1. Building Viable African Electricity Networks
Review of electrification options
for low income areas
Ian C Davies
Energy Week at the World Bank
7 March 2006

2. ERT Concept Energising Rural Transformation
Promoting economic activity using a package of electrical, telecoms, health and education. This presentation refers to the electricity portion and specifically grid connections. Similar techniques are applicable to isolated mini-grids.

3. Key elements ‘Smart’ subsidy Affordability Low cost construction
For consumers
For utility
For government
Low cost construction

4. The ‘Smart’ subsidy Once off contribution to capital cost only
No subsidy of running costs
Contribution should ‘buy down’ the non-viable portion of the investment
Remaining balance should be viable investment in its own right

5. Affordability Can the community afford electricity?
Affordability survey is a key task
Can the utility afford electrification?
Will the cash flow exceed the running costs?
Can the government afford the subsidy?
Will the economic benefit pay for the subsidy?
(Yes - if cash positive)

6. Will the network be viable?
A project financial model can help
It should show all the variables
It should illustrate the sensitivity of each variable
It should be graphic and easy to understand
Initial example Final example

8. Bank Cash US$

10. Bank Cash US$

11. Changes made Variable Before After Connection fee $200 $60
Construction cost
$711
$650
Subsidy
$605
$325
O&M per month
$6.00
$3.50
Tariff
+18%
+17%
House consumption
45kWh/m
100kWh/m
Commerce consumption
500kWh/m
300kWh/m
Losses
24-18%
16%

12. Summary ‘Low cost” package Importance varies by network
Construction cost
Operating cost
Product marketing
Network marketing
Reduce losses
Connection fees
Consumer contributions
Conversion costs
Metering issues
Community issues
Tariffs
Generation cost
Importance varies by network
Model shows key issues

13. Building viable African electricity networks
‘Low cost’ and ERT
can help to make it happen
Please go do it!
Ian C Davies