What can renewable energy offer to entrepreneurs in a country with 100% of grid coverage and one of the cheapest electricity tariffs in the world?
Kyrgyzstan is a relatively small country, with over 90% of the territory covered by mountains, which offers a lot of opportunity to produce organic foods. Out of over 6,3 million of total population, 66% live in the rural areas. Agricultural production employs 20% of labor force and accounts for 12% percent of country’s GDP.
Electricity generating capacity of the country equals 3945 MW with an annual output of 12-15 billion kWh. Although 92% of electricity is produced by hydropower plants, and can be considered “green”, the share of renewable energy (small hydropower plants) in 2018 was only 1.38%. Household consumption accounts for 57% of the total distributed electricity and 85% of total distributed heat across the country. At the same time, the level of physical deterioration of assets of the electric power industry is up to 50-70%, which creates high risks for the stable functioning of the industry, contributes to the growth of accidents and failures of power equipment during peak seasonal overloads.
Raising the interest in renewables
In 2013, the country consumed all electricity generated, and next year the country moved from the category of export-oriented countries to the category of import-oriented ones.
An increase in electricity consumption over the last 8 years equals 83% with an increase in population by only 17%, and a further disproportionately large increase in electricity consumption can be predicted from population growth only. There is no stock of generating capacities in the country to ensure the growth of electricity consumption.
Electricity tariff for households is heavily subsidized and equals to 0.01 USD, for businesses – 0.03 USD per kWh while the cost of production equals to 0.026 USD. Lack of management transparency has resulted in a loss of trust - household surveys indicate that over 65% of respondents said that electricity tariffs are too high and should be reduced.
High dependence on the tariff policy in the energy sector leads to the accumulation of losses of the energy sector, resulting in need of renovation and investment, ever-increasing debt financing, and lack of support for renewables. As a result, very few experts, products and firms are available in the renewable energy market, and almost all are based in Bishkek, making it difficult for consumers to get consultations.
Limited market leads to limited resources for informing the potential consumers about the benefits of renewable technologies, limited demonstration possibilities, higher prices and the low quality of service and after-sales support from suppliers. So, how do we interest consumers in renewable energy?
Solutions: tailoring to specific consumers
The cost of a 1kW PV system with 9.6 kW battery backup starts at 4000 USD, with a simple payback of 60 years, and 135-liter integrated solar water heating system costing around 1500 USD with a simple payback of 17 years at business tariffs.
To promote renewable energy in such conditions, we tailored to specific consumers and businesses in Kyrgyzstan with adapting or creating market and technology solutions, which would be cheap and reliable enough in conditions of cold winters and unstable electricity supply.
Specific consumers, first, all entrepreneurs involved off-grid activities: cattle grazing, beekeeping, eco-tourism, as well as businesses involved in the production of eco-foods and herbs. Three of the most promising solutions, promoted as part of Energy Access SME Development Project, supported by OFID, include solar driers, solar chargers as well as pre-packaged solar PV systems.
For example, a forced convection solar drier, adapted and upgraded to be mobile and to have a back-up electric drying, can dry up to 10 kg of fresh product and is being marketed at 300 USD. Adapting a more efficient solar drier design has allowed decreasing the cost of drier per kilo of fresh produce from 55 to 33 USD and increase the volume of dried product 10-fold per square meter of drier’s tray area.
Over 25 such small solar driers have already been sold through local micro-financial institutions, and a larger solar drier, able to dry up to 100 kg of fresh product in one batch has been developed and is now ready to be used by small cooperatives.
Solar charger – is another product, developed specifically for remote tourist camps, which otherwise would use a diesel generator for producing electricity for several light bulbs, supporting a small fridge and charging electronic devices of guests. The 50W and 300W versions are available for different sized camps, at the equivalent of 347 USD and 835 USD.
For example, the large solar charger was successfully used during Kol Fest - eco-art and music fest in June 2019, organized on the southern coast of Issyk-Kul, bringing together people from different countries. Solar charger provided energy for smartphones and power banks of over 100 festival participants, who otherwise would have been left without power. The festival participants said that they would pay for charging – at 25 US cents per charge; it would allow a small business to pay back the full cost of the solution within 1 summer season.
A solar system with 300W solar PV panel, 225Ah battery power, controller of 25А and 0,5kW invertor, needed to receive “regular” 220V electricity from 12V, stored in batteries is offered for equivalent of 970 USD. The energy, provided by the system should be enough to support the basic needs of a family, who can use it to watch TV, separate milk, keep a small refrigerator going and ensure that their off-grid home is well-lit with LED lights.
The solar solutions, adapted for the Kyrgyzstan market seem to be modest – almost too simple, but we tried to find the right balance between comfort and financial considerations and see them as seeds for the green energy revolution.