From SHS to Mini-Grid-Based Off-Grid Electrification: A Case Study of Bangladesh

Abstract

This chapter presents a local-level study of a village off-grid system in Bangladesh. Using the recent census information and household survey information, the study presents the current status of rural electrification in Bangladesh and indicates the characteristics of rural energy use. It then applies an integrated methodology that identifies the demand in the off-grid village context using six alternative scenarios that capture the residential demand by household type, commercial demand and productive demand. The techno-economic analysis of the optimal off-grid system architecture is then presented using HOMER software. Three energy resources are considered, namely solar energy, wind and diesel fuel. The optimal configuration suggested for the scenarios consists of diesel generators for the basic level of demand and PV-diesel hybrid for higher demand and reliable supply scenarios. The cost of electricity per kWh remains high for the basic level of supply and decreases as the system size increases. However, the capital and asset replacement costs increase considerably for bigger systems. The business case is then analysed for each scenario and it is found that grid price parity is impossible to reach with even full capital cost subsidy, indicating a significant amount of operating cost subsidy requirement that makes the larger systems financially unviable. Moreover, the small mini-grid system for the basic level of supply emerges as a cheaper option than providing the consumers with solar home systems. However, the monthly electricity bill will become unaffordable for most consumers when demand restrictions are removed. Accordingly, the chapter suggests a mini-grid-based electricity supply to provide the basic level of provision alongside productive energy use during off-peak hours as the starting point. If the business develops and demand improves, the system can be expanded subsequently using appropriate technology combinations.