Electricity in Transition: Renewables in Developing Countries

The energy sector is undergoing a major transformation, becoming more decentralized and more interactive than ever before. Growing numbers of independent renewable generators are changing consumer behavior and posing challenges for current utilities.

Renewable energy micro-grids—localized, discrete renewable energy power generation systems, independent from traditional grids—have been widely praised for offering more choices to consumers from a variety of electricity sources other than conventional government or corporation-backed electricity supplies. Additionally, renewable micro-grids have the potential to transform the electric system and improve access to modern energy in developing countries, which is an important step in addressing issues of inequality. However, volatile prices of fossil fuels, as well as technical obstacles regarding intermittency and storage, raise questions about whether renewable energy is a reliable source of power. In developing countries, where relatively weaker infrastructure poses greater challenges, these doubts prove to be particularly strong.

A recent study published by the World Resources Institute and Prayas Energy Group examines current features and obstacles of electricity grids in four developing countries: Brazil, China, India, and Kyrgyzstan. Across these countries, the evolution of renewable energy and the development outlook for electrical systems vary, but several trends including rapidly increasing capacity and investment in renewable energy, rising numbers of potential consumers, and an improved structure that is transitioning towards a more liberal market are consistent throughout.

Overall, modern electrical grids need a more comprehensive and compatible system to accommodate both conventional electricity generated from fossil fuels as well as electricity generated from independent renewable sources. Jairaj et al. suggest that decision makers in developing countries should construct a modern electrical grid system that allows them to reap the economic, environmental, and social benefits such infrastructure provides.

The authors identify three key areas that need to be addressed for a smooth transition to modern electrical grids: technology and infrastructure, institutions, and pricing and equity.

First, energy generators do not produce electricity around the clock. Energy output from wind turbines and solar panels rises and falls according to the time of day and the climate. This feature, defined as intermittency, can cause problems with compatibility and interconnectivity, which contributes to difficulties in maintaining a balance between energy demand and supply.

Second, while centralized generation was the main source of electricity in the past, distributed generation is becoming increasingly adopted. Existing institutions lack long-term planning that accounts for potential future changes in consumer behavior and supply and demand patterns. This means that longstanding traditional models of highly regulated, pre-planned systems in traditional institutions need reevaluation. Moving forward, a more interactive and transparent institutional framework that involves stakeholders supporting advanced decision-making, management, and regulation of modernized grids will be necessary.

Lastly, thorough research on pricing is crucial to achieve financial stability. Unreasonable electricity taxes and inefficient collection have caused capital shortfalls and power infrastructure deficits. With increasing networks of electricity flowing between producers and consumers, and the volatile prices of fossil fuels, costs must be evaluated reasonably. Designing an equitable distribution of revenues and costs is necessary to safeguard both accessibility to electricity for populations in need as well as the sustainability of a modernized electric power system.

Though developing countries have only recently begun interpreting the implications of rapid changes in electric systems, it is crucial that policymakers address the technological, financial, and institutional challenges of expanding the use of renewable micro-grids. Understanding the implications of these rapidly advancing trends on developing countries will shape the future of how countries produce and consume electricity as well as allow them to take full advantage of renewables’ economic and social potential.

Article source: Jairaj, Bharath, et al. “The Future Electricity Grid: Key Questions and Considerations for Developing Countries.” World Resources Institute (2016): 4-52.

Featured photo: cc/(moommama, photo ID: 504696386, from iStock by Getty Images)