#1Solar Mini-Grids in Rural Burundi Jerusalem Institute for Israel Studies Milken Innovation Center Claire Kaufman Milken Innovation Center Global Fellow at Gigawatt Global University of California, Berkeley Summer 2016#2GIGAWATT GLOBAL A FOUNDING PARTNER OF PORICA Jerusalem Institute for Israel Studies Milken Innovation Center Gigawatt Global Coöperatief U.A. is a multinational renewable energy company focused on the development and management of utility-scale solar fields in emerging markets. "A for-profit company with a non-profit's soul" Completed: Rwanda, Georgia, USA In Progress: Nigeria, Kenya, West Bank, South Sudan, Benin, Burundi, Mini-grids in Burundi#3Main Questions Jerusalem Institute for Israel Studies Milken Innovation Center a. How to organize, regulate, finance, and implement microgrids to create affordable, sustainable energy production and use in developing economies (Burundi). b. What are the tariff and financial structure, technology ownership and management, and system organization alternatives to enable scalability (for modular growth or connection to larger grid systems), financial feasibility (sustainability and returns to all stakeholders), and highest impacts (deliver low cost, clean energy to users).#4Burundi Country Report Jerusalem Institute for Israel Studies Milken Innovation Center PEOPLES FRO BURUNDI NEE ABIGEREED Economic Indicators GDP (current US $) GDP growth Total Population GDP per $ 3.09 billion (2015) -2.5% (2015) 11.18 million (2015) capita $ 276.0 (2015) (current US $) Energy Indicators Electricity Access 7% (2015) Total Average household 23 kWh/year/hh (African consumption average of 150 kWh/year) Electricity Access in 1% (2015) Rural Areas Percentage of Burundi 88% Living in Rural Areas Source: World Bank and SE4All Power Africa Energy Hub#5Power Stations and Transmission Grid for Burundi Kigali Rusizi 1 Rusizi 2 RWANDA Kirundo KIRUNDO Rusizi Rusizi 3 MUN CINTOKE NGOZI Cibitoke Kabu 16 Kaganuzi Kayanza Rwegura Bubanza KAYANZA Kabulantwe Mpanda DEMOCRATIC REPUBLIC OF THE CONGO Muramvya Bujumbura Gitega MWARO LAKE TANGANYIKA HOUMBURA Mwaro Ruzibazi BURURU Mulembwe ururi RUTANA Rutana Rushiha Makamba MBA LAKE RUVIGI Ruyigi Rusuma Falls UNITED REPUBLIC OF TANZANIA KUZO Cankuzo LEGEND Existing Hydro Station Diagram 5 Distribution of REGIDESO clients in 2011 23% 42% 14% 21% Industri Commer Manage Aut Source: REGIDESO Diagram 6 Production sources REGIDESO (2003-2011] 250 200 Proposed Hydro Station 150 Existing Transmission Line 70.9 57,0 Proposed Transmission Line 71,1 www Proposed Distribution Line 100 National Boundary SOURCE The course for the Seserap is Poiting pics and Me Design Genel Services Deportes The Word Bank PLEASE WITH The boun Provincial Boundary National Capital Provincial Capital Town Village Approdate Sale 10 10 20 30 40 k Pred by Kill Map Copy-SteWA 61,7 104,1 13,5 4,1 75 134,4 114,4 111,B 118,3 50 967 втр B4,7 0 2003 2004 30m Hydropower 2005 2006 2007 2008 2009 2010 2011 Thermal Import Source: REGDESO Israel Studies ovation Center#6The Mini-Grid Solution Distribution Grid - Carries electricity to customers Generator -Fueled by diesel, PV, wind, gas from biomass digestion, or a micro-hydro system IN Meter - Measure power consumption - Circuit breaker limits consumption allowed for a fixed monthly bill FIGURE 3.15: Generalized mini-utility operating model Source: IFC analysis. Mini-Utility Employees - Sign-up customers - Collect money - Operate and maintain generator -Fix faults in distribution grid Jerusalem Institute for Israel Studies Milken Innovation Center#7Why Are Mini-Grids Not Used More In Africa? Jerusalem Institute for Israel Studies Milken Innovation Center "The major hurdles in the success of mini-grids are not technology-related. There are no significant technology barriers that hinder mini-grids whether they are powered by diesel generators, renewable energy or a combination of both (hybrid systems). Rather, since supply to remote villages with low income is not economically viable, financial sustainability is the key challenging factor. Compounding the problem is the fact that there is no "one-size-fits-all" solution." (SE4ALL Energy Access Committee, OFID 2014)#8Two Part Pilot Project In Off-grid Burundi ● Street lighting mini-grid Community mini-grid - Anchor-Based Consumer Model - Phase 2: connect school and medical clinic - Additional SHS component Long-term goal: create a replicable model to ultimately reach 1 million Burundians Yearly sum of global irraciat ori 2200 2000 1800 Demora Republ of the Congo 1650 Joint Research Center/PVGIS Rwanda Jerusalem Institute for Israel Studies Milken Innovation Center BLUMOUTA Tarzanie 17 10 S#9Five Key Challenges Matching supply & demand Community involvement Cheap & reliable fuel source Managing monetary risk Tariff formation Case studies of best practices in scalable mini-grids → Two detailed feasibility study "game plans" Jerusalem Institute for Israel Studies Milken Innovation Center#10Demand Analysis: Community Mini-grid Appliance 1 Hours per day Type of Business Appliance 1 Power Rating [kilowatt) of use of Appliance 1 Time of use Appliance 1 (day Night) Appliance 2 Name Gilbert NKURUNZI ZA Mill Mill 2 12 Day Rice Huller Mathias NTIRABAMPA Juma Mill, Rice Huller Mill 2 12 Day Rice Huller Mill, Rice Huller Mill 2 12 Day Rice Huller Gervais NSHIMIRIMANA Mill Mill 2 12 Day Jean NYANTOBERWA Mill Mill 2 12 Day Nicolas NYANTOBERWA Gerard Bukuru Food shop, mill, décortiquese Mill 2 12 Day Mill Mill 2 12 Day Average Sum 2 12 Appliance 2 Power Rating [kilowatt) Jerusalem Institute for Israel Studies Milken Innovation Center Hours per day of use of Appliance 2 Time of use 2 Energy useage per day (kWh) 2.25 2.25 2.25 6 Day 6 Day 6 Day 37.5 37.5 37.5 24 24 24 24 2.25 6 29.78571429 208.5 Liters of Diesel used per day Appliance 1 Liters of Diesel used per day Appliance 2 Cost of diesel per liter Expenditures on fuel per day Cost per kWh Income Frequency (per day, per week] Average income per day Percentage of Income spent on Diesel Signed Agreement (Y/N) 8 5 $ 1.00 $ 13.00 $ 0.35 Per day $ 60.00 21.67% 8 5 $ 1.00 $ 13.00 $ 0.35 Per day $ 60.00 21.67% Y 8 5 $ 1.00 $ 13.00 $ 0.35 Per day $ 60.00 21.67% 8 $ 1.00 $ 8.00 $ 0.33 Per day 8 $ 1.00 $ 8.00 $ 0.33 Per day 8 $ 1.00 $ 8.00 $ 0.33 Per day 8 $ 1.00 $ 8.00 $ 0.33 Per day 69 69 69 69|- $ 60.00 13.33% $ 60.00 13.33% $ 60.00 13.33% $ 60.00 13.33%| 8 5 1 $ 56 15 7 $ 10.14 $ 71.00 $ 0.34 2.37 60 17%#11Tariff Structure Jerusalem Institute for Israel Studies Milken Innovation Center Consumption-based tariff by kWh - vs. Capacity-based by monthly fee, Pre-Device Tariff, Energy as a service, etc. Customer Tiered by customer type Commercial Time of Use Tariff Weightage Weighted Average $ 0.40 40% $ 0.160 Industrial $ 0.38 50% $ 0.190 Residential $ 0.35 0% $ Night (battery) $ 0.50 10% $ 0.050 TOTAL 100% $ 0.400#12Billing Structure Pay-as-you-go (vs. Fixed monthly payment) - - Scratch cards - Lumeter, Sparkmeter, SteamaCo Jerusalem Institute for Israel Studies Milken Innovation Center#13Financial Model 1 2 3 Year A B C D 0 1 2 E F G H Burundi Micro Grid Financial Summary 3 4 5 Jerusalem Institute for Israel Studies Milken Innovation Center J K L 6 7 8 9 10 4 5 Revenue $ 22,710 $ 23,137 $ 23,571 $ 24,012 $ 24,460 $ 24,916 $ 25,379 $ 25,850 $ 26,329 $ 26,815 kWh * tariff 6 Cap Ex $ -118,961 0 7 Op Ex $ -4,327 $ 0 -4,434 $ 0 0 0 0 0 0 0 0 8 EBIDTA 18.383 $ 18,703 $ -4,543 $ 19,028 $ -4,655 $ 19.357 $ -4,770 $ 19,690 $ -4,888 $ 20,028 $ -5,009 $ 20,371 $ -5,132 $ 20,718 $ -5,259 $ 21,070 $ -5,388 21,427 9 10 Less Depreciation $ -11,896 $ -11,896 $ -11,896 $ -11,896 $ -11,896 $ -11,896 $ -11,896 $ -11,896 $ 11 Less Tax $ -1,946 $ -2,042 $ -2,139 $ -2,238 $ -2,338 $ -2,440 $ 12 NOPAT $ 4,541 $ 4,765 $ 4,992 $ 5,222 $ 5,456 $ 5,692 $ -2,542 $ 5,932 -2,647 $ 6,175 $ -11,896 $ -2,752 $ 6,422 $ -11,896 -2,859 6,671 13 14 Cash Available for Debt Service 16,437 $ 16,661 $ 16,888 $ 17.118 $ 17.352 $ 17.589 $ 17.828 $ 18.072 $ Revenue 15 Principal $ -5,748 $ -6,208 $ -6,705 $ -7,241 $ -7,820 $ -8,446 $ -9,122 $ -9,852 $ leveraged from the grant (modeled on next slide) 16 Interest (8%) $ -6,662 $ -6,202 $ -5,705 $ -5,169 $ -4,590 $ -3,964 $ -3,288 $ -2,559 $ 18.318 $ -10,640 $ -1,770 $ 18.568 -11,491 -919 17 Debt Fatia 18 Loan Balance Outstanding $ -83,273 $ -77.524 $ -71,316 $ 19 DSCR 20 1.32 1.34 -64,611 $ -57,370 $ 1.36 1.38 -49,550 $ 1.40 -41,104 $ -31,982 $ 1.42 1.44 -22,130 $ 1.46 -11,491 $ 1.48 -0 1.50 21 Depreciation Add Back 22 Tax Shield on Interest 23 Equity Ratio 24 Net Income to Equity 25 Equity IRR 26 Equity Payback Period 77 $ $ 11,896 $ 1,999 $ 11,896 $ 1,861 $ 11,896 $ 1,712 $ 11,896 $ 1,551 $ 11,896 $ 1,377 $ 11,896 $ 1,189 $ 11,896 $ 986 $ 11,896 $ 768 $ 11,896 $ 531 $ 11,896 276 20% $ -35,688 $ 6,026 $ 6.112 $ 6.190 $ 6,259 $ 6,319 $ 6,368 $ 6,405 $ 6.429 $ 6.439 $ 6.433 11.76% 5.75 Years#14Expansion Scenarios: Leverage Grant by Reinvesting Profit into 30% Equity of New, Identical Mini-Grids Every Two Years One MG every two years: steady, upward linear trend. Milken Innovation Center As many MGs every two years as our cash flow allows: exponential growth AGGREGATE CASH FLOW $450,000.00 $400,000.00 $350,000.00 $300,000.00 $250,000.00 $200,000.00 $150,000.00 $100,000.00 $50,000.00 Expansion Model 16 $350,000.00 14 $300,000.00 12 10 10 00 6 4 NUMBER OF MINIGRIDS AGGREGATE CASH FLOW $250,000.00 $200,000.00 $150,000.00 $100,000.00 $50,000.00 $- Π 1 3 5 7 2 $- 3 579 11 13 15 17 19 21 23 25 27 29 $(50,000.00) 0 $(50,000.00) YEAR Aggregate Cash Flows -Mini-grids Expansion Model 9 17 13 15 17 19 21 23 25 27 29 YEAR Aggregate Cash Flows -Mini-grids 120 100 80 60 40 40 20 20 0 NUMBER OF MINIGRIDS