By Steven Bayne, Aggreko
Maintaining and updating aging power distribution infrastructure can create a huge strain on utility resources, with maintenance of transmission lines often running into hundreds of thousands of dollars per kilometer.
Rural power distribution brings with it a specific set of challenges. The length of distribution lines and their susceptibility to the elements create maintenance problems across large sections of the grid, and the cost of higher-voltage lines means replacing them is an expensive operation.
Rural electrification is not a niche issue globally. It is estimated that seven out of eight rural Sub-Saharan Africans do not have access to electricity at all, alongside as many as 300 million people in India. Of course, many more face poor quality electric power across the globe-it is not just a “developing nation” issue.
Utilities that distribute power to rural customers need to find a balance between the cost of supplying electricity and the value of maintaining permanent infrastructure.
Preventing widespread power failure and protecting reliability, is the No. 1 concern of most electric utilities. The power industry plays a vital role in determining quality of life, generating jobs and developing growth.
The weather plays a crucial role, too. Line failures, disruptions and critical equipment damage caused by storms and extreme weather conditions all play a part in rural power infrastructure management. Add to this decreasing voltage levels along distribution lines and reduced reliability as they wear out, and utilities face huge costs simply to maintain the status quo, let alone to overcome issues that can cause havoc for end users in remote locations.
Not addressing these concerns can lead to a collapse of power infrastructure in rural communities-and often investment is at the heart of the matter.
For example, Nigeria has lost around 50 percent of its aging power generation, transmission and distribution infrastructure because it has not been maintained, upgraded or replaced. This is according to a Nov. 3, 2015, Vangard (a Nigeria-based media company) report.
About half of Nigeria’s population lives in rural communities and the lack of electricity in these rural areas is a major problem. A poster paper titled “Rural Electrification Infrastructure Development in Nigeria Using 0n-Grid and Off-Grid Sources” presented by Kelechi Eke at the 2014 World Engineering Conference on Sustainable Infrastructure held in Abuja-Nigeria, covered Nigeria’s rural electrification problems.
Eke said experts believed providing electricity in rural areas would catalyze the growth of agricultural industries, which would help curb some of the wider socio-economic issues Nigeria faces. The lack of investment in that infrastructure, however, has instead contributed to Nigeria’s problems.
To deal with these concerns, utility companies are starting to look at the bigger picture. What’s the economic impact of rural power distribution? Where are the pinch points both to the cost of maintaining the line and to the end user in losing the line? What are the alternative solutions to laboriously maintaining extremely expensive, lengthy and aging distribution lines into rural areas?
Reducing both the cost of supply and consequently the cost of electricity consumption is the end game. But looking at the wider implications can also lead to the establishment of entirely new energy markets.
Peru is a good example. It has one of the world’s fastest growing economies and is rich in energy resources. With vast rural forestlands, Amazonian plains and enormous mountain ranges, however, poverty is deepest and most common among people living in these remote rural areas.
Since 2006, Peru has increased access to electrical power to more than 100,000 low income rural households through a combination of extending its national grid and using distributed generation in the form of solar power systems. This is according to “Energy Case Study: Peru,” published on Oct. 13, 2015, by CFI.co.
At a cost of $145 million, schools, health clinics and community centers benefited, as did households and small businesses. In addition, the project was instrumental in establishing a national tariff for off-grid photovoltaic systems, leading some distribution companies to improve rural electrification as part of their commercial investment.
Another example is Australia, which despite being a highly urbanized nation, faces significant challenges in reaching its rural communities. Investment in power transmission infrastructure can cost billions of dollars, which may not be recovered.
Aggreko was involved in one project that illustrates the issue in microcosm.
Rural regions in Western, Northern and North Queensland face costly maintenance and replacement of single wire earth return (SWER) lines to small communities and even to single farms. Entirely reliant on one, sometimes up to 280-km SWER line, the cost of energy to the farm was increasing each year due to the huge maintenance and repair expenses required to keep the link in place.
Each distribution company involved received government subsidies to provide energy distribution in the region. In addition, they owned the transmission line to the community or farm. An audit of the maintenance requirements for these lines put the cost of long-term repairs around $10 to $15 million Australian dollars ($7.3 to $11 million U.S. dollars) per line. This made the cost of providing electricity to these farms extremely high.
That cost-benefit analysis led to wider thinking about more cost-effective solutions. Aggreko was asked to assess the cost and rewards of on-site energy production using a generator. While this would render the distribution line redundant, the cost of energy, while higher than its current level, could represent a huge saving for the farm, utility and government.
The solution was for Aggreko to install a mix of small scale batteries, diesel generation and solar at the farms, resulting in a more reliable supply. Aggreko estimated, based on the projections from upgrading the lines, that even after 20 years of use, the government would still be saving money.
Regulatory changes were required to implement this solution because customer had to be “disconnected.” This meant that the distribution company no longer received subsidies for those disconnected customers and, therefore, faced a potential loss of annual revenue, but the long-term overall savings couldn’t be ignored.
What’s Next for Rural Energy Distribution?
Utility businesses are right to look at varied and less obvious solutions. Rural communities play a vital role in societies around the world. In many nations, lack of power is affecting millions of people. It is important, therefore, for distribution utilities and regulators to look at the most effective way to counteract aging infrastructure.
Whether that means creating new energy markets through investment or being prepared to say “no” to repairing old transmission lines, innovative thinking will only become more important as time moves on.
Steven Bayne is an Aggreko sector manager for IPP/utilities in Australia-Pacific. Aggreko PLC is a provider of modular, mobile power and adjacent product solutions.