Integrating Further? an indepth Case Study of an Integrated Rural Energy Utility
Somerset West, 08.04.2009 - James Smith
Restio Energy Ltd has made available an indepth case study of an Integrated Rural Energy Utility in Africa, NuRa. This is the second report emanating from a REEEP-funded project entitled 'An Integrated Rural Energy Utility Roadmap for Africa' and seeks to understand the feasibility of establishing Integrated Rural Energy Utilities (IREUs) in Africa.
NuRa is an energy service provider for 15,000 households and operator of 8 energy stores across northern KwaZulu-Natal. The main operational area has approximately 100 000 households, of which 65% are without electricity. For off-grid electricity, there is only one technology option, solar home systems (SHS), but there are a wide variety of amenities and cost options available. The solar home system fee covers not only the “rental” of the system, but also the cost of some maintenance and replacement of worn equipment (excluding lightbulbs). On the thermal side, the energy stores sell LPG and ethanol gel fuel (and related products).
The case study report provides a detailed review of NuRa’s current day operations and finances, including a description of how the utility has evolved to reach this point, as well as integration options for the future including diversification into other technologies and new client groups.
The case study of NuRa yields some tentative lessons for the future establishment of IREUs in Africa:
- Rural utilities need to be far for more dynamic and flexible than large-scale, grid-based ones. This has been well illustrated with NuRa needing to make a “rapid plan” when government SHS subsidies were twice put on hold;
- Government subsidy proved critical for NuRa in delivering solar home systems, since the (generally) low-income market that the IREU services is not able to afford to purchase the system outright;
- More integrated utilities present greater opportunities for mixed customer markets, not having to rely exclusively on impoverished rural households with their concomitant income constraints and uncertainties. Being able to service the requirements of rural-based commercial concerns, public infrastructure, etc. as well, will afford the utility greater income stability and opportunity, helping to establish a model that can absorb the uncertainties of the rural household market;
- The question of “when” to integrate is still to be answered. Should an IREU be established from the start, where all products and services are relatively equally valued/invested in, or does it make more business sense to start with a core business (as NuRa did with its off-grid SHS business) and evolve the utility over time?
You can download the full case study by clicking the link below.