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Mini-Grids for the Sustainable Electrification of Rural Areas in Sub-Saharan Africa: Assessing the Potential of KeyMaker Models

1
Department of Energy Engineering, Campus El Gouna, Technische Universität Berlin, 10623 Berlin, Germany
2
Institute for Future Energy Consumer Needs and Behavior (FCN), RWTH Aachen University, 52074 Aachen, Germany
*
Authors to whom correspondence should be addressed.
Current address: INENSUS GmbH, Am Stollen 19D, 38640 Goslar, Germany.
Energies 2020, 13(23), 6350; https://doi.org/10.3390/en13236350
Received: 3 November 2020 / Revised: 24 November 2020 / Accepted: 26 November 2020 / Published: 1 December 2020
(This article belongs to the Section A5: Smart Grids and Microgrids)
Solar hybrid mini-grid systems possess the potential to substantially support electrification in sub-Saharan Africa. While their technical reliability has been proven, their financial viability is achieved only by heavy subsidization as of now. Due to the growing importance of results-based financing, we ask whether newly developed business models leveraging on the value added of electricity supply in rural areas (such as the KeyMaker Model) bare the potential to substantially reduce amount of grants required to finance the initial capital investment and thus contribute to a sustainable form of development. The principle of the KeyMaker Model is based on utilizing the locally supplied mini-grid electricity to establish a local agro-processing project, the revenues of which are an additional income stream for the mini-grid operator, while the project creates an end-market for the local farmers to sell their produce. We have developed two scenarios (without and with KeyMaker Model) for four rural villages in Nigeria as a case study to scientifically assess the potential of KeyMaker Models. We simulated and optimized the mini-grid systems using the software tool HOMER. We then assessed their financial viability. Our analysis demonstrates grant finance requirements ranging from 82% to 99% of the total investment for the base-case mini-grid projects without consideration of the KeyMaker Model. We find that a well-selected KeyMaker Model such as cocoa bean processing reduced the grant requirement by 68 percentage points, while processes based on maize, palm oil and cassava processing achieved reductions of 36, 26 and 8 percentage points, respectively. Hence, we conclude that the value added by the introduction of new local business models bares the potential to reduce grant requirements for the socially and economically necessary electrification across the Global South. View Full-Text
Keywords: mini-grid; rural electrification; energy poverty; grant requirements; business model development; sustainable development mini-grid; rural electrification; energy poverty; grant requirements; business model development; sustainable development
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MDPI and ACS Style

Cabanero, A.; Nolting, L.; Praktiknjo, A. Mini-Grids for the Sustainable Electrification of Rural Areas in Sub-Saharan Africa: Assessing the Potential of KeyMaker Models. Energies 2020, 13, 6350. https://doi.org/10.3390/en13236350

AMA Style

Cabanero A, Nolting L, Praktiknjo A. Mini-Grids for the Sustainable Electrification of Rural Areas in Sub-Saharan Africa: Assessing the Potential of KeyMaker Models. Energies. 2020; 13(23):6350. https://doi.org/10.3390/en13236350

Chicago/Turabian Style

Cabanero, Andrea, Lars Nolting, and Aaron Praktiknjo. 2020. "Mini-Grids for the Sustainable Electrification of Rural Areas in Sub-Saharan Africa: Assessing the Potential of KeyMaker Models" Energies 13, no. 23: 6350. https://doi.org/10.3390/en13236350

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