Linking household and productive use of electricity with mini-grid dimensioning and operation

Off-grid systems, and mini-grids in particular, are expected to play a significant role in improving electricity access to one billion people until 2040. One of the major challenges for mini-grids is associated with their high costs, low financial viability and local development impact. Productive use of electricity can be an important driver of local development and impacts the total load in a mini-grid. By using a mixture of high-resolution (minutes) measurements and long-term data (years) on electricity expenditures and purchased electricity from a mini-grid in the Tanzanian highlands, we analyse the technical and economic impact from household and productive use of electricity, respectively. The high-resolution data is analysed using performance indicators and the long-term data using regression tools. We find that a mixture of household use and productive use of electricity provides both technical and economic benefits for the operator. In addition, we find that while productive use customers only represent 25% of the customers, they generate 44% of the operator's income. Furthermore, productive use of electricity customers are also likely responsible for the peak demand in the mini-grid, which occurs during day time. Lastly, we find empirical evidence suggesting that expenditures and demand are unit elastic, which has implications on economic policies for supporting rural electrification. (C) 2020 The Authors. Published by Elsevier Inc. on behalf of International Energy Initiative.

Automated summary

Off-grid systems, particularly mini-grids, are expected to help improve electricity access for one billion people by 2040. The productive use of electricity by customers in mini-grids has important economic value for operators and may contribute significantly to peak demand.