1.1. Background and Theoretical Foundations
Ensuring reliable and affordable access to electricity is paramount for households and communities to attain fundamental capabilities [
1]. The useful energy services associated with adequate access to electricity are a cornerstone for economic development [
2,
3] but are also indispensable for advancement across diverse dimensions, i.e., education, nutrition, sanitation and health [
4,
5,
6]. Furthermore, access to electricity is a socio-technical imperative, fostering social innovation, which is pivotal in facilitating a low-carbon energy transition, promoting civic empowerment and addressing overarching social objectives [
7].
On the global political stage, the acknowledgement of the critical role of universal access to electricity is reflected in target 7.1 of the Sustainable Development Goals (SDGs), adopted by the United Nations in 2015 [
8]. While notable progress has been documented in the preceding decade, the realization of universal electrification by 2030, as stipulated within SDG 7.1, remains at a considerable distance. Globally, more than 675 million people lacked access to electricity in 2021 [
9]. Rural regions are disproportionally affected, with eight out of ten people without access living in rural areas [
9]. In Sub-Saharan Africa, where 567 million people lacked access to electricity in 2021, the disparity in electricity access rates between urban and rural areas has risen in recent years [
9]. This trend can be attributed to the financial and technical challenges of reaching the rural population. In rural areas, which are only sparsely populated and where purchase power and electricity consumption can be low [
10], extending the national power grid to supply electricity is often economically not viable [
11]. Here, isolated renewable-based off-grid systems can be a cost-efficient and sustainable solution to enable electricity access to communities (e.g., [
11,
12,
13,
14]) and provide communities with a basis for conducting activities, which enhance development across the various dimensions interlinked with electricity (see, e.g., [
2,
6,
10,
15]).
More granular research on the interlinkage of access to electricity and development on the micro-level (see, for example, [
16]) has shown that while access to electricity via off-grid energy systems can stimulate development in rural communities, access to electricity alone does not guarantee development. One must note that the literature assessing the correlation between electricity access and development often identifies economic metrics as a central effect measure for development, e.g., household income (e.g., [
16,
17]). Given the significance of household income for causally related household activities, which may lead to changes evoking development in other dimensions [
17], this is a meaningful indication. Nevertheless, evidence of projects, in which access to electricity in rural locations was enabled and no direct effect on income or well-being was observed, is abundant (e.g., [
18]). In fact, the impact of electrification projects on enhanced development (i.e., increasing economic activities or household income) seems to crucially depend on the community’s
choice of how to
use the electricity within the scope of action, which is facilitated by the local energy system. Thus, the literature evidence is strong that the outcomes and impact of electrification projects (note that in this paper, we understand—as per the logical framework theory—“outcomes” as the project’s effects at the target-group level, as opposed to “impact” as the project’s effects at the societal or regional level) depend on (i) the
ability and
choice of the community to
use the electricity for
productive activities [
19,
20]; (ii) external factors supporting the community in their
capacity to
utilize electricity for productive activities, e.g., finance, training, awareness, etc. [
15,
17]; and (iii) the degree to which the energy system design facilitates the community’s choices.
The use of electricity for productive uses is commonly referred to as productive use of electricity (PUE), as opposed to consumptive use of electricity in households [
19]. Such PUE commonly comprises electrically powered machinery used by the community, according to their operational preferences, and may be directly integrated into the electricity supply system, which serves residential loads of the community. Thus, the PUE appliances and the user of the PUE asset directly influence the operational requirements of the electricity supply system and its financial viability. Energy system planners (note that we use the term “energy system” instead of “electricity system” to account for potential additional energy vectors in the system) pay increasing attention to PUE system integration and PUE user behavior. In addition to supporting the stimulation of economic and social development of the community or individual user [
15,
17], PUE appliances can benefit the financial viability of the energy supply system. PUE appliances typically consume more energy than residential appliances in rural villages [
21,
22] and may therefore provide a reliable (and relatively larger) source of income for the system operator compared to domestic loads (see the relevant discussions on “anchor loads” as relatively large non-domestic loads in [
23]). Prominently, the financially viable operation of off-grid energy supply systems serving residential customers with a low electricity consumption poses significant challenges. Including PUE assets as anchor loads can increase the energy system utilization rate and provide a predictable high off-take guarantee, which in turn improves the projects’ bankability [
21] and de-risks electrification projects for the private sector [
10]. One must note that the prevailing narrative in the relevant literature that PUEs represent a reliable and relatively higher source of income for rural electrification operators (“anchor load”) is not universally applicable and depends on the respective context. In rural businesses, which are often operated by single informal entrepreneurs and may not be well organized, the operation of PUE may in fact be erratic. In addition, the continuous electricity demand for the PUE asset depends on the economic success of the associated business. The dependency poses a financial risk to the energy system operator. This is especially relevant in contexts, which are characterized by short lifetimes of businesses. Nevertheless, in communities with limited financial capacity to invest in stand-alone energy systems, which power a PUE asset, the systematic planning of integrated energy systems serving both PUE assets and residential loads is imperative for the utilization of electricity for productive uses and the development of associated capacities within the community.
The essential aim of off-grid energy system planning is to design a system, which adequately addresses the electricity-related needs of the community it serves. In this, the system must be financially viable to be sustainably operated and maintained to ensure its proper function.
Figure 1 describes the basic dynamics and interactions between local parties involved in and relevant to the description of the considerations, which guide the planning of an off-grid energy system integrating domestic household loads and PUE loads.
The community is composed of individual households using the energy system. These households have individual time-variable preferences and capabilities (i.e., assets) to utilize electricity. Within the community, there are needs for services, some of which can be supplied by specific PUE, which can be integrated in the local electricity supply system. The electricity and service needs are highly context-specific. The electricity utilization preferences of the individual households and the operational preferences of the PUE operator determine the principal design requirements for the integrated energy system. For the energy system and the PUE, two roles are relevant, namely the role of operation and the role of financing and ownership. These roles may be assumed by the community, a single member of the community or an external entity, including the energy system planner.
We make use of
Figure 1 to both guide the discussion of existing literature and its respective underlying perspectives and to describe the deliberate assumptions we made in our analysis. In research and in the practical implementation of a project, the planning rationale deviates from a generalized perspective. For context-specific relevance, it is useful to deviate from a generalized consideration, presume system design choice and make context-specific assumptions. The assumptions made may be a result of limitations of the available data, e.g., the household electricity demand, or they may result from the intention to study certain underlying dynamics or the consequences of specific system choices, e.g., applicable business models. In practice, the basis for decision making is, in many cases, the financial viability of the energy system, as rural electrification efforts are often driven by the private sector, which requires a cost recovery business model. It is important to note that this constitutes a specific perspective, namely system financing and operation. Accordingly, the current literature investigating the integration of PUE in off-grid systems supplying electricity to household loads often and usefully considers the financial perspective and evaluates the integration of PUE in off-grid systems based on its expected financial impact. Given the complexity and the various possible constellations of interaction and behavior of the parties involved in the local energy system, as depicted in
Figure 1, it is no surprise that the existing literature finds contradictory results regarding the financial benefits of integration of PUE in off-grid energy systems. For example, Booth et al. [
24], in a hypothetical community micro-grid scenario (peak load of 5.7 kW), find that integrating a single 10 kW maize mill could either decrease the cost of electricity provided by the system by 14% or increase it by 7% compared to a system only serving domestic loads, depending on the mill’s daily and seasonal operational parameters (notably, the authors exclude the costs of the mill from their calculation, assuming a community member or external party is responsible for the financing of the PUE asset). Specifically, the authors find that the economic impact of integrating the maize mill varies across “operating scenarios”, which denote different usage patterns of the mill across days of the week or seasons of the year. Similarly, van Hove et al. [
21], studying the economic impact of integrating various PUEs in mini-grids serving household loads, find that the impact is determined by the usage patterns of the PUE. Seasonally used PUEs in particular may offer only little improvements in the system costs, as they require additional energy system assets to meet peak demand during the high season, which are under-utilized during the low season [
21]. These two examples (for other similar examples, see [
25,
26]) support our suggestion that in order to ensure economic improvements in off-grid electricity supply via integration of PUE, the energy consumption patterns of the PUE appliances (notably determined via usage patterns and community preferences) need to fit into the household residential electricity consumption patterns to avoid costly additional production (and storage) devices being required to power the PUE, aside from the residential loads.
1.2. Motivation and Ambition
Supported by this evidence, we determine that the economic benefit of integrating PUE in energy systems will only be substantiated for all parties involved when (i) the PUE asset integrated in the system addresses the service needs of the community, thus being used and consuming electricity sustainedly, (ii) the electricity load patterns of the PUE and residential loads—each determined by the individual community member using the respective load—enable operational synergies; and (iii) the energy system infrastructure is sufficiently flexible to accommodate varying demand conditions (i.e., measures to efficiently add or remove production, storage and distribution assets). Thus, energy system planners integrating PUE in off-grid systems simultaneously serving residential loads are challenged in identifying the PUEs, which are relevant to fulfilling the service needs of the local community (Challenge I), and identifying PUEs with load profiles, which do not conflict with the domestic household load profiles (Challenge II). While the first issue may be solvable by observing local value streams of the communities, the latter poses a significant challenge. To identify a well-fitting PUE for a residential system, practitioners often integrate PUE ex post within existing residential off-grid energy systems to use historical data of the system under consideration or similar systems to identify PUEs matching the current residential energy consumption. However, historical data of residential users in off-grid energy systems are often not available, not generalizable [
27] or require complex processing. Therefore, practitioners rely on trial and error, often ending up with inefficient solutions and energy systems ill-suited to their application [
27]. Further, ex post integration of PUE in existing residential systems may hinge on the decisions made in conceptualizing the residential system, which leads to inefficient path dependencies for the entire PUE system. For example, if the primary energy generation asset is already fixed, it may be inefficient to install additional production equipment required to supply the PUE appliance, which could potentially prevent the simultaneous scaling of the residential and PUE systems (Challenge III). Third, it is well known that the usage patterns of PUE appliances, dictated by the activities and behavior of residents using the appliances, can affect the requirements of the system components, scaling, and therefore, economics [
21]. Co-creating an energy system with the PUE user and residential energy system users (see
Figure 1) may unlock cost savings, which cannot be achieved under ex post integration of PUE systems. While such co-creation approach is increasingly discussed in the academic literature (see, e.g., [
28,
29]), it is rarely used in practice. However, in fact, energy system users—i.e., community members—are implicitly included in system conceptualization by energy system planners at the beginning of the conceptual design of energy systems (e.g., by assuming consumption patterns based on previous experience, etc.), but they are not comprehensively integrated in the planning process. The potential of fully integrating co-creation approaches in energy systems is yet to be explored (Challenge IV). A maximum participation of (future) users—as will be discussed in this paper—can contribute to optimal alignment of the various electricity consumptions in a system—dictated by user behavior—with the planned energy system assets to minimize the energy supply costs and, as a result, also minimize the possible energy costs for the users.
Therefore, in this paper, we propose a methodology to tackle the prevailing challenges in energy system planning for off-grid electricity systems to cost-efficiently design off-grid energy systems, including PUE, improve the project’s financial viability and increase the potential contribution of electricity access to enhance the development of electrified communities. We therefore aim to address the following challenges:
Challenge I: Identify a PUE appliance, which fulfils the service needs of the local community and guarantees sustained usage and electricity consumption;
Challenge II: Identify PUE appliances with load profiles, which do not conflict with the residential load profiles, with the aim to improve the financial viability of the project via PUE integration;
Challenge III: Design an energy system, which serves both residential loads and the PUE appliance to make use of synergies;
Challenge IV: Showcase the potential for energy system cost reduction, which can be achieved by matching the user behavior of PUE and of household appliances when co-creating energy systems with their users.
Our methodology combines qualitative interviews, advanced statistical analysis and energy system modeling. First, in a community in Madagascar, we identify the relevant PUE assets, which address the community’s service needs, the associated value streams and the associated operational patterns. Next, we use the historical data of residential nanogrid energy systems to study the development of electricity consumption over time, identify the statistically significant predictors of electricity consumption and derive representative load profiles. Subsequently, we apply energy system modeling to model the scenarios of integrating PUE appliances with representative residential load profiles, which represent socio-economic characteristics, and optimize the models with regard to the lowest total system costs, including the investment decision in energy system assets and PUE and their dispatch. We evaluate the results based on key economic and technical metrics. By interpreting the key figures, we can derive statements regarding the suitability of matching different PUE appliances with households based on their socio-economic and demographic description. In addition, we can observe the distributional effects of cost sharing between residential electricity users and PUE users across different PUEs.
The methodology was developed in a case study of a rural village in northern Madagascar, and two PUE appliances were exemplarily assessed (an electric rice huller and a freezer). We provide evidence from semi-structured interviews with local communities to calibrate the model and derive additional qualitative evidence of PUE integration in energy system planning.