Productive Use of Energy in African Micro-Grids: Technical and Business Considerations

Demand for electricity from small industry and businesses, which is defined as the productive use of energy (PUE), is a key success factor for micro-grids. Because of the typically low energy usage of residential customers, without linkage to and support for these energy users, micro-grids are likely to struggle to reach the critical revenue needed for financial viability. This report is a resource entrepreneurs and developers can use to understand the technical and business model challenges related to PUE in smaller micro-grids. It focuses on small agricultural processing, and small industrial and commercial loads. This report examines best practices for promoting PUE and the business models used by developers. It starts with background information and a literature review followed by a discussion of key enterprise considerations for productive use (PU) including: value chain and business case analysis, enterprise development and training, appliance financing, and developers running PU businesses. Unlike many other reports on PUE, this report is based on application specific data. The report is also unique in that it provides actual customer demographics and load profiles. This report considers PUE from both business and technical perspectives, and it considers the interests of both the micro-grid operators and the microenterprises and entrepreneurs they serve. It looks at the service levels required by different PUs and the technical characteristics and challenges of different types of PU equipment. The report also includes examples of business cases for some of the most important PU opportunities, including milling, ice making, carpentry, egg incubation, and water treatment. This report is a resource that entrepreneurs, governments, and non-governmental organizations can use to help design programs to meet their individual goals of PUE in micro-grids and economic development in rural Africa. It can also be used by developers, engineers, and other organizations designing micro-grids to inform their technical and business decisions and to improve system design, reduce risk, and increase success with adding PU loads to both new and existing micro-grids.