Assessing the impacts of irrigation loads and capital subsidies on minigrids: A case study of Kenya

Abstract

Minigrids offer a promising electrification solution for rural communities beyond the grid in developing countries in Sub-Saharan Africa (SSA). However, their economic viability is hindered by low electricity demand which results in high minigrid tariffs as compared to centralized utilities. This underscores the need to explore technical and policy measures to achieve grid parity tariffs and hence energy access equity as well as accelerating rural electrification. Productive use of electricity (PUE) has potential to mitigate the low demand barrier and enhance minigrid viability. In this paper, we present an integrated modeling framework for determining the optimal subsidy needed to achieve grid parity for irrigation-anchored minigrids in SSA, with Kenya as a case study. We focus on irrigation due to the economic importance of agriculture in SSA as well as the high prevalence of farming activities in rural SSA. We estimate irrigation energy demand using projections from the Global Change Assessment Model (GCAM) for 2020–2045 and formulate the minigrid model as a constrained optimization problem to minimize daily energy costs over a year with hourly resolution. The results from our techno-economic assessments show that incorporating irrigation loads in the minigrid operation can reduce their tariffs by up to 41%, with final results dependent on geographical location and the forecasted climate future scenarios. Sensitivity analysis indicates that a 50% subsidy is required to achieve grid parity in irrigation-anchored minigrids, while communal models (without irrigation as a PUE) require an estimated 75% capital subsidy to realize grid parity tariff. Our model and its results can be used as a high-level framework of reference when planning minigrids with irrigation loads in developing countries.