Increasing access to energy services in rural areas - REEEP ...

MODULE 10: INCREASING ACCESS TO ENERGY SERVICES IN RURAL AREAS
page 10.31
A concession approach has been demonstrated in Argentina, 41
where an award
would be given to the most qualified RESCO bidder to provide the energy services
as a regulated monopoly in a certain areas and over a certain number of years
thereby operating in a “controlled” free-market environment. The tariffs should
be real, reflecting the actual costs of service, but subsidies for electricity used
could be extended to the poorest (based on household spending for lighting in
the absence of electricity or on household willingness to pay) and then reduced
over time during the concession period.
In a rental approach, as SOLUZ have shown in Honduras and Dominican Republic, 42
the RESCO shoulders the costs of the equipment meaning the customer would
never own the system, but they would have to show their repayment capacity
while paying rent on it. If the energy service agreement needs to be cancelled, it
can be by giving advance notice and when payment is discontinued a technician
can transfer the system to another customer. The disadvantage is that this
approach can generally only be used for equipment that can be easily relocated,
for example, for SHS and small village PV systems.
7.2. Government-led model
A government-led model can take on several forms. For example, for the Mexico
PRONOSOL programme, the government maintained control of the programme and
the private sector only participated as a vendor of goods and services and never
as the owner-operator. A “bottom-up” approach was taken allowing awareness
building on RE and participation of communities, and this effort has increased the
rural electrification level with over 40,000 SHS disseminated.
For the Chile PER (Programa de Electrificación Rural or Rural Electrification
Programme), the government led with a subsidy approach which was only for the
initial investment and did not include O&M costs for which tariffs were set high
enough to cover. The actual financing for the energy systems (decided by lowest
cost to provide electricity) was 10 per cent from users, 20 per cent to 30 per cent
from a distribution company (responsible for O&M) and 60 per cent to 70 per cent
subsidy from the state. Although new electricity supply was provided to more than
90,000 households, exceeding targets, most projects were on-grid extension and
diesel systems for off-grid rather than renewables.
A similar model has also been found in China to finance energy services in rural
areas. Apart from the government controlling the financial model, market elements
41
The programmes are PAEPRA (1995-2000) and PERMER (2000-2005).
42
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