Prosumer Empowerment through Community Power Purchase Agreements: A Market Design for Swarm Grids

Abstract

Between 2010 and 2019, the population without access to electricity decreased from 1.2 billion to 759 million. Electricity access can be provided in two ways: either through top-down, centralized electrification via national grid extension or bottom-up, decentralized through decentralized renewable energy solutions (DREs), that is, standalone solar systems, mini grids, and swarm grids. The IEA estimates that the number of people connected to DREs between 2010 and 2019 more than doubled, reaching 11 million people, while GOGLA et al. calculate that by 2019, 105 million people had access to off-grid solar systems (lanterns and solar home systems). To achieve the United Nation’s Sustainable Development Goal 7 in a bottom-up dominated approach, Tilleard et al. estimate that in Africa alone, by 2030, more than 290 million people could be connected to mini grids (this translates to more than 4,000 mini grids). DREs represent the most economically viable option for servicing the part of the population that is too remote or for which the national grid extension is too expensive. Advancing the top-down electrification process, countries of the Global South, with support of international aid and development funding, are accelerating their national grid expansion. As the national grid reaches their customers, the private sector (DRE companies) is put at danger of having to either relocate their assets or abandon them. At the same time, the DRE end-user, reached by the national grid, faces several challenges due to being exposed to a double infrastructure. The challenges can be of technical and financial nature caused by assets that are becoming abundant or need additional equipment to be suitable for national grid and DREs.