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Research into electricity reliability to be showcased at Grid Reliability and Utility Operations Conference, Ghana, hosted by EEG, ESMAP and the MCC

As more and more people living in developing countries gain access to electricity, the focus of policy makers is starting to shift towards understanding the quality of that access, and how to improve the reliability of on-grid electricity. In February 2020, EEG, in collaboration with the Energy Sector Management Assistance Program (ESMAP) and the Millennium Challenge Corporation (MCC), is hosting a Grid Reliability and Utility Operations Conference in Accra, Ghana, to showcase some of the research being carried out in this area. Simon Trace, EEG’s programme director, explains more.

In discussions about energy in the developing world, the primary focus is often the one billion people without access to electricity. Low access rates and insufficient installed capacity are fundamental issues that affect livelihoods and economic growth, so, understandably, many investment programmes aim to deliver new connections and the new generation capacity required to support them.

However, in many developing countries, urban access rates are relatively high (over 75 per cent), with many households and businesses already connected to the grid. Here, the primary issue is poor electricity reliability, rather than lack of access.

 

The impact of poor reliability

Developing countries are plagued by chronic load shedding (rolling electricity shutdowns, which are scheduled and controlled) and unplanned blackouts. Power outages are typically related to the basic capacity and quality of the electricity system – being, for example, a result of insufficient electricity generation, network fragility (leading to breakdowns on transmission and distribution lines, and in transformers and other equipment), or maintenance requirements.

Outages can last for hours, even days, and can be widespread and frequent. For example, according to World Bank Enterprise Surveys data, in 2013, firms in Ghana experienced over eight power outages in a typical month. In 2015, firms in Ethiopia also reported over eight per month. In Nigeria during 2014, there were 32.8 outages in a typical month.

And if electricity is unreliable, the gains from expanding access will of course be limited. Reliability issues are often associated with a reduction in the demand, use, and social benefit of electricity. Frequent or long-lasting power outages, coupled with voltage fluctuations (brownouts), are thought to discourage investments in welfare-improving and income-generating electrical appliances, and reduce the output from existing ones. This contributes to low overall electricity consumption and constrains the economic wellbeing of households and small businesses.

For some households and firms, spending money on alternatives to reliable grid power, such as backup generators and voltage regulators, becomes a necessity, reducing the amount they can spend on more profitable investments.

In terms of the macroeconomic impacts of power outages, studies suggest that the costs may be significant – in the range of 2-3 per cent reduction in long run GDP per capita. The 2013 World Bank Enterprise Surveys found that in Ghana, 61.2 per cent of businesses saw electricity reliability as a major constraint.

In South Africa, the recent load shedding implemented by utility Eskom as a result of technical faults and maintenance issues at its power stations has threatened economic growth. One report suggested it could have cost the economy as much as R5 billion a day, another that GDP is forecast to grow less than one per cent this year, with the problems at Eskom being a main contributing factor.

 

The challenges

Improving electricity reliability can be hard to achieve, however. To deliver a reliable supply to customers, a utility needs to follow appropriate operational processes and requires significant ongoing investment. But in many developing countries, utilities face capacity constraints, and resources for operating, maintaining, and upgrading infrastructure are limited. South Africa’s Eskom, for example, has reportedly battled to meet demand for electricity because most of its plants are old and have been poorly maintained.

In addition, electricity tariffs in developing countries tend to be set below cost-recovery levels, and inaccurate meter readings, non-payment of electricity bills, and theft (through meter tampering or directly tapping into electricity lines) make revenue collection challenging. In many countries, electricity theft is highly political (reflecting the often-prevailing view that energy is a right, rather than a private good) and legal penalties are not enforced.

Utilities are also facing the challenges of an evolving technological landscape. For example, renewable generation requires flexibility to maintain system stability, and even in relatively small systems, suboptimal, inefficient dispatch could result in significant unnecessary costs. There is also the entrance of private players, such as Independent Power Producers (IPPs), to consider, resulting in new tariff and market structures.

In addition, in order to improve reliability, a utility needs solid information about grid performance – yet most countries don’t have enough data to understand even the highest-level reliability issues. Utilities have very low-quality information on system outages; in fact, many won’t know there has been one unless a customer reports it. Even when an outage is reported, the utility may not know when it started or how long it lasted, how many customers were affected, or what remedy may be needed.

 

The need for research

The scope of these problems is not well understood, and few studies have analysed the causes and consequences of outages, or the ways in which policy makers can address them. Therefore, important operational and investment decisions are being made by utilities and governments without them knowing the frequency, duration, and geographic extent of power outages and voltage fluctuations, or the impact they have on the economy. 

Reliability is one of EEG’s priority focus areas, with several projects investigating ways of improving the reliability of electricity systems in developing countries. On Tuesday 4 and Wednesday 5 February 2020, EEG, in collaboration with ESMAP and the MCC, is hosting a Grid Reliability and Utility Operations conference in Accra, Ghana, to showcase some of these projects, and other relevant research from outside the EEG programme.

The conference will focus on the challenges developing countries face in delivering reliable, sustainable electricity to customers. Topics are expected to include: the impacts of unreliable electricity supply and the role of technology and utilities in increasing reliability; the impacts of non-technical losses and the remedial measures available; power sector reform (including tariff setting and market structures); dispatch diagnostics; and the technical and human resource constraints facing utilities.   

The keynote speaker will be Martin Eson-Benjamin, chief executive officer at Ghana’s
Millennium Development Authority (MiDA). Confirmed presentations include:

While electricity access remains a fundamental issue for developing countries, more attention is starting to be paid to reliability of supply and the operations of the utilities tasked with the day-to-day delivery of on-grid electricity – but there are many knowledge gaps to address. The EEG conference aims to provide a forum for international academics and policy makers to highlight and discuss the latest research relating to grid reliability in low- and middle-income countries.

If you would like to attend the event, please register your interest here.

By Simon Trace