Access to electricity contributes to increase productivity, enables and improves the delivery of social and business services from a wide range of village-level infrastructure such as schools, financial institutions, and farming tools [1].
Considering the Colombian case study, energy access in rural and remote areas represents one of the most challenging issues [2]. Although the country has a high average electricity coverage index (99.59% in urban areas and 84.84% in rural areas), two-thirds of the national territory correspond to non-interconnected zones (ZNI) [3]. During the last decade, the national government, trough the Institute of Planning and Promotion of Energy Solutions for Non-Interconnected Zones (IPSE), has installed 16 hybrid microgrids across the country. However, they are not enough to extend the service to approximately 1565 small localities without electricity access. In addition, the Mining and Energy Planning Unit (UPME) launched a series of sustainable rural electrification plans for Colombia’s departments (PERS), but only five departments have enacted PERS: Nariño, Guajira, Cundinamarca, Choco, and Tolima [4].
Although state-owned utilities have traditionally carried out electrification, limited public and donor funds have proven insufficient to meet the aggressive access goals that governments and international organisations have set [1]. Main barriers include: a lack of clear and effective public policy, high levels of risk, lack of enough subsidies, low population density or isolated areas, payment culture and low willingness to pay, low income families, and potentially low returns.
Although extending the grid could be also an alternative, high costs associated with the generation, transmission and distribution of electricity in these zones, have made that provision of the electricity service is mainly performed by means of diesel generation plants. Therefore, there is the need of more investments to promote the installation of hybrid microgrids in these areas.
This paper will focus on the benefits and challenges of enabling microgrids in the electricity supply system in rural areas, specifically in milk producer areas. Due to a lack of clear and effective public policy and high levels of risk and potentially low returns, microgrid electrification studies are not attractive opportunities for the private sector. Specifically, there are two primary drivers of uncertainty for investors: fuel price and electricity demand volatility.
Interviews constituted the primary source of information for this research. Interviewees were selected in order to obtain comprehensive insights from the different stakeholders involved in the electricity market: generators, regulators, public agencies, retailers, consumers, and academic institutions. We analysed the qualitative data through the software NVivo.
Results from this study will support the formulation of policy recommendations for energy planning in off-grid rural areas, as well as enabling the participation of private investors in microgrids projects.
