.).Ownership is only important if acommunitys sense of responsibility forthe system increases; thus, perceivedownership is often more important thanlegal ownership.In Tamborapa Pueblo, legalownership for the system remained with themunicipality, however, the community still feltresponsible for its upkeep as they felt it to betheirs. This distinction between perceived (a

sense of) ownership and actual (legal)ownership was field-tested by Harley et al.(2011b) who corroborated that the former is ofgreater import than the latter. Khennas andBarnett (2000) comment that Ownership isless important for sustainability than business-like management.

It can be advisable to spread ownershipover a wider set of stakeholders to improvethe accountability of the managementboard. According to the experience of the GIZ

Private Sector Participation in Micro-HydroProgramme in Rwanda, faced with internalcorruption or mismanagement, enterprises aremore resilient when their investment group iscomposed of a diverse set of stakeholders,including socially motivated equity investors(business angels) (pers. comm. Pigaht, 2011).

Management

Effective management is essential forproject sustainability and welfare impact.

This was voiced particularly strongly by PracticalAction in Peru and the REDP in Nepal, yet it wasalso commented upon in the literature,Management plays a major role in deciding thesuccess of a micro-hydro plant (ITDG, 1999).ESMAP (2001) found that it is often thesystems management, rather than thetechnology, which may ultimately cause aproject to fail and this has been reiterated inseveral other studies (ESD, 2003;Krishnaswamy, 2010; Miranda, 2006; Zerriffi,2007).

In the long term, more formalised

management (such as cooperatives ormicro-enterprises) is generally better thanlooser forms of management such asCBOs as greater transparency andaccountability can be enforced. In Nepal,greater formalisation can help to improve thetransparency, accountability and overallorganisational strength of the managementboard as it can now be penalised if foundbreaching its codes of conduct. This is also truein Peru, where micro-enterprises and

cooperatives are considered more robust thanCBOs (pers. comm. Escobar, 2009). A studyperformed by Practical Action in Nepal hasshown that community managed systemsappear extremely tricky to administer and areunlikely to succeed unless the community ishomogenous largely due to inadequatemanagement and operational capacity,advocating instead that a corporate structurewith business enterprise models andinstitutionalised operational practices

(including improved documentation andrecording practices) should be adopted(Practical Action, 2006).

Only properly trained community membersshould be assigned the responsibility ofmanaging or operating an electricalsystem and this responsibility should notbe rotated within the community withoutthe training being repeated in full. Althoughrotation potentially widens participation in the

project, it dilutes the chains of accountabilityand makes it difficult to hold the operatorsresponsible if something goes wrong. Theannual or biannual rotation of administrators atthe PV battery charging stations in HuanchoLima (Peru) resulted in poor administrative andtechnical management in later years: thepassing of technical knowledge by word ofmouth from one administrator to the next wasinadequate and community control overcollected funds was weak.

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Documents

Delivery_models for Decentralised Rural Electrification, 2012