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

SUSTAINABLE ENERGY REGULATION AND POLICYMAKING TRAINING MANUAL
page 10.60
• Maximizing the number of financially sustainable household connections that can be
achieved using a limited subsidy resource (focuses on the number of households);
• Maximize number households to be reached, with minimum subsidy (promote maximum
private sector investment);
• Maximize the socio-economic benefit to be achieved through electrification of households,
institutions, social services and enterprises – requires rating of a wide range of
possible benefits (this reduces the emphasis on the number of households connected);
• Maximize economic benefit of electrification (will tend to place even less focus on
household connections, more on enterprises/industry);
• Least-capital cost electrification (sometimes used for grid electrification planning, if
there is lack of information on consumption, and thus little basis to differentiate lifecycle
revenues and costs);
• Take a least cost approach to O&M to maximize sustainability of operations (allow substantial
capital subsidy to reduce O&M).
Benefit points system of analysis
One way to support decision-making on technology selection, and specifically whether grid
technology is likely to be viable for certain clusters of loads; a simple rule of thumb can
be developed using “benefits points” (BP). 1
Each potential electrification project would
accrue a number of “economic benefit points” in order to take in to account social and
economic benefits that arise from rural electrification. A system of allocating “benefit
points” can be developed in order to try and quantify these social benefits as well.
For example, a “benefit points” system essentially allocates one point to the electrification
of a rural household and then compares the electrification of other institutions and
industries against this reference. As an example, electrification of a small shop or another
trader is considered to provide three times more economic benefit as a household on the
basis of the potential for increased income generation that may accrue through electrification.
So a small shop is allocated three benefit points. The electrification of a health centre
might accrue 70 benefit points.
The benefits point allocation system aims to take into account both the size of the load
(in kWh for energy consumption or kW for power demand), its contribution to the overall
financial feasibility of the line extension, as well as its weighting for social benefits. The
benefit points for proposed projects are then summed to assess the total potential benefit
of a particular project.
The benefits of point analysis will prove useful in the rural electrification process and will
be mentioned wherever appropriate in the following section.
1
This system was first proposed for use in Namibia and South Africa and has been adapted for use in
Uganda.