Micro-grids for Rural Customers
Micro-grids for Rural Customers
Business Model Description
Micro-grids have the potential of providing affordable and clean energy for rural communities while also reducing the dependency on foreign energy supply. Micro-grids could be powered by small utility-scale solar systems with backup and storage capabilities to ensure reliable power supply. This project seeks to provide micro-grid power to rural communities in Belize.
Expected Impact
Increasing domestic generation will reduce power costs and reduce/offset carbon emissions.
How is this information gathered?
Investment opportunities with potential to contribute to sustainable development are based on country-level SDG Investor Maps.
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Country & Regions
- Belize: Orange walk
Sector Classification
Renewable Resources and Alternative Energy
Almost half of the energy in Belize comes from hydropower and from Mexico's Federal Energy Commission- average domestic renewable energy supplies accounted for 49% of total generation, while energy imports from Mexico accounted for 43% and fossil fuel generation the remaining 8% which indicates that there is a high dependence on energy from external sources, identifying the need to transition to cleaner and and alternative energy
Alternative Energy
As an independent power producer (IPP) a long-term power purchase agreement (PPA) can establish the Levelized Cost of Electricity (LCOE) which is based on the total installed cost (TIC), financing costs and the required operational and maintenance costs. This forms the rate at which the IPP/Developer will sell energy to the grid.
Belize's 2011 National Energy Policy Framework calls for increased public sector support for renewable energy projects. In addition Belize’s Nationally Determined Contributions (2021) call for 75% of generation from renewables by 2030.
On average domestic renewable energy supplies accounted for 49% of total generation, while energy imports from Mexico accounted for 43% and fossil fuel generation the remaining 8%. Micro-grids have the potential of providing affordable and clean energy for communities while also reducing the dependency on foreign energy supply. Micro-grids could be powered by small utility-scale solar systems with backup and storage capabilities to ensure reliable power supply.
High importation costs (taxes) when acquiring the necessary photovoltaics (PV) equipment, high financing costs with short terms from sources, high transaction costs if financing is secured from external banks (exchange fees, etc.) and capital exchange controls could create timing issues with repatriation of dividends (for foreign investors).
Pipeline Opportunity
Micro-grids for Rural Customers
Micro-grids have the potential of providing affordable and clean energy for rural communities while also reducing the dependency on foreign energy supply. Micro-grids could be powered by small utility-scale solar systems with backup and storage capabilities to ensure reliable power supply. This project seeks to provide micro-grid power to rural communities in Belize.
Business Case
Market Size and Environment
5% - 10%
The Energy Unit under the Ministry of Public Utilities, Energy and Logistics and Logistics Tours Ministerial Departments conducted an assessment to identify communities who do not have access to electricity. Utilising data from this report and external assumptions as a benchmark, a microgrid business model was built.
Indicative Return
5% - 10%
The Energy Unit under the Ministry of Public Utilities, Energy and Logistics and Logistics Tours Ministerial Departments conducted an assessment to identify communities who do not have access to electricity. Utilising data from this report and external assumptions as a benchmark, a microgrid business model was built.
Investment Timeframe
Long Term (10+ years)
Typical solar module lifespan is estimated at 30-35 years. PPAs tend to be 15 years with the potential to renew for an additional 15 years. Investment timeframe defined based on solar equipment useful lifespan and assuming original PPA is successfully renewed at least once.
Ticket Size
USD 1 million - USD 10 million
Market Risks & Scale Obstacles
Capital - Limited Investor Interest
Capital - CapEx Intensive
Impact Case
Sustainable Development Need
Improve electricity coverage at an affordable rate as 1,156 households accross various rurual communities in the country presently do not have access to electricity.
Gender & Marginalisation
Some rural areas in Belize still lack energy access.
Additionally, single parent households which are primarily headed by women, typically do not have access to affordable electricity rates.
Expected Development Outcome
Increasing domestic generation would help to reduce cost of power volatility and in particular solar generation would help to reduce/offset carbon emissions.
An alternative source of energy can potentially increase the coverage of the rural population at an affordable rate.
Gender & Marginalisation
Energy access to persons in remote areas who currently do not have access to effeciently carry out day-to-day activities.
Single parent households which are primarily headed by women, would have access to more affordable electricity rates.
Primary SDGs addressed
7.1.2 Proportion of population with primary reliance on clean fuels and technology
7.2.1 Renewable energy share in the total final energy consumption
7.1.2 - In 2018, 83.0 % of the population relied primarily on clean fuels and technology. 7.2.1 -The share of renewable energy in the total final energy consumption was 38.7% in 2017.
7.1.2 Implement an interconnection policy and regulatory framework to facilitate distributed renewable power generation by 2022 7.2.1-Achieve 75% gross generation of electricity from renewable energy sources by 2030 through the implementation of hydropower, solar, wind and biomass, including in the tourism sector
13.2.2 Total greenhouse gas emissions per year
Total greenhouse gas emissions (kt of CO2 equivalent) in Belize was 1,194.71 in 2017
Reduce GHG emissions and increase GHG removals related to land use change totalling 2,053 KtCO2e11 cumulative over the period from 2021 to 2030
Directly impacted stakeholders
People
Planet
Gender inequality and/or marginalization
Outcome Risks
Negative impacts are not likely to occur.
Impact Risks
Stakeholder participation risk - Indigenous communities can be reluctant to allow for private sector investments within their communities.
Impact Classification
What
Affordable and sustainable energy distribution.
Risk
Negative impacts are not likely to occur.
Impact Thesis
Increasing domestic generation will reduce power costs and reduce/offset carbon emissions.
Enabling Environment
Policy Environment
lize's 2011 National Energy Policy Framework calls for increased public sector support for renewable energy projects.
Financial Environment
Potential fiscal incentives such as duty exemptions from the government on equipment to facilitate microgrid projects
Regulatory Environment
he PUC is responsible for regulating all public utilities in Belize (electricity, water and telecommunications). Regulatory authority for the electricity sector is derived from the Public Utilities Commission Act, Belize Electricity Act
Belize Electricity Limited is licensed to transmit and distribute electricity throughout Belize which shows the infrastructure support the country has to increase energy access.
Marketplace Participants
Government
Ministry of Public Utilities (Ministry of Energy) is responsible for setting national energy policy.The Public Utilities Commission (PUC) is the electricity regulator approval of rates, IPPs and transmission and distribution.
Private Sector
Independent power producers (IPPs)
Public-Private Partnership
Belize Electricity Limited is the country's transmission and distribution company maintains and operates a national grid. The Government of Belize (GOB) has direct ownership of 32.6% interest in the Company, whilst the Social Security Board (SSB) owns 31.2% resulting in public sector interest of 63.8%. Fortis Cayman Inc. owns 33.3% interest and over 1,500 small shareholders own the remaining 2.9% interest in ordinary shares.
Target Locations
Belize: Orange walk
References
- ("1) Belize Electricity Limited. (2020). Annual Report. Retrieved from https://www.bel.com.bz/annual_ reports/ Annual%20Report%202020.pdf " "2) International Renewable Energy Agency. (2018). Renewable Capacity Statistics 2018. Retrieved from https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2018/Mar/IRENA_RE_Capacity _Statistics_2018.pdf " "3) Belize Electricity Limited. (2018). Annual Report. Retrieved from https://www.bel.com.bz/annual_ reports/Annual%20Report%202018.pdf " "4) Bunker, Kaitlyn, Roy Torbert, et al., (2018). Belize Consolidated Project Plan. Rocky Mountain Institute. Retrieved from http://www.rmi.org/Belize-consolidated-project-plan " "5) Energy Transition Initiative. (2015). Energy Snapshot: Belize. Retrieved from https://www.nrel.gov/docs/ fy15osti/62707.pdf " "6) CO2 Scorecard. Retrieved from https://co2scorecard.org/countrydata/Index/4136.Retrieved on August 2021" "7) Belize Electricity Limited. (2018). Annual Report. Retrieved from https://www.bel.com.bz/annual_ reports/Annual%20Report%202018.pdf "
- ("8) Belize Electricity Limited. (2020). Annual Report. Retrieved from https://www.bel.com.bz/annual_ reports/ Annual%20Report%202020.pdf" "9) United Nations Foundation. (20). Microgrids for Rural Electrification: A Critical Review of Best Practices Based on Seven Case Studies. Retrieved from https://www.cmu.edu/ceic/assets/docs/publications/ reports/ 2014/micro-grids-rural-electrification-critical-rev-best-practice.pdf "
- (10) Government of Belize. (n.d). Preliminary Ranking of Villages for Mini-grid System