Village Energy and Electricity: Best Practice in Lao PDR, February 2004
| By | Adam Harvey, Off-Grid Program Adviser |
| Download (click on the image) |  |
| Description | From the forward: Over the past five years, a team of Lao experts has been training small companies to become village energy service specialists, to work in areas not due for electricity grid connection. The companies offer a choice of electricity supply technology, so that there is a solution for each village. Most villages have chosen solar home systems, but as the companies begin to work in the remoter cloudy and hilly areas, more villagers are choosing village-scale hydro systems. The challenge has been to develop a framework within which the companies can operate consistently over many years into the future. An ambitious goal for Laos is to connect 75% of rural families to the grid by 2020, and to help at least another 15% to receive off-grid electricity by this time. This would mean companies delivering 10,000 connections on average per year over the next fifteen years, and providing ongoing service support to large numbers of operational systems. The market for off-grid connections could be larger than 150,000 households, if grid extension does not progress as fast as intended. Given that off-grid villages in Laos are highly inaccessible, and most villagers generally can afford only 1 or 2 dollars per month for electricity, this activity needs some form of financial subsidy. If finance is not consistently available, or the policy and regulation environment is inconsistent, companies will not be able to operate. Much of the work over the past five years has been to secure a firm policy and regulation environment, and to develop a realistic longterm financing strategy. Although the focus of the program so far has been on electricity supply, the regulatory framework and financing approach has been designed to work for a wide range of renewable energy options for rural communities. The energy service companies are able to diversify into technologies such as biogas-based cooking, using the same financing modality. With respect to electricity supply, the modality accommodates options such as bio-fuels for engine generators. A key challenge has been to make sure the stand-alone electricity installations operate reliably for many years. The solution has been to develop a 'rent-to-buy' or hirepurchase mechanism. In the case of villagers choosing solar home systems, they buy the equipment by monthly payments over a period of several years. The solar panel then becomes an important economic asset to poor families, since it retains high re-sale value. They choose a Village Electricity Manager to provide technical support over this period and beyond. In the case of hydro and engine-generators, this 'VEM' hire-purchases the equipment personally, using it to run a small business selling electricity. In both cases, prospective ownership has proved in practice to be an excellent motivation to take care of the equipment. The Village Electricity Manager and the Electricity Service Company, both receive a portion of each monthly hire-purchase payment. In this way, a technical and management structure is permanently in place to support the long-term needs of operational customers. Both the Company and the VEM have a strong incentive to maintain the equipment in good working order, as they lose income if villagers withhold payments for any reason. The program has been developed by an Off-Grid Promotion and Support (OPS) office located within the Ministry of Industry and Handicraft (MIH) in Vientiane. The team includes Government officials, and personnel recruited from the private sector. The work is funded by a soft loan from the World Bank, combined with a GEF grant. This paper outlines progress with the program so far, focusing on 'best practices' - that is, choices we have made through careful testing of options, to ensure reliable service for Lao villagers and a selfsustaining framework for implementing companies. |
| File size | 1523 kB |
| Date | 29-07-2004 at 19h08 |