A Product of the USAID-NREL Partnership

PRODUCTIVE USE OF ENERGY IN 

AFRICAN MICRO-GRIDS:

TECHNICAL AND BUSINESS 

CONSIDERATIONS

Samuel Booth, Xiangkun Li, and Ian Baring-Gould

National Renewable Energy Laboratory

Diana Kollanyi, Abishek Bharadwaj, and Peter Weston

Energy 4 Impact

Contract No. DE-AC36-08GO28308

August 2018

Photo by Peter Weston, Energy 4 Impact
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Acknowledgments 

The National Renewable Energy Laboratory and Energy for Impact thank the Power Africa Beyond 

the Grid team for its guidance and input throughout this work and specifically Katrina Pielli. The 

authors would also like to specifically thank Isaiah Lyons-Galante of PowerGen, as well as Nathan 

Williams and Paulina Jaramillo from Carnegie Mellon University for the data and analysis on 

productive use of energy in PowerGen systems. Also, many thanks go to Irene Wilson and John 

Correa of Healing Waters International for contributing the expertise, data, and information for the 

water case study. Finally, thanks to Eric Lockhart and Tim Reber from NREL as well as to the other 

members of the micro-grid development community who offered data, feedback, and time in support 

of this report.
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Acronyms 

AC alternating current

CAPEX capital expenditures

DC direct current

E4I Energy 4 Impact

GIZ Deutsche Gesellschaft für Internationale 

Zusammenarbeit

kW kilowatt

kWh kilowatt hour

L liters

LED light emitting diode

LCC life-cycle cost

LCOE levelized cost of energy

MW megawatts

NREL National Renewable Energy Laboratory

O&M operations and maintenance

PU productive use

PUE productive use of energy

PV photovoltaics

QAF Quality Assurance Framework

REopt Renewable Energy Optimization

Vulcan Vulcan Impact Investing

W Watt
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Important Notices

This work was authored, in part, by the National Renewable Energy Laboratory, operated by Alliance 

for Sustainable Energy, LLC, for the U.S. Department of Energy (DOE) under Contract No. DEAC36-08GO28308. Funding provided by the United States Agency for International Development 

(USAID) under Contract No. IAG-17-2050. The views expressed in this publication do not 

necessarily represent the views of the DOE or the U.S. Government including USAID.

The analysis is based on projections, estimates or assumptions made on a best-effort basis, 

based upon expectations of current and future conditions at the time they were developed.

This analysis relies on information provided to NREL by Energy for Impact that has not been 

independently validated by NREL.

The analysis results are not intended to be the sole basis of investment, policy, or regulatory decisions. 

REopt. This analysis was conducted using the NREL REoptModel 

(http://www.nrel.gov/tech_deployment/tools_reopt.html). REopt is a techno-economic decision 

support model that identifies the cost-optimal set of energy technologies and dispatch strategy to meet 

site energy requirements at minimum lifecycle cost, based on physical characteristics of the site and 

assumptions about energy technology costs and electricity and fuel prices.
vii

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Executive Summary 

Demand for electricity from small industry and businesses, which is defined as the productive use of 

energy (PUE), is a key success factor for micro-grids. Because of the typically low energy usage of 

residential customers, without linkage to and support for these energy users, micro-grids are likely to 

struggle to reach the critical revenue needed for financial viability. Productive users are also important 

to enhancing the economic and social development impacts of micro-grids and rural electrification 

programs more broadly. 

This report is part of a series of reports being developed by the National Renewable Energy 

Laboratory (NREL) and Energy 4 Impact (E4I) in support of the Power Africa Beyond the Grid 

Program and is a companion document to the Quality Assurance Framework for Mini-Grids (BaringGould et al. 2016). This report is a resource entrepreneurs and developers can use to understand the 

technical and business model challenges related to PUE in smaller micro-grids. It focuses on small 

agricultural processing, and small industrial and commercial loads.

This report examines best practices for promoting PUE and the business models used by developers.

It starts with background information and a literature review followed by a discussion of key 

enterprise considerations for productive use (PU) including: value chain and business case analysis, 

enterprise development and training, appliance financing, and developers running PU businesses.

Unlike many other reports on PUE, this report is based on application specific data, in this case data 

gathered by E4I working with a range of micro-grid developers and PUs in East Africa. The report is 

also unique in that it provides actual customer demographics and load profiles from PUs on microgrids operated by PowerGen Renewable Energy in Tanzania, analyzed for a related Power Africa 

project (Williams et al. 2018). An example of this load data (Figure ES-1) shows the average load 

profiles of various PUs over the course of a day, clearly demonstrating that different productive use 

applications can diversify or compound residential energy use patterns.

Figure ES-1. Examples of productive use load profiles

Source: Williams et al. 2018

This report considers PUE from both business and technical perspectives, and it considers the interests 

of both the micro-grid operators and the microenterprises and entrepreneurs they serve. It looks at the 

service levels required by different PUs and the technical characteristics and challenges of different 

types of PU equipment. The report also includes examples of business cases for some of the most 

important PU opportunities, including milling, ice making, carpentry, egg incubation, and water 

treatment. The example of the business case for egg incubation is shown in Table ES-1.
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Table ES-1. Business Case for Egg Incubation

(illustrative information based on E4I data, currency values are in U.S. Dollars)

VARIABLES VALUES UNITS

Size of incubator 100 eggs

Power rating of incubator 100 Watts (W)

Capital Cost 122 $

Amount of power consumed per day 2.4 kWh/day

Operational hours 24 hours/day

Operational days per month 21 days

Tariff 0.90 $/kWh

Cost of power 45 $/month

Avg. Expenses per month (including electricity) 83 $/month

Avg. Revenue of sales per month 125 $/month

Net profit 42 $/month

Profit Margin 34%

Simple payback 3 months

The report also examines the technical challenges and design considerations for a developer in adding 

PU loads, such as supporting motor inrush currents and the decision to provide single-phase versus 

three-phase power to allow different productive use applications. In addition, it analyzes the technoeconomics of adding PU from the micro-grid developer’s perspective. As an example of the analysis 

conducted within this report, Figure ES-2 compares the levelized cost of energy and the capital costs 

of a system that includes a 10 kilowatt (kW) maize mill in Tanzania. The analysis of this system 

compares a base case system in Tanzania with ones in which the mill is operated under various 

scenarios: on weekdays between 9:00 AM and 5:00 PM, at 33% loading (2.6 hours per day) or 50% 

loading (4 hours per day), and seasonal operation (6 months per year). Adding the mill can increase 

the capital expenditures required for the micro-grid by up to $33,000 (right figure) but can either raise 

or lower the levelized cost of energy per kilowatt hour (kWh) based on the operating scenario. The 

cost of energy can be lowered by about 14%, from $1.21 to $1.03, in micro-grids powered by solar 

photovoltaics and batteries at 50% loading, but can also be raised by 7%, from $1.21 to $1.29, if the 

maze mill can only be used seasonally at a lower 33% loading.
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Figure ES-2. Levelized cost of energy (left) and capital expenditures, or CAPEX (right) for 

photovoltaic-battery system with a maize mill in Tanzania

This report is a resource that entrepreneurs, governments, and non-governmental organizations can 

use to help design programs to meet their individual goals of PUE in micro-grids and economic 

development in rural Africa. It can also be used by developers, engineers, and other organizations 

designing micro-grids to inform their technical and business decisions and to improve system design, 

reduce risk, and increase success with adding PU loads to both new and existing micro-grids. 

$0.80

$0.90

$1.00

$1.10

$1.20

$1.30

LCOE

PV-Battery Micro-grid: Energy Cost with 

10 kW Mill at Various Loadings

Base Case 10kW 33%

10kW 50% 10kW 33% (Nov-Apr)

$50,000

$70,000

$90,000

$110,000

$130,000

CAPEX

PV-Battery Micro-grid: Capital Cost with 

10 kW Mill at Various Loadings

Base Case 10kW 33%

10kW 50% 10kW 33% (Nov-Apr)
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Table of Contents

1 Introduction .................................................................................................................................... 1

1.1 Background ............................................................................................................................. 1

1.2 Definitions............................................................................................................................... 2

2 Review of Productive Use Literature............................................................................................ 3

3 Entrepreneurs: Key Considerations for Business Cases............................................................. 6

3.1 Value Chain Analysis and Business Case Assessment ........................................................... 6

3.2 Enterprise Development and Training .................................................................................... 8

3.3 Equipment Financing .............................................................................................................. 9

3.4 Developer Operated Productive Use Businesses..................................................................... 9

4 Developers: Business Considerations ......................................................................................... 11

4.1 Anchor Load Model .............................................................................................................. 11

4.2 Payment and Tariff Models................................................................................................... 11

4.2.1 Standard Tariffs........................................................................................................ 12

4.2.2 Day/Night Tariffs..................................................................................................... 12

4.2.3 Flat Standing or Connection Charges....................................................................... 12

4.2.4 Prepayments............................................................................................................. 13

4.2.5 Fee for Service ......................................................................................................... 13

4.2.6 Productive Use Zones............................................................................................... 13

4.2.7 Consumer Choice and Awareness............................................................................ 14

4.3 Demand-Side Management ................................................................................................... 14

4.4 Load Estimation .................................................................................................................... 15

5 Developers: Technical Considerations ....................................................................................... 18

5.1 Service Levels, Performance Monitoring, and Metrics......................................................... 18

5.2 Technical Design................................................................................................................... 19

5.2.1 Alternate Current (AC) versus Direct Current (DC)................................................ 19

5.2.2 Three-Phase versus Single-Phase Distribution Networks........................................ 20

5.2.3 Dispatchable Backup Generators............................................................................. 21

5.2.4 Lower Power Factor................................................................................................. 21

5.2.5 Reliability................................................................................................................. 22

5.2.6 Inductive Loads........................................................................................................ 22

6 Entrepreneurs: Business Case Studies ....................................................................................... 24

6.1 Ice Making............................................................................................................................. 24

6.2 Milling................................................................................................................................... 26

6.3 Carpentry............................................................................................................................... 29

6.4 Egg Incubation ...................................................................................................................... 31

6.5 Water Treatment and Sales.................................................................................................... 32

6.6 Other Productive Uses........................................................................................................... 33

6.7 Business Case Comparison ................................................................................................... 34

7 Impact of Productive Use on Micro-grids.................................................................................. 36

7.1 Financial Impact.................................................................................................................... 36

7.1.1 Optimal System Design............................................................................................ 36

7.1.2 Existing Oversized Systems..................................................................................... 40

7.2 Social Impact......................................................................................................................... 40

7.2.1 Job Creation and Induced Impacts ........................................................................... 41

7.2.2 Environmental Considerations................................................................................. 41

7.2.3 Gender Equality ....................................................................................................... 41

8 Risks and Mitigation Strategies .................................................................................................. 42

8.1 Poor Estimation of Expected Demand from PUE................................................................. 42

8.2 Payment Risk......................................................................................................................... 42

8.3 Knowledge and Skills............................................................................................................ 43

8.4 Social Acceptance Risk......................................................................................................... 43

8.5 Technical Risk....................................................................................................................... 43

9 Conclusions ................................................................................................................................... 44
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Figures

Figure ES-1. Examples of productive use load profiles........................................................................vii

Figure ES-2. Levelized cost of energy (left) and capital expenditures, or CAPEX (right) for 

photovoltaic-battery system with a maize mill in Tanzania...................................................................ix

Figure 1: Example refrigerator use for a microenterprise....................................................................... 5

Figure 2. Rural value chain..................................................................................................................... 7

Figure 3: Example productive uses including bakery, welding, movie theatre, and cafe .......................7

Figure 4. Maize value chain actors and components .............................................................................. 8

Figure 5. Distribution by customer types.............................................................................................. 15

Figure 6. Distribution by customer employment .................................................................................. 16

Figure 7. Distribution by customer by business type............................................................................ 16

Figure 8. Productive use load profiles .................................................................................................. 17

Figure 9: Commercial ice making equipment....................................................................................... 26

Figure 10: Diesel powered milling machine ......................................................................................... 28

Figure 11. Example carpentry workshop .............................................................................................. 30

Figure 12: Example egg incubation equipment .................................................................................... 31

Figure 13: Healing Waters treatment system and bottle filling ............................................................ 33

Figure 14. Investment requirements and financial performance of different Pus.................................34

Figure 15. Electrical consumption of different PUs.............................................................................. 35

Figure 16. LCOE of scenarios for hybrid systems................................................................................ 37

Figure 17. Capital costs and life cycle costs of mills scenarios for hybrid systems .............................38

Figure 18. PV and generator sizing for hybrid systems........................................................................ 38

Figure 19. LCOE of PV-battery systems ($/kWh)................................................................................ 39

Figure 20. Capital cost and life cycle cost of PV-battery systems........................................................ 39

Figure 21. Optimal generation sizing for PV-battery systems.............................................................. 40

Figure A1-1. Four pillars of E4I process for providing PUE support (Source: E4I)............................47

Figure A2-1. LCOE breakdown by scenario ........................................................................................ 51

Figure A2-2. Load profiles used in LCOE analysis.............................................................................. 51
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Tables

Table ES-1. Business Case for Egg Incubation ...................................................................................viii

Table 1. Maize Mill: Energy Pricing Comparison................................................................................ 12

Table 2. Results of Comparison of the LCOE of Heavy Residential and Business Load Profiles.......15

Table 3. Electricity Consumption Patterns: Commercial and Retail Loads.......................................... 23

Table 4. Electricity Consumption Patterns: Small Manufacturing Loads............................................. 23

Table 5. Electricity Consumption Patterns: Agricultural, Horticultural, and Aquaculture Loads........23

Table 6. Business Case for a Freezer Based Ice Making System ......................................................... 25

Table 7. Mill: Diesel-Based Operations (Milling Services Only)......................................................... 27

Table 8. Mill: Diesel-Based Operations (Processing and Selling Maize)............................................. 27

Table 9. Mill: Micro-Grid-Powered Operations Milling Services........................................................ 29

Table 10. Mill: Micro-Grid-Powered Operations Processing and Selling Maize .................................29

Table 11. Business Case for Carpentry Tools....................................................................................... 30

Table 12. Business Case for an Egg Incubator ..................................................................................... 31

Table 13. Key Data Inputs for Water Treatment Modeling .................................................................. 32

Table A1-1. Four Pillars of E4I Process for Providing PUE Support................................................... 48

Table A2-1. LCOE Modeling Inputs and Assumptions........................................................................ 50

Table A3-1. QAF Metrics and Service Levels for Power Quality........................................................ 53

Table A3-2. QAF Metrics and Service Levels for Duration of Daily Service......................................54

Table A3-3. QAF Metrics and Service Levels for Peak Power Levels................................................. 54

Table A3-4. QAF Metrics and Service Levels for Energy Use per Service Level ...............................54

Table A3-5. QAF Service Levels and Metrics for Power Reliability ................................................... 55

Table A4-1. REopt Modeling Assumptions.......................................................................................... 56

Table A4-2. Load Characteristics Modeled .......................................................................................... 56

Table A4-3. Key Data Inputs for Water Treatment Modeling.............................................................. 57
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1 Introduction

Demand for electricity from small industry and businesses, which is defined as the productive use of 

energy (PUE), is a key success factor for mini- and micro-grids.1 Without linkage to and support for 

these users, micro-grids are likely to struggle to increase local commercial uptake of electricity or 

reach the critical level of sales necessary to secure their financial viability. Productive users are also 

an important part of enhancing the economic and social development impacts of micro-grids and rural 

electrification programs more broadly. Potential impacts of PUE include increased local economic 

activity, added value to products and services, job creation, and enhanced gender equality. 

Many different models have been tried and tested to promote PUE, but there is no “one size fits all” 

solution. The most successful models usually have four things in common:

• Their approach focuses on the business needs of the productive uses (PUs).

• They foster the development of new PUs around existing value chains to increase productivity or 

the value of goods sold.

• They include targeted business development services for local entrepreneurs.

• They make available grants or microfinance to stimulate investments in income-generating 

equipment.

Matching electricity demand with supply is also critical to the success of micro-grids, and many 

developers aim to shift demand from times of lower renewable resource availability to times of higher 

availability through demand-side management. It is difficult for micro-grids to achieve this balance 

because demand can be volatile as a result of the relatively small number of customers, the seasonality 

of rural economies, and the modest financial means of consumers. Some PU appliances can also 

present technical challenges for the micro-grid operators if they are not managed properly or systems 

are not designed appropriately.

1.1 Background

This report is the first of three knowledge articles written by Energy 4 Impact (E4I) and the National 

Renewable Energy Laboratory (NREL) with support from Power Africa. NREL and the U.S.

Department of Energy have developed a Quality Assurance Framework (QAF) for Mini-Grids

(Baring-Gould et al. 2016). This framework has the dual goals of (1) defining a range of service levels 

that ensure safe, quality, and affordable delivery of electricity and (2) providing an accountability 

framework that can be used to determine whether an agreed-upon service level has been delivered. 

This report is a companion document to the QAF. It is a resource for entrepreneurs and developers to 

understand the technical and business model challenges related to PUE in smaller micro-grids—those 

with a capacity of 5–100 kilowatts.

2 It focuses on small agro-processing, industrial, and commercial 

loads rather than large anchor loads, which tend to be absent in most micro-grid locations.

This report looks at best practices for promoting PUE and the different business models used 

by developers. Unlike many other reports on PUE, this report is based on data gathered by E4I while 

working on the ground with a range of micro-grid developers and PUs in East Africa. The 

observations and information in this report come from direct experience by E4I and NREL. Much of 

the data and information comes from E4I experience supporting PU in eight different village microgrids in Kenya and Tanzania from November 2016 to April 2018. E4I supported the micro-grids by 

providing business and technical mentorship services to the PU businesses to increase uptake of 

 1 The terms “mini-grid” and “micro-grid” do not have clear or consistent internationally recognized definitions 

and are used somewhat interchangeably by many industry stakeholders and practitioners. In this report, we use 

the single term micro-grid for simplicity but do not attempt to distinguish it from the term mini-grid, which 

could also apply in most instances. See Section 1.2 for how we define micro-grids. 2 Micro-grids with a capacity of less than 5 kW tend to target private households rather than productive users.
2

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electricity demand. Anything not from the authors comes from other sources and is cited. The report

considers PUE from both commercial/business and technical/engineering perspectives, considering

the interests of both the micro-grid operators and the microenterprises and entrepreneurs they serve.

This report explains why PUE matters for micro-grid developers and why it can help rural economic 

development. It also looks at the service levels required by different PUs and the technical 

characteristics and challenges of different types of PU equipment. The report includes examples of 

business cases for some of the most important local value chains, including milling, ice making, 

carpentry, egg incubation, and water treatment.

1.2 Definitions

For the purposes of this report, a micro-grid consists of small-scale electricity generators—such as 

solar photovoltaics (PV) or engines and possibly energy storage systems—connected to a distribution 

network that supplies electricity to a small localized group of customers. Such micro-grids are

operated independently and are not interconnected with a national grid. Off-grid power systems can 

range in size from a few kilowatts (kW) up to 10 megawatts (MW). This report focuses on microgrids with a capacity of 5–100 kW. 

PUE may be defined in different ways. Narrowly defined, it refers to activities that generate income, 

increase productivity, enhance diversity, and create economic value through the consumption of 

electricity.

3 More broadly defined, it includes all socio-economic uses of electricity that improve 

quality of life and local resilience (e.g., electricity for education, healthcare, and other 

welfare services).

The PUs covered in this report are microbusinesses and small businesses based in rural areas. Most of 

them are active in agriculture or related processing, light manufacturing, or small commercial and 

retail trading.

 3 The Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) defines PUE as “agricultural, commercial 

and industrial activities involving energy services as a direct input to the production of goods or provision of 

services” (GIZ and EUEI-PDF 2013).
3

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2 Review of Productive Use Literature

Much has been written about how to scale up micro-grids in sub-Saharan Africa and the role of PUE

in that process. Some of the key factors that have been identified for growth include:

• The creation of viable micro-grid business models and the need to include PUs

• Better market linkages with and information on potential micro-grid users, including existing and 

likely future demand, ability and willingness of users to pay, and local value chains

• Increasing the capacity and skills base of developers, users, and other stakeholders

• Access to finance for both the micro-grid operators and their users.

PUE is an important consideration, but there are a number of related factors that are also important for 

growth in the sector. For more information on the general challenges and potential solutions for 

micro-grid scale-up, see Energy 4 Impact and INENSUS (2016) and the eight principles of the Africa 

Mini-Grid Developers Association.4

PUE has an important role to play in micro-grids and rural economic development. The rationale for 

including PUE in micro-grid business models is twofold. Firstly, the revenues generated by household 

customers are often small because of low levels of electricity consumption. By fostering PUE, 

operators can increase the average electricity consumption and revenue for the micro-grid, thus 

improving the chances of long-term viability. Secondly, PUE can improve rural livelihoods through 

the opportunities created for increased income, new businesses and jobs, and access to a more 

diversified pool of products and services. Any potential livelihood improvement may also increase 

residential demand and the ability to pay for electricity, which improves the overall viability of the 

micro-grid business model. 

Much of the existing literature on PUE focuses on investigating the link between use of electricity and 

economic activity and the enabling environment for PUE. Some studies suggest that electricity has

limited impact on increasing the income of microenterprises and small enterprises. Grimm, Hartwig, 

and Lay (2011) found that electricity supply had no systematic or uniform influence on the profits of 

small tailoring businesses in Ouagadougou, Burkina Faso. In fact, they concluded that the supply of 

electricity could be a financial burden because of the high cost of grid connection and electrical 

appliances. These financial burdens may be even more pronounced for some marginalized rural 

economies.

Other studies suggest that there is a positive correlation between electricity supply and the creation 

of new enterprises and jobs. Dinkelman (2008) concluded that South Africa’s post-apartheid rural 

electrification program led to a 13.5% increase in female employment because the availability 

of electricity enabled new businesses to produce local goods and services that were previously 

“imported” at a higher cost. This in turn helped lower local prices, increase local savings, enhance 

local economic activity and create local jobs.

These studies show that access to electricity can help trigger economic activity under certain 

conditions, but that access is not always enough and that other barriers, such as the high up-front costs 

of electrical appliances, may require additional consideration to help stimulate economic activity.

Additional research on how micro-grids can enhance or improve PU, which PU applications are most 

compatible with micro-grids, how to address the relatively high upfront capital to purchase 

appliances, and how to improve the uptake of these PU applications is necessary, but some work has 

been done to analyze these connections. These conflicting findings also point to the need to develop a 

PU strategy, not just implement a potential PU concept. A PU strategy for a community or 

 4 “Principles,” Africa Mini-Grid Developers Association, http://africamda.org/index.php/principles/. 
4

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development model would take a more holistic approach, considering and addressing many of the 

topics that are introduced in this document. 

Vulcan Impact Investing (Vulcan) is one of a few micro-grid developers that has published its own 

research on the uptake of electricity (Blodgett et al. 2016). According to Vulcan, there are several preconditions for a successful PU strategy. Firstly, access to finance at the project and enterprise level

is important, including dedicated funding for PU businesses and enhanced mobile payment solutions. 

Secondly, the policy and regulatory framework needs to create micro-grids with viable business 

models to serve productive users. Thirdly, it is important to provide capacity building to local 

communities and enterprises, and to share experience and best practices. Vulcan also found that a

minority of the customers of its Kenyan micro-grids5 consumed most of the electricity. The top 10%

of customers (small businesses) generated five times the average revenue per user of the remaining 

90% of customers and 40% of total revenue. Most customers consumed fewer than 250 watthours/day, yet they remained important as a hedge against the loss of higher use customers. Electricity 

demand fluctuated widely by month and season, with demand being highest in December and lowest 

in February.

Another report based on Vulcan data examined the results of energy demand surveys and the

implications for correct system sizing; Blodgett et al. (2017) compared forecast demand with actual 

consumption and found that forecasts were on average more than four times actual consumption,

which has led to many micro-grids being oversized. While oversizing a micro-grid system reduces its 

financial viability, undersizing can also negatively affect a micro-grid’s value to PU businesses: if a 

business cannot depend on the micro-grid for power supply, it employs coping strategies using

alternative sources of energy.

It is also important to contextualize PU in the host community to explore the potential for economic 

development and understand existing and potential demand for electricity in detail (Lecoque and 

Wiemann 2015; Contejean and Verin 2017). This means micro-grid developers should consider

existing energy sources and economic activities when developing solutions and exploring potential 

new activities. New activities should be embedded in existing market value chains, otherwise

substantial support will be needed to build new markets. Furthermore, the community should support 

new initiatives that are developed and business models that are deployed. Developers can play a role 

in sharing knowledge, building capacity and providing access to machinery. Also, community 

services such as churches, schools, clinics, and irrigation should be considered when developing a PU

strategy, as they may impact current and future load.

Appliances for PUs are also not well covered in the literature. However, Global LEAP has published 

a report on the global off-grid appliance market (Global LEAP 2016) that includes information on 

key market trends in three appliance categories: fans, televisions, and refrigerators. Global LEAP

concluded that promoting off-grid appliances beyond lighting and cooking was important for driving

social impact. The report also highlighted that awareness and understanding of the off-grid appliance 

market was limited and that increasing energy efficiency was the key driver for new commercial 

opportunities.

 5 Vulcan has 10 operating solar mini-grid or micro-grid sites of between 1.5 kW and 6.0 kW.
5

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E4I (Ireri 2018) looked at the market for refrigeration in Uganda and found there was a clear business 

case for AC-powered energy-efficient refrigerators for retail microbusinesses selling drinks, in both 

on-grid and off-grid settings. A typical product for a microenterprise is a 100 L–150 L refrigerator

costing approximately $250. Refrigerators enable diversification of products sold, provide additional 

revenue streams to non-retail related businesses, and improve competitiveness. The main challenges 

for microenterprises are the high energy costs related to the high energy consumption of the 

refrigerators, power supply interruptions,

6 and the suitability of the products for their business needs

(e.g. robustness, design features, and usability). Some businesses managed consumption by switching 

off refrigerators intermittently. An example entrepreneur operating this type of business is shown in 

Figure 1.

Figure 1: Example refrigerator use for a microenterprise

Source: E4I

 6 This is more of an issue for the main electricity grid rather than micro-grids.
6

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3 Entrepreneurs: Key Considerations for Business 

Cases

There is no standardized business model for developing PU around micro-grids. Many different types 

of PU businesses exist in rural areas—each with their own unique value chain and local 

characteristics—and the track records of these businesses vary widely. Some micro-grid developers 

have tried to support existing PU value chains by providing local enterprise support or finance for PU 

electrical appliances. Some have introduced new value chains and encouraged people or organizations 

from outside the community to invest in new PUs. Others have invested directly in the PU businesses 

themselves, generating an alternative income flow to that of the micro-grid. In this section, the report

examines these ideas and looks at the key steps in developing a successful PU strategy, namely:

• Value chain and business case analysis

• Enterprise development and training

• Productive use financing

• Developer operated PU businesses.

This section focuses on key challenges for the entrepreneur, Sections 4 and 5 focus on key challenges 

for the developer, and Section 6 presents entrepreneur case studies. 

3.1 Value Chain Analysis and Business Case Assessment 

Most PU businesses operating in small village micro-grids fall into one of three categories based on 

E4I experience: 

• Primary industries (e.g. agriculture, fishing, meat and dairy livestock, and timber)

7

• Light manufacturing (e.g. carpentry, welding, tailoring, and ice making)

• Commercial and retail enterprises (e.g. phone charging businesses, grocers, hair salons, 

restaurants, video and satellite screening, cafes, popcorn makers, and small freezers).

For many communities, particularly agricultural ones, it is important to start by looking at any 

existing products, services and activities that may originate in the village and consider how value can 

be added through the supply of electricity or services derived by electricity supply. Many products 

produced at the village level have little or no processing or value-adding activities linked to them and, 

where those activities do exist, they are often minimal and done manually. Community based 

economic development combined with load expansion can be achieved by exporting higher value 

products and services outside the village economy. Examples could include agricultural processing or 

the milling of lumber in place of exporting of raw timber. Similarly, looking at what products or 

services are imported into the village that could be provided locally can provide ideas for local 

productive use, such as ice or local services.

For some activities, electricity acts as an enabler to make a product or service possible (e.g. ice 

making). In others, electricity is a catalyst that improves the product (e.g. electric milling or 

woodworking appliances). Electricity can also be a differentiator that does not change the product 

or service but does change the user experience (e.g. refrigerators to cool drinks).

 7 The most common primary industries are production of cereals and grains (e.g. maize, cassava, sorghum, and 

rice); oil seed production; small-scale fruit and vegetable farming (especially products where there is high urban 

demand, such as onions, tomatoes, French beans, and pineapples); small-scale coffee, tea, and cocoa farming; 

chicken and pig farming; fishing, particularly lake fish such as tilapia and Nile perch. 
7

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To develop an effective PUE strategy, it is important to analyze the local value chain for different PU

businesses in four main areas (Figure 2):

Figure 2. Rural value chain

Inputs or primary production includes intake of raw materials or commodities such as agricultural 

products, water, or wood. Processing involves value added activities utilizing these inputs such as 

drying, milling, or water treatment. Outputs are the value add products such as flour, lumber, or clean 

water and the export of these products or the sale of them in the local community through small 

enterprises. End use is the consumption or use of these products by the end consumers such as the 

consumption of food products or the construction of housing. Some examples of operating PU

businesses in rural Africa are shown in Figure 3.

Figure 3: Example productive uses including bakery, welding, movie theatre, and cafe

Source: E4I

The value chain for specific crops or products can be quite complex, and it can be helpful for 

entrepreneurs to understand where they fit in the existing value chain and how their position may 

change with the addition of PU. An example of the specific value chain related to maize in Kenya 

(Figure 4) shows the complexity of understanding the actors, markets, inputs, outputs, and other key 

attributes of a single commodity. It also illustrates how these variables change depending on which 

part of the chain an enterprise is targeting as farmers and millers occupy very different positions.

Inputs Processing Outputs End Use
8

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Figure 4. Maize value chain actors and components

Source: USAID 2015, p. 328

PUE interventions must also be rooted in the business interests of the entrepreneurs, including what 

they need to succeed in their markets and what investments would make financial sense given their 

expected cashflows. This means looking at every part of the entrepreneurs’ businesses, from 

the amount and quality of their products and the time spent on production and services, to revenues 

and costs (including electricity costs), supply chain/feedstock strategy, local access to markets, and 

market prices.

3.2 Enterprise Development and Training

Successful enterprise development cannot be delivered by quick fix solutions—it requires a holistic 

approach covering all the factors that make for a successful business, which takes time. Mentoring is 

needed to help build the commercial and technical skills of local entrepreneurs, to train them in using 

electrical appliances, and to help their businesses navigate the challenges of early development.

Mentoring could be provided by governments, non-governmental organizations, or potentially 

developers themselves if they had the necessary capacity and knowledge. Local PUE champions 

should be identified and recruited to mentor and inspire others. It requires sustained interaction as 

rapidly delivered training alone is quickly forgotten. A deeper long-term partnership with the 

entrepreneur is more likely to deliver long-term results.

A distinction must be made between working to expand services of existing businesses through 

electrification and the development of new businesses that are enabled by access to electricity.

Entrepreneurs with existing businesses are more likely to have a basic knowledge of running a 

business and the market for their product, even if they are not necessarily familiar with the electrical 

appliances. Those being trained in new businesses may need to be taught the basic foundations of 

running a business and to learn about a new product. They will require more comprehensive 

mentoring over a longer period with a more intense follow-up (GIZ and EUEI-PDF 2013).

Both approaches are valid from a development perspective. Existing businesses might be able to 

grow more quickly, create more employment, and earn more income in less time. Start-up businesses 

 8 See source document for a definition of acronyms utilized in this figure.
9

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have the potential to help additional individuals and improve their lives, but it may take longer to 

achieve concrete results. For a step-by-step guide to enterprise development, see Appendix A.

3.3 Equipment Financing

Equipment financing is a critical component of enterprise development. This is especially true for 

PUE, where the capital costs of some equipment and appliances can be high relative to the financials 

of the enterprise. Entrepreneurs often struggle to get the required financing, and—because of the 

remote location and off-grid nature of many micro-grids—there are often no formal or even informal 

financial institutions close by. 

Some micro-grid developers have set up their own financing schemes (e.g. concessionary loans or 

grants) to bridge the gap. They may finance the enterprises directly or through third parties, such as a 

local financial institution or a supplier of appliances. Although similar in construct, appliance 

financing can also be used to expand residential energy consumption, but it may not have the same 

impact as PU development, although the specific equipment may be identical. For example, in 

Tanzania, Jumeme, Rafiki Power, and PowerGen act as financial intermediaries themselves and 

provide equipment loans to customers from their own balance sheet. Mwenga Power piloted a 

partnership with a local microfinance institution—the Mama Bahati Foundation—that provided loans 

to some of the Mwenga customers for asset finance in Tanzania. The main advantage of the first 

approach is that the developer has direct control over the financing strategy and the choice of 

equipment (which should be appropriate for both the entrepreneur and the micro-grid). However, it 

can also be a burden on the developer’s balance sheet, and many developers lack the skills and 

resources for credit assessment, loan monitoring, and follow-up on loan repayments. Also, many 

developers are not from the local community, so they lack some local knowledge and can exacerbate 

the challenges of this type of program. The main advantage of the second approach is that the 

developers can focus their time and resources on running the micro-grid, while their partner does the

financing. However, it is often not easy to find financial institutions that are willing and able to lend 

to microentrepreneurs in remote rural areas on acceptable terms (i.e. reasonable collateral 

requirements and interest rates). This is particularly the case for start-ups or new business activities 

that have no track record.9

Micro-grid developers often use a lease-to-own model of equipment and in some cases residential 

focused appliance financing based on consumer finance or microfinance principles. Most financing 

terms are for 12 months or fewer, and they require the customer to make an up-front deposit of up to 

30% of the cost of the appliance. The costs of electrical appliances vary but are typically within the 

range of most microfinance institutions (i.e. from a few hundred dollars to $10,000). In case of 

default, the equipment can be repossessed, or electricity can be disconnected, or the payment terms 

can be adjusted to incentivize the entrepreneur to make the necessary repayments. The customer 

usually makes repayments monthly, in addition to their monthly electricity payments. Therefore, the 

business case for PUE activities must account for both the cost of electricity and the monthly 

repayments. Ownership of the equipment transfers to the customer once the loan or lease is fully 

repaid.

3.4 Developer Operated Productive Use Businesses

Rather than just selling electricity, some micro-grid developers have chosen to set up their own 

productive businesses that rely on power from the micro-grid. These businesses are generally linked 

to existing local value chains, but they may also be completely new businesses. 

 9 Many microfinance institutions will require a business to have at least 6–12 months of cashflows before they 

will consider providing the business a loan. Some microfinance institutions will also require borrowers to start 

with smaller loans to demonstrate creditworthiness, which can delay access to loans that are large enough to 

purchase PU equipment.
10

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Examples of micro-grid developers diversifying their income streams and running their own 

productive businesses include: 

• Jumeme in the lake region of northern Tanzania (1 micro-grid, 90 kW) is milling imported maize 

to produce flour for sale to the local community, and using freezers to make ice for preservation 

of fish, both for local fishermen and to support their own tilapia fishing business

• Mandulis in northern Uganda (1 micro-grid, 32 kW) is milling maize to produce their own flour 

and as a service to local farmers, and selling byproducts of the biomass gasification process such 

as biochar which is a fertilizer and alternative to charcoal

• RVE.SOL in western Kenya (1 micro-grid, 7.5 kW) is treating water and selling water cannisters.

The main advantages for a developer of setting up its own PU business are: 

• They have more control over the demand for electricity in the micro-grid, including the timing of 

demand so that they can co-optimize between their electricity sales and use as well as the growth 

of demand on their system.

• They can potentially make a higher margin on the PU business than on selling electricity. The PU 

business itself may eventually have higher growth and be more profitable than the micro-grid

itself.

• They can reduce regulatory risk because the sale of services, such as milling, are less regulated 

than electricity in many countries. This doesn’t reduce the developer’s regulatory requirements in 

the electricity sector, but it can support diversification of revenue and thus reduce the overall risk 

from changes in electricity sector regulations. 

• Diversification of funding streams, electricity sales and the identified PU, while potentially 

optimizing local staff members who can take part in both businesses. 

The main disadvantages of a developer setting up its own business are: 

• The cost of setting up and running the PU business may be beyond the financial means of some 

developers for some of the more expensive PU opportunities, such as water treatment systems or 

commercial ice makers.

• Increased technical and business complexity may undercut the company’s ability to perform their 

primary responsibility (the provision of energy services) successfully.

• The developer may not have the local skills, experience, or knowledge to run the business.

• The economic benefit of the PU goes mainly to the developer rather than to the local community.

• Competition between the developer’s own PU business and other local businesses may create 

community tensions.
11

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4 Developers: Business Considerations

PUs present many business model considerations for a micro-grid system developer as they can 

increase revenues and lower costs for an appropriately designed system or an existing underused 

system. However, they can also present significantly different considerations than residential loads in 

terms of tariffs, risks, system design and other key considerations. This section reviews some of these 

key considerations from the developer perspective. 

4.1 Anchor Load Model

The ABC micro-grid developer business model, which is what many developers targeted initially,

focuses on larger anchor clients. “A” refers to anchor clients, which have large consumer loads and

are responsible for a majority of the micro-grid’s electricity sales. They can potentially generate more 

stable, predictable long-term revenues for the micro-grid, making financing easier. Examples include 

cell phone towers, flower farms, tourist lodges, and other medium-sized industries and agriculture 

processing activities. “B” refers to smaller business customers, including agricultural loads, small 

manufacturing loads, and commercial or retail loads. This report is focused on PUs from these types 

of loads. “C” stands for community customers, which are mainly private households and make up a 

small proportion of the micro-grid’s loads. 

Most African micro-grids are in remote areas and do not have access to large anchor clients, and thus 

this model may not be generally applicable and is likely not a viable strategy to provide widespread 

energy access. While the lack of an anchor client makes financing more difficult, anchor clients 

generally insist on more competitive tariffs and often have onerous service requirements that the 

micro-grid may not be able to consistently fulfill. Small business and PU customers offer a more 

diversified customer base and greater scope for local economic development. These small businesses 

are the focus of this report and the considerations in this section, representing a modification of the 

original ABC business model and a more viable strategy to provide widespread energy access.

4.2 Payment and Tariff Models

Micro-grid tariffs should be set at levels that account for the ability and willingness of rural customers 

to pay. In many cases however, micro-grids require some form of subsidy so that the owner and 

operator can make a fair return on their investment, and the tariffs are affordable and acceptable for 

the user. To this end, the tariff, with an applied subsidy if relevant, must reflect the true cost of 

providing power for the micro-grid to be successful (Reber et al. 2018). Some PUs are particularly 

sensitive to the price of electricity and can be stimulated to use more power through appropriate tariff 

setting. Micro-grid tariffs also need to account for alternative sources of electricity, such as standalone solar systems and diesel generators. These alternative sources may be more or less expensive 

for a business than electricity from the micro-grid but may also have additional benefits or costs to 

both the micro-grid developer and PU owner. As an example, Table 1 shows an economic comparison 

between the price of diesel and electricity for a maize mill. For consistency, all the financial analyses 

for this report were done in U.S. Dollars. Tanzanian shillings were converted to U.S. Dollars using the 

exchange rate in March 2018 of 2,244 Tanzanian shillings to one U.S. Dollar. There are clearly 

additional considerations, such as the cost of both the diesel engine and electric motor, the different 

maintenance requirements for both approaches, and a reduction in the complexity and cost of the PU 

operator to operate a device that may not be central to their business, such as maintaining a diesel 

engine.
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Table 1. Maize Mill: Energy Pricing Comparison

(illustrative information based on E4I data)

VARIABLE VALUE UNITS

Size of diesel power motor 15 horsepower

Diesel consumption per hour 3.2 liters (L)

Diesel price 0.99 $/L

Operational hours per day 2 hours

Cost of diesel per day 6.34 $/day

Size of equivalent electric motor 10 kW

Amount of power consumed per day

to match the amount of maize milled 

per day

20 kWh

Equivalent micro-grid tariff required to 

compete with the cost of milling using 

a diesel engine ($6.34/20kWh)

0.32 $/kWh

This analysis illustrates the challenge that competing power options pose for a micro-grid developer,

as the diesel and electric motor options for a maize mill have similar capital costs. As such, a 

developer must offer power at approximately $0.32 per kWh to be competitive with a diesel motor,

which is far lower than the $0.50–$1.20 per kWh most developers currently charge. Alternatively,

electricity from a micro-grid could offer a different value proposition to the owner of a PU business 

where they would pay more for electricity because of other co-benefits it might provide for their 

business, such as higher availability because their mill never runs out of fuel or lower operating costs 

from not needing to pay employees to service the engine or travel to purchase diesel fuel, which can 

be quite far in many cases. See Sections 6.2 and 7.1 for additional discussions of maize milling 

economics and a case study. These types of tradeoffs have led to several micro-grid tariff models 

including those discussed in Sections 4.2.1–4.2.6. Also see Reber et al. 2018 for additional 

information on tariffs and tariff considerations.

4.2.1 Standard Tariffs 

Many micro-grid developers/operators charge a fixed rate per kWh for the consumption of electricity. 

This is the most simple and basic way to charge for power, simply involving a method of measuring 

consumption, either pre or post payment. Such tariffs can become more complicated as the per kWh 

rates vary by certain customer attributes, such as type of connection (e.g. residential or commercial), 

size of load, or location of load. 

Different tariff or subsidy structures may also be designed to support specific customer classes, such 

as providing a subsidized base level of service for residential customers while requiring commercial 

customers to pay the full cost.

4.2.2 Day/Night Tariffs

One challenge with solar micro-grids is steering consumption to times of peak generation during the 

day and reducing the need for expensive storage or back-up diesel generators at night. PUs can be 

incentivized to consume more during the day through lower daytime tariffs and higher nighttime 

tariffs.

4.2.3 Flat Standing or Connection Charges

A standing or connection charge covers the fixed costs of micro-grid connection, including the 

ongoing cost of connection, the cost of meter readings and maintenance, and other charges. It is 
13

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simply a charge for access to electricity. Standing charges are often targeted at larger PUs who may 

pay a lower consumption (per kWh) charge. Connection charges may also vary based on the rated 

power of the PU equipment, driven by the micro-grid’s need to reliability supply these typically larger 

loads. Feedback from PUs on such charges have been mixed. Some businesses are unwilling to pay

the flat charge if they do not consume power because they close, for example, during harvest or 

holidays or feel the rate is to high based on energy use.

Micro-grid operators also often charge flat rates for fixed amounts of load. While this applies less to 

PU, it is common in residential applications where, for example, a fixed monthly rate is set for two 

light bulbs and a cell phone charger regardless of actual kWh consumption. 

4.2.4 Prepayments

Most micro-grids require customers to prepay for electricity. The more electricity customers consume, 

the higher the pre-payments needed. Electricity usage can be monitored through load or smart meters. 

Prepayments are usually recorded, cashless, and paid directly by the user if a mobile money transfer 

system such as M-Pesa exists, thus reducing the potential for financial impropriety (Energy 4 Impact 

and INENSUS 2016). The prepayment structures of most micro-grids could impact a PU business, 

especially in an earlier stage, as it could pose a cash flow or financing challenge to prepay this cost 

prior to receiving revenues from the business. 

4.2.5 Fee for Service

Developers can generate revenues directly from sales of electricity units (in kWh) combined with a 

standing payment, or by bundling the cost of electricity into the cost of productive services or 

products. This so-called “fee for service” model can help the developer avoid difficult electricity 

regulations and other end-user financing issues where micro-grid operators can purchase their own PU

equipment. The micro-grid operator invests in a workshop or service center and sells use of

appliances (e.g. an electric mill or woodworking tools) or final products (e.g. flour from a mill or 

clean water from a water kiosk). Customers then pay a service fee, which covers the cost of using the 

appliances (return on investment, operating costs) and the cost of the electricity, or a price for the 

product. To be successful, it is important that the micro-grid operator understands the local value 

chain and can cover the up-front investment and operating costs.

4.2.6 Productive Use Zones

Distribution assets make up a significant part of the cost of a micro-grid. Depending on the physical 

geography of the micro-grid site, connecting certain households and businesses that are far away from 

the source of generation may not be feasible. 

Some micro-grid developers have addressed this problem by creating special zones for small 

commercial electricity users located close to their generating units. This allows them to save on 

distribution costs, potentially provide higher service quality such as three phase power, and potentially 

generate additional revenues from business space rental income. Such special zones are also good for 

the commercial businesses because they have access to better amenities and more customer traffic due 

to multiple businesses concentrated in one area. For example, RVE.SOL established the KUDURA 

commercial center near its 8-kW solar hybrid micro-grid in Sidonge, Kenya, which has mobile money 

agents, barber shops, snacks and food outlets, water services, and businesses showing television or 

videos (RVE.SOL n.d.). 

For the PU zone model to work, it is important that the generator or business zone be centrally located 

in the community, so the zone can become a market hub. Care should also be taken to ensure the zone 

does not compete with an existing community marketplace, which might lead to community tensions 

and boycotts of the new zone. Finally, it is important to establish the right pricing points for both the 

electricity and the business space rentals.
14

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

4.2.7 Consumer Choice and Awareness

Promotion of PUE and increased consumer awareness can sometimes, perhaps surprisingly, lead to 

a fall in demand for electricity from the micro-grid. As local businesses become more aware of the 

electricity cost related to larger appliances and longer hours of use, they may reduce their uptake of 

power from the micro-grid by looking for efficiency improvements or better time of day utilization. 

This does not necessarily mean they have reduced their overall power consumption. Rather, as E4I 

has observed from one micro-grid in Tanzania, businesses choose to use their own solar home 

systems during the day and switch to the grid in the evening or make use of diesel generators when 

diesel costs are lower than the equivalent tariff of the grid. Therefore, it is important that micro-grid 

developers account for the cost and service provided by competing energy sources when they prepare 

their pricing plans for different customers.

4.3 Demand-Side Management

Matching electricity demand with supply is critical. It is difficult for micro-grids to achieve this 

balance because demand can be volatile as a result of the relatively small number of customers, the 

seasonality of rural economies, and the modest financial means of customers. Demand-side 

management aims to shift demand from times of lower renewable resource availability to times of 

higher availability. For solar micro-grids, this means increasing energy demand during the day when 

generation is high and reducing it at night when power comes from battery storage or a back-up 

generator. 

Demand management for PUs can happen through load scheduling (specific times for electricity 

supply in different branches of the micro-grid), tariff incentives (lower tariffs at times of higher/lessexpensive supply of electricity), automatic disconnection of nonpriority loads at peak demand times,

and installation of energy efficient equipment/appliances. For solar micro-grids, it is a matter of 

identifying which users can choose when they consume electricity. For example, electric mills 

consume power close to times of high solar irradiation (because they often dry their product in the sun 

before milling to achieve a better-quality, drier flour), so they can be incentivized through price 

changes to make minor shifts in demand. In contrast, restaurants are mainly active in the evening, and 

they are unable to shift their use to times with higher solar irradiation. 

As part of a recent report on micro-grid tariffs published by NREL in support of Power Africa (Reber 

et al. 2018), some high-level analysis tools were developed to examine the impact of different load 

profiles on the levelized cost of energy (LCOE) for micro-grids in Africa (Li 2018). These tools were 

used to compare the LCOE of a residential-heavy and a business-heavy load profile to provide some 

high-level quantitative insights into the potential LCOE differences between these two types of load 

profiles in three different power system configurations. These two load profiles both consume 19,711 

kWh annually, but the timing of that consumption varies as the business-heavy profile has more 

consumption during the day than the residential-heavy profile. Results from this analysis are 

summarized in Table 2. It should be noted that the business-heavy load profile results in reduced 

capital expenditures (CAPEX), operating expenditures, and LCOE values for all three system types.

This shows that PUE can lower costs for micro-grid users and improve the business model for 

developers. Additional information can be found in Appendix B.
15

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Table 2. Results of Comparison of the LCOE of Heavy Residential and Business Load Profiles

RESULTS 

SUMMARY

RESIDENTIAL HEAVY BUSINESS HEAVY

Diesel 

only 

PV +

battery

PV + battery +

diesel

Diesel 

only 

PV +

battery

PV + battery +

diesel

Total life-cycle 

cost

$150,567 $161,616 $142,168 $138,876 $122,369 $114,136

Total CAPEX $39,395 $112,383 $45,737 $29,037 $79,122 $44,565

Total operating 

expenditures

$111,173 $49,233 $96,431 $109,839 $43,247 $69,571

LCOE $0.90 $0.96 $0.85 $0.83 $0.73 $0.68

4.4 Load Estimation

Sizing micro-grid systems is complex, and systems are often over or undersized as discussed in 

Section 2. Part of this complexity and sizing challenge can be attributed to the lack of data regarding 

load profiles from PUs in operating systems. As part of a separate Power Africa initiative, NREL 

partnered with Carnegie Mellon University and PowerGen Renewable Energy, a leading East African 

micro-grid developer, to analyze customer and consumption data from PowerGen’s existing systems 

in Tanzania (Williams et al. 2018). Select data from this analysis is presented in Figures 5–8 and 

illustrates some key attributes of the PUs in PowerGen systems. Figure 5 shows the distribution of 

customers in a typical system: residential or home customers make up the majority of connections. 

Figure 5. Distribution by customer types

Source: Williams et al. 2018
16

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Figure 6 shows the typical employers and occupations of customers, which are primarily in 

agriculture or local business.

Figure 6. Distribution by customer employment

Source: Williams et al. 2018 

Figure 7 shows distribution of customers by business type, with shops being the most common 

business.

Figure 7. Distribution by customer by business type

Source: Williams et al. 2018

Figure 8 shows the average load profiles of various PU businesses. While residential customers make 

up the majority of the connections, Figure 8 shows that businesses have much higher consumption per 

connection.
17

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Figure 8. Productive use load profiles

Source: Williams et al. 2018

Actual load data of operating micro-grids have been shown to be a better predictor of future 

consumption than surveys in some cases (Blodgett et al. 2017). When designing micro-grids to 

incorporate PU loads, it could be valuable to compare survey data with these operational data to adjust 

or confirm estimates. Additionally, for developers considering encouraging PUs it could be valuable 

to review these load profiles and determine which types of business they may want to encourage 

based on when the loads occur. Finally, these data could be used to better understand what types of 

PU businesses are currently operating in rural villages and how they are operated.
18

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5 Developers: Technical Considerations

While both developers and entrepreneurs have many considerations regarding how the PU of 

electricity may impact their businesses, developers also face a set of unique technical challenges when 

determining whether and how to connect these loads to their micro-grids. Consideration of how to 

connect PU loads can reveal concerns about quality and safety that result in high perceived risk. This 

section summarizes micro-grid levels of service, performance reporting and monitoring, and key 

technical considerations related to system design for PU. 

5.1 Service Levels, Performance Monitoring, and Metrics 

Governments, regulators, and donors are increasingly focusing on the level of electricity service 

provided by micro-grids. Just talking about energy access in terms of electricity connections is no 

longer sufficient; level of service matters. In Tanzania, for example, micro-grid developers are 

required to indicate the level of service they will offer at the project development stage, and this is 

then monitored throughout the project life cycle.

The World Bank/ESMAP10 and the International Energy Agency have developed standardized

definitions for different levels of service through a multitiered framework (Bhatia and Angelou 2015).

Each tier has different levels of key attributes such as availability and reliability, with Tier 1 being the 

lowest level of service and Tier 5 being the highest and closest to grid quality. The QAF uses many of 

the same metrics as the multitiered framework and builds on this framework to address several 

additional metrics for performance monitoring and reporting and allows for disaggregation of the 

metrics. 

It is important that developers of micro-grids define the service level that they will provide to 

productive users in terms of key metrics such as peak power, power availability, and reliability.

Defining the service level helps the developer appropriately design their micro-grid system and helps 

the entrepreneur appropriately plan their business operations. A mutually agreed upon level of service 

can form the basis for a customer agreement between the developer and the business. See Lockhart et. 

al. 2018 for more information on customer agreements and key considerations. According to the 

multitiered framework, most PUs require Tier 3, 4, or 5 levels of service. The levels of service defined 

by the QAF are disaggregated into different levels for different categories and are discussed in the 

following as they relate to PU levels of service and performance monitoring.

Performance monitoring, metrics, and evaluation play an important role in the development and 

operation of micro-grids. The following bullets highlight key performance indicators and their impact 

on PU and discuss metrics for these items from the QAF. See Appendix C for more information. 

• Power Quality: Electricity quality is typically measured in terms of voltage and frequency 

variations. The key question for PU customers is whether the power provided is of a sufficient

quality to safely and effectively meet their needs. Most PU equipment cannot be operated

properly if the voltage deviates from its design parameters. Larger PU equipment, particularly 

motors, can drive down the voltage and disrupt supply to other customers within the same 

feeder due to the high inrush or starting currents. Frequent monitoring of the system voltages 

and frequencies as well as testing transformers should make it easier to identify and solve 

power quality issues.

• Power Availability: Power availability is defined by three parameters: power draw, energy 

availability, and duration of daily service. The key questions for PU customers are whether 

power is provided in the amount that meets their expectations, is available for the specified 

duration and at an appropriate time of day. Depending on the service limitations of the micro-

 10 ESMAP is the Energy Sector Management Assistance Program, a partnership of the World Bank Group 

and others. For more information, see www.esmap.org. 
19

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grid technology, some developers have tried to incentivize PU businesses to operate in nonbusiness hours through “time-of-day” tariffs and other methods.

• Power Reliability: A key issue for PU customers is whether electricity is supplied with 

enough reliability to meet their business needs. The reliability of micro-grids in sub-Saharan 

Africa is generally much better than that of national grids in the same region. Blackouts can 

significantly disrupt productive activities, leading to financial losses, the extent of which 

depends on the frequency and duration of the interruptions. Some PUs use costly backup 

generators to address this issue. 

5.2 Technical Design

The load to be served is one of the most important considerations in the design of a micro-grid. The 

micro-grid must be designed to serve the required loads while maintaining power quality, reliability, 

and availability. To do this properly requires that decisions about key design requirements such as 

peak power, reactive power, single-phase or three-phase systems, and capacity utilization are made 

carefully. In this section, the report discuss how PU applications impact these decisions and how 

micro-grids can be safely and economically designed to supply PU loads. 

5.2.1 Alternate Current (AC) versus Direct Current (DC)

When incorporating motor loads into micro-grid power systems, understanding how systems and 

motors are designed is important. Most micro-grid power systems in the developing world are 

designed as alternating current (AC) single or three-phase power systems; however, some systems are 

direct current (DC) systems. 

• AC is the term used to describe an electrical supply where the flow of electrical charge (electric 

current) changes direction periodically. In most electrical supplies this happens 50–60 times every 

second. The voltage level also reverses along with the current. AC is suitable for delivering power 

to households and larger loads, including office buildings and PUs. Most micro-grids have ACbased distribution systems. Most larger scale power generation equipment including dispatchable 

generators, micro-hydro, and wind turbines above approximately 20 kW produce AC power.

• DC provides a constant voltage or current in one direction. It is produced by solar PV and is the 

form of power that is used in chemical battery storage. DC is suitable for common low-power 

household applications such as LED-lighting and TVs, and a few commercial applications such as 

variable speed drives in pumps.

AC can be converted to DC using rectifiers, and DC can be converted to AC using inverters.

Rectifiers and inverters may be independent pieces of equipment or combined into one device, 

commonly referred to as a power converter.

Examples of DC micro-grid developers in East Africa include Devergy and Mesh Power. These 

developers have DC-based micro-grids that largely cater to households or small localized loads, such 

as water pumping.

The two most critical limitations of DC-based grids for servicing PU loads are:

• Distribution Constraints: DC-based distribution networks are generally not extended more than 

200 meters from the generation point because of electrical losses. This typically does not work for 

most PU businesses as they are usually scattered across villages and may not be close to a 

centralized power source, though the PU zone as described in Section 4.2.6 is a notable exception. 

To extend DC grids beyond this limit requires large conductors or the use of high DC voltage,

which introduces further safety and system complexity issues. Therefore, an AC-based 

distribution network is likely to be preferred for any large energy users or dispersed villages. 

• Appliances: Most DC-based appliances are restricted to lighting and small appliances, so

identifying DC based PU equipment may be difficult. The market for AC-based appliances is 
20

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more mature, with greater choice, availability, and lower prices. The continued expansion of DC 

based solar home systems is increasing the number of appliances that are being developed 

specifically for DC applications.

Most micro-grid systems provide AC rather than DC power because of the distribution and appliance 

constraints noted. Additionally, because centralized grids utilize AC power, people are more familiar 

with designing and building AC power systems.

11 Additionally the inability to use appliances and 

equipment from centralized grids and the sense from some consumers that DC power is inferior, has 

led to the more common use of AC micro-grids. However, DC micro-grids could certainly be used to 

power DC PU loads and could be a more efficient option, especially for small loads that can be placed 

near the point of generation.

5.2.2 Three-Phase versus Single-Phase Distribution Networks

Single-phase and three-phase networks are both used for AC-based micro-grids in Africa. There are 

technical and cost tradeoffs when deciding which to use. Single-phase power is sufficient for basic 

loads such as lighting, small electronics, and some small motors. Single-phase power is typically 

delivered with a two-wire system consisting of a power wire and a neutral wire. Three-phase systems

typically supply power over four-wire systems consisting of three power wires and a neutral. Threephase power is typically needed for any large loads, especially large motors. Three-phase systems can 

also deliver single-phase power by connecting between one of the power wires and the neutral. This 

allows a system to provide three phase power at locations close to the power station with individual 

single phase radial lines servicing outlying loads. However, the loads in a micro-grid system must be 

reasonably balanced between phases, which adds some technical complexity to systems design, 

distribution layout, and operations. A typical alternative is to provide individual single phase radial 

lines. Costs to build a three-phase system are typically slightly higher than a single-phase system; the 

exact cost difference depends on system specifics such as supply voltage and line distances, but costs

are generally 5%–20% higher. Costs may be increased for items such as cables (four wires versus 

two), poles (heavier cables may require more poles), distribution boxes, and electrical meters. Costs 

for certain generation equipment, such as three-phase inverters or three-phase generators may also be 

slightly higher but are required for larger power systems as single phase, low voltage distribution lines 

also have defined load limitations. Additionally, supplying a business with three-phase power may be 

slightly more expensive, in terms of individual connection costs to account for additional protection

breakers, than single-phase connections, which would still likely be provided at the residential level 

even for a three-phase micro-grid.

When large motor loads are added or desired in a micro-grid system, the decision between a singlephase system or a three-phase system becomes more critical. Single-phase motors require 

more current than three-phase motors, so as motors become larger, three-phase motors become more 

economical to operate and less expensive to purchase. Most motors above 5–10 horsepower require a 

three-phase power supply. Although specific residential consumers will typically only need single 

phase power, as micro-grid systems become larger and add PU, they are increasingly more likely to 

need to provide three-phase power to at least some consumers. 

Given that three phase motors are readily available and may already be deployed in specific 

communities, many existing micro-grid system owners are examining ways to modify existing singlephase mini-grid systems to supply power to three-phase motors. When determining the best way to 

incorporate a three-phase motor into a micro-grid system, there are three main options: (1) replace the 

three-phase motor with a single-phase motor if available, (2) build a micro-grid or a portion of the 

micro-grid with three-phase generation and distribution capacity, or (3) use equipment such as a 

rotary converter or a variable frequency drive to convert single-phase power to three-phase power 

directly at the motor. For example, a variable frequency drive uses inverters and transistors to 

 11 The cost effectiveness and efficiency of AC systems versus DC systems is an ongoing debate in the off-grid 

community. In this report, we do not take a position in the debate but instead focus on AC, as this is the most 

common design, especially for PU.
21

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

synthesize and output three-phase power from a single-phase source. Each of these potential solutions 

has tradeoffs in terms of cost, complexity, motor lifetime, and other considerations. For example, 

whether the motor and the micro-grid system are existing or just being developed will make a 

significant difference, as the economically optimal design for a new system versus a retrofit will 

likely be very different.

5.2.3 Dispatchable Backup Generators

A key decision for developers of micro-grids is whether to incorporate a dispatchable generator, 

typically diesel, or to rely on a purely renewable option that incorporates batteries and other load 

control options to provide consistent power from what is a variable resource. Dispatchable generators 

have many advantages, as they,

• Reduce the amount of storage required to provide high reliability while incorporating variable 

renewable resources, both on a daily and seasonal basis.

• Provides a viable second source for generating energy which provides additional flexibility in 

case loads are higher than originally expected.

• Help with equalization of batteries and thus reduce charging cycles and lengthen battery life for 

lead acid batteries which can result from inconsistent renewable based charging.

• Typically reduce the overall LCOE for a system providing a similar level of service when coupled 

with PV and batteries.

Diesel generators may not make sense for every situation as they also have many disadvantages,

including:

• Increased system design and operations complexity.

• Additional maintenance skills required.

• Emissions of air pollutants and greenhouse gases.

• Requirements that diesel fuel be sourced, transported, and stored on-site which has additional

operating cost, health, and safety considerations.

• Production cost of energy from diesel power is typically higher than the production cost of power 

based on renewable sources.

Diesel generators should be considered on a case by case basis that weighs the tradeoffs between 

these factors. 

5.2.4 Lower Power Factor

Power factor is the ratio of the real power that is used to do work and the apparent power that is 

supplied. Depending on the origin, condition, and specifications of the PU equipment, PUE loads can 

sometimes cause low power factors either locally or throughout the micro-grid system because of 

their reactive power demands. A micro-grid system must be designed to both supply the necessary 

reactive power for these loads and the correct power factor if needed. Low power factor increases 

system losses and maintenance requirements, while reducing the operational life of specific 

equipment. A low power factor can directly or indirectly result in poor power system performance and 

reduced reliability. Power factor can be improved by installing corrective devices such as capacitor 

banks on the distribution system or at specific loads. However, the best way to avoid power factor 

issues is to appropriately select and size appliances and equipment. Low power factor and the need to 

supply large amounts of reactive power can also jeopardize the business model of micro-grid

operators as they are typically not compensated for reactive power or the losses associated with poor 

power factor that may result from the poor selection of low quality equipment by a consumer. 
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5.2.5 Reliability

Large PUE loads can put additional strain on micro-grid power systems, which may impact both the 

PUE load and other customers. Several possible issues to be aware of include:

• If there are heavy users on an overloaded feeder, the feeder may be vulnerable to shutdowns.

• Users may occasionally connect loads greater than their maximum allowable energy consumption.

• PUE loads can cause low power factor in the micro-grid system resulting in inefficient operation.

• The starting or inrush current for PU equipment, specifically large motors, may be larger than the 

micro-grid can supply. 

• System size may not be sufficient to supply the energy requirements of specific PU loads.

All of these issues can be mitigated with appropriate micro-grid and PU design combined with good 

communication and contractual agreements between the energy supplier and the customer. An 

additional way to mitigate or reduce the potential impacts of large PU loads is by designing the 

distribution system so that interruptions can be isolated and not affect the entire grid. 

PUE significantly influences the design of the system’s capacity. Measurement of the micro-grid’s 

capacity should be done across multiple service level tiers based on the number of PUE appliances 

that can be operated on the system. The system can theoretically be designed so that all PU loads can 

run concurrently. In practice, this rarely happens, and effective load management can be used to 

support more efficient system designs.

5.2.6 Inductive Loads

Many micro-grids, particularly ones focused primarily on energy access, are principally designed to 

serve smaller and straightforward loads, such as lighting, cell phone charging, and some small 

appliances. An example of a typical small household load has a peak of around 25 W made up of 

several 5–10 W LED light bulbs and an 8 W cell phone charger. A typical micro-grid has between 25 

to 200 households connected, so there is diversity in terms of exactly when these loads are turned on 

based on individual household behavior even though there is consistency with general use (e.g. most 

households turn on lights at night but not at the exact same moment). Power draw from these types of 

loads is relatively consistent when turned on, and these types of loads do not have large surge capacity 

or reactive power requirements unless very poor-quality appliances are being used. PUs are typically 

larger loads with more unique requirements. 

Many PU appliances for micro-grids are based on inductive loads such as electric motors. Inductive 

loads resist changes in electric current, and thus the measured current lags the voltage.

When designing a micro-grid, it is important to analyze these loads carefully, both in terms of their 

likely electricity consumption (in kilowatt hours) and their potential starting current (measured in 

watts). Tables 3–5 show the normal and start-up current for different types of electrical equipment.

The actual electricity consumption of motors is usually slightly higher than the parameters indicated 

on the nameplate, which do not account for the efficiency of the connected appliances. Consumption 

is further increased by the power factor, which is typically around 80% in these motors. The 

combined impact means these loads may consume about 30% more than their nameplate capacity. 

Starting currents for electric motors can be three to four times their nameplate current for up to several 

seconds, depending on the inertia of the motor and the connected appliance. Low inertia machines 

(e.g. woodworking and welding tools) have start-up currents that last a few milliseconds. High-inertia 

machines (e.g. mills) can require several seconds. Table 3 shows typical power requirements for many

PU loads. Devices, such as motor soft starters can be installed in front of the specific device to reduce 

or soften inrush currents, typically by increasing the length of the high current inrush.
23

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Table 3. Electricity Consumption Patterns: Commercial and Retail Loads

TYPE OF EQUIPMENT WATTAGE (W) TYPE OF POWER 

SUPPLY REQUIRED

START-UP 

WATTAGE (W)

Popcorn maker 250–1,800 Three-phase None

Fryer 1,200–1,500 Three-phase 3,600–4,500

Oven 1,000–4,400 Three-phase None 

Hair equipment Hair dryer 500–1,000 Single-phase None

Blow dryer 1,500–2,500 Three-phase 6,500–9,800

Hair clippers 10–20 Single-phase None

Printing and 

photocopying

Computer 65–150 Single-phase None

Printer, 

scanner, 

photocopier

100–465 Single-phase None

Freezer/refrigerator 700–1,400 Single-phase None 

Blender 300–600 Single-phase 900–1,800

Source: E4I Experience and Estimates

Table 4. Electricity Consumption Patterns: Small Manufacturing Loads

TYPE OF EQUIPMENT WATTAGE (W) TYPE OF POWER 

SUPPLY REQUIRED

START-UP 

WATTAGE (W)

Welding, compressing, flexing 

(curving wood) 

1,040–5,000 Three-phase 2,100–3,000

Woodworking Lathe 225–750 Single-phase 675–2,250

Table saw 1,600–1,800 Three-phase 3,300–5,000

Jigsaw 400–900 Single-phase 800–1,200

Tailoring 100–600 Single-phase None

Source: E4I Experience and Estimates

Table 5. Electricity Consumption Patterns: Agricultural, Horticultural, and Aquaculture Loads

TYPE OF EQUIPMENT WATTAGE (W) TYPE OF POWER 

SUPPLY REQUIRED

START-UP 

WATTAGE (W)

Chilling/cooling 800–4,800 Single-phase None

Drying 600–800 Single-phase None

Pasteurization, separators, 

homogenizers

700–3,500 Three-phase 1,400–10,500

Incubating 200–6,000 Three-phase 600–18,000

Irrigation pumping 500–4,200 Three-phase 4,800–7,200

Pressing 1,500–4,800 Three-phase 3,000–9,200

Grinding 800–3,250 Three-phase 6,500–9,800

Milling 850–7,500 Three-phase 1,500–21,500

Packaging machine 250–3,000 Three-phase None

Source: E4I Experience and Estimates
24

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

6 Entrepreneurs: Business Case Studies

In Section 3, the report discussed important considerations for entrepreneurs examining PU

enterprises. In Sections 4 and 5 the report examined the important considerations for PU from the 

developer’s perspective regarding technical and business model challenges. In this section, the 

report looks at the economic case for different PU microbusinesses primarily from the entrepreneur’s 

perspective.

This section provides illustrative business cases for five different types of PU: ice making, milling,

carpentry, egg incubation, and water treatment. The first four business cases are based on data 

gathered by E4I on PU customers in eight different village micro-grids in Kenya and Tanzania from 

November 2016 to April 2018. E4I supported the micro-grids by providing business and technical 

mentorship services to the PU businesses to increase uptake of electricity demand. The water 

treatment case is based on input from Healing Waters International. 

The data have been anonymized to protect the identity of individual developers. Where possible, the 

data gathered from these micro-grids was compared with data from other micro-grids. 

The results of the business cases should be treated with caution for several reasons:

• Each village economy has its own unique features, and they may not apply to other areas.

• The data cover only eight micro-grids over 18 months. It would have been preferred to rely on 

data from more micro-grids over a longer period, but such data was unavailable.

• E4I was unable to get a reliable breakdown of the costs of the different PU businesses (apart from 

the electricity costs) and therefore relied on the aggregate numbers provided by the entrepreneurs. 

Ideally, a detailed breakdown for the different PU businesses on both revenue and costs, including 

information about size and pricing in the relevant PU markets, input costs (raw materials such as 

water, grains, timber, and eggs), electricity costs, and other costs (e.g. transport, rent, salaries,

spare parts, and repairs) would have been available.

For these business cases, the analysis assumed an average tariff of $0.90 per kWh, which is a common 

median rate. The actual micro-grid tariffs for PUs vary enormously (from $0.50/kWh to nearly 

$2/kWh), depending on whether the consumer pays a fixed standing charge (in which case the price 

per kWh is lower), the type of PU business, and the size of the micro-grid. 

6.1 Ice Making

Ice making can be an attractive PU activity, especially in remote and hot areas. There are two main 

types of ice makers: stand-alone freezers (which usually require less than a kilowatt of power) and 

much larger, commercial ice makers (which require 10s of kilowatts). The ice is used for a range of 

purposes but particularly to preserve food (e.g. store freshly caught fish) and cool drinks. Ice is 

typically sold in bags of 5–10 kg that cost up to $0.20 per kg.

12 The profitability of an ice-making 

business depends on the cost of electricity, the demand for ice,13 and the availability and cost of 

alternative ice suppliers.

14 The business case for a freezer-based system is shown in Table 6. It 

assumes a price for ice of $0.20 per kg.

 12 E4I data and experience. 13 For example, regulatory restrictions on fishing have reduced demand in parts of Lake Victoria, and there are 

also seasonal variations in fishing. 14 Prices on islands tend to be higher due to less competition from nearby ice makers and the cost of shipping ice 

from the mainland.
25

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Table 6. Business Case for a Freezer Based Ice Making System

(illustrative information based on E4I data)

VARIABLES VALUES UNITS

Size of freezer 90 L

Power rating of freezer 180 W

Amount of power consumed per day 0.36 kWh

Capital cost 365 $

Operational hoursa 2 hours

Avg. Revenue of cold storage sales

(cold drinks, ice cream, ice blocks) per month 110 $/month

Avg. Expenses per month (incl. electricity) 75 $/month

Cost of power 8 $/month

Tariff 0.90 $/kWh

Net Profit 35 $/month

Profit Margin 32 %

Simple payback for freezer 10b months

a Freezer operates for eight hours; compressor cycle period is two hours. This may not represent the ideal 

operation of a freezer from a business perspective but is indicative of current operational practices. The 

business/freezer is assumed to operate 24 days per month or roughly 6 days per week. b Simple payback is calculated as total costs divided by monthly profits or in this case ($365/$35)

It should be noted that this illustrative example and the others in this report do not include the cost of 

financing when analyzing profits and simple paybacks. The effective interest rates for developers or 

microfinance institutions could meaningfully decrease these margins and increase payback periods. 

The interest rates for this type of financing vary substantially and are not included in this analysis but 

should be considered by an entrepreneur looking at a business in this space. For example, if the $365 

cost of the refrigerator was borrowed on a one-year loan with a 15% interest rate, the entrepreneur 

would end up paying about $30 over the course of the year in interest. Additionally, the monthly 

payments would be about $33 per month (including principal and interest) in this scenario, so the 

majority of the operating profits from the first year of business would be required to pay back the loan 

for the freezer, leaving limited resources for expanding the business, inventory, repairs, and other 

expenses. 

Figure 1 shows a picture of a small freezer. Figure 9 shows an example of a commercial ice making 

operation powered by a micro-grid to supply ice to fishermen and businesses.
26

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Figure 9: Commercial ice making equipment 

Source: Samuel Booth, NREL

6.2 Milling

The milling of maize, cassava, or sorghum to produce flour, and the husking and shredding of rice are 

common in remote rural communities in Africa. Milling has traditionally been done through grinding

or pounding by hand, because of a lack of electricity in rural areas, or by small mills driven by diesel 

engines. 

The decision to invest in a mill depends on several factors:

• How much people are prepared to pay for machine milling: Milling fees, which are usually the 

only source of income for a miller, tend to be much higher (up to four times higher) in rural

villages than in towns. Although the higher costs in villages must be weighed against the time and 

cost of traveling to town.

• How many people are prepared to pay for the milling service or how much grain will be milled.

• How much grain needs to be milled to pay off the mill.

• How much it costs to run a mill: It is important to cover both fixed and variable costs when 

calculating the cost to operate a mill.

• Whether there are competing mills in the same area: Based on E4I’s experience, most small 

villages can probably only economically support one or two mills.

Diesel-driven mills are the most common type of mills. The two predominant business models for 

these mills are milling services for a fee (Table 7) and purchasing raw commodities such as maize 

kernels, milling it and selling flour (Table 8).
27

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Table 7. Mill: Diesel-Based Operations (Milling Services Only)

(illustrative information based on E4I data)

VARIABLES VALUES UNITS

Diameter of the mill 18 inches

Size of the diesel generator 15 horsepower (hp)

Diesel consumption per hour 3.2 L

Diesel price 0.99 $/L

Average daily operation 2 hours

Amount of maize milled in one hour 120 kilogram (kg)

Price of maize milling .045 $/kg

Cost of diesel per day 6.34 $/day

Labor cost 3.12 $/day

Revenue from milling per day 10.80 $/day

Net Profit after Labor and Fuel 1.34 $/day

Table 8. Mill: Diesel-Based Operations (Processing and Selling Maize)

(illustrative information based on E4I data)

VARIABLES VALUES UNITS

Diameter of the mill 18 inches

Size of the diesel generator 15 hp

Diesel consumption per hour 3.2 L

Diesel price 0.99 $/L

Average daily operation 2 hours

Cost of raw maize 0.36 $/kg

Amount of maize milled in one hour 120 kg

Price of processed maize 0.45 $/kg

Cost of diesel per day 6.34 $/day

Labor cost 3.12 $/day

Revenue from processing per day 21.6 $/day

Net Profit after Labor and Fuel 12.14 $/day

Within these two models, milling services are more common, but selling flour is more profitable. It 

was unclear why selling flour was not more common because it was vastly more profitable than 

milling services. Data were unavailable on the additional costs of running a business to sell flour and 

as such were not captured in this analysis, so that could be one explanation. The capital or financing 

costs associated with the purchase of the mill and generator were also not accounted for in these 

simple calculations. Other explanations may be related to the availability of maize for processing or 

the market demand for flour that make this a less viable option in practice. When determining to 

invest in and operate a milling business, an entrepreneur must not only decide on a business model,
28

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but they must also choose between an electric mill and a diesel-powered mill. Figure 10 shows an 

example diesel powered milling machine.

Figure 10: Diesel powered milling machine

Source: Samuel Booth, NREL

Electric motor-driven mills can be preferable to diesel-driven mills because they can be easier to 

operate and more reliable. They require less maintenance, are easier to start, and have environmental 

benefits. They also never run out of fuel and reduce labor by removing the time and cost of traveling

to purchase diesel fuel. A cost assessment comparing a diesel mill to an electric mill was provided in 

Table 1. In this example, if the electricity costs less than $0.32 per kWh the mill would be less 

expensive to operate with electricity. This however does not take into account the other possible 

benefits. The profitability of a mill, diesel or electric, ultimately depends on the price of the grains, 

droughts and pests affecting food production and income generation, equipment breakdowns, and of 

course, the cost of electricity or fuel.

Many millers already have diesel-powered mills, and they may well decide to convert their mill to 

electric motors rather than purchase a brand new electric mill. The up-front investment in electric 

motors is much lower (around $500) than the full electric mill (around $2,000)15, and the payback 

period is much shorter. However, there are a few challenges with retrofitting a mill for an electric 

motor. One example is that selecting an appropriate electric motor can be complex as it must conform 

to certain standards and specifications to avoid the risk of damaging the mill and potentially the 

micro-grid. In contrast, many electric mills have already been designed to meet certain technical, 

safety, and efficiency requirements.

The analysis for this report considered the business case for an electric mill rather than an electric 

motor for an existing mill. This analysis builds on the diesel mill case studies in Tables 7 and 8 to 

show the equivalent case for an electric mill. The analysis goes further to show the necessary tariffs 

required for a micro-grid to maintain the same level of profitability as the diesel mill and the 

breakeven tariff for the mill to make a profit assuming no other changes. These cases (Tables 9–10)

do not consider savings for operation and maintenance (O&M), time required to source fuel, or other 

variables. Table 9 shows that the margins on a fee for service mill are small and an electric mill 

becomes unprofitable at a relatively low tariff of $0.38 per kWh. For the case shown in Table 10,

where the mill sells flour, the profits are higher, and the business owner could adsorb higher cost 

energy up to a tariff of $0.92 per kWh. Although the breakeven costs for replacing a diesel driven 

option remains at $0.32 per kWh. With the E4I data showing an average micro-grid tariff of $0.90 per 

 15 The cost of an equivalently sized diesel-powered mill is about the same, approximately $2,000. Data on the cost

of purchasing a replacement diesel motor, instead of an electrical motor, was not available.
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kWh in the eight micro-grids evaluated, careful consideration must be given for the ability of a mill to 

operate profitably on micro-grid power and the need for potentially lower tariffs to attract and retain 

mills as micro-grid customers. It is also necessary to further investigate the other benefits noted for 

electrical mills and their impact on the business case. 

Table 9. Mill: Micro-Grid-Powered Operations Milling Services

(illustrative information based on E4I data)

VARIABLES VALUES UNITS

Size of equivalent electric motor 10 kW

Amount of power consumed per day 20 kWh/day

Revenue from milling per day 10.80 $/day

Labor cost 3.12 $/day

Net profit to be maintained (diesel-based case) 1.34 $/day

Desired cost of power 6.34 $/day

Breakeven Tariff for Diesel Cost Equivalence 0.32 $/kWh

Breakeven Tarif for Profitability 0.38 $/kWh

Table 10. Mill: Micro-Grid-Powered Operations Processing and Selling Maize

(illustrative information based on E4I data)

VARIABLES VALUES UNITS

Size of equivalent electric motor 10 kW

Average daily operation 2 hours

Amount of power consumed per day 20 kWh

Revenue from milling per day 21.6 $/day

Labor cost 3.12 $/day

Net profit to be maintained (as per business as usual) 12.14 $/day

Desired cost of power 6 $/day

Breakeven Tariff for Diesel Cost Equivalence 0.32 $/kWh

Breakeven Tariff for Profitability 0.92 $/kWh

6.3 Carpentry

Carpentry and other woodworking activities are widely practiced in rural communities in Africa. 

In a similar way to how millers operate, carpenters often operate manually without an electricity 

connection by traveling to an electrified location or using diesel generators. Except for some saw 

mills which can be driven directly from a diesel engine, carpentry or other woodworking businesses

will typically use electrical energy which lends itself more to the use of micro-grid solutions. The 

success of the carpentry business depends on demand for furniture and other wood products, the 

availability and cost of timber, and the level of competition. Based on E4I’s experience, most small 

villages can probably only economically support one or two carpenters and woodworking shops. The 

electric machinery used by carpenters ranges from small drills and grinders to large machines, such as 

bench saws, which are more expensive and have larger power requirements. Limited information 
30

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

about the business case for carpentry was available, but the reference business case for a lathe 

machine is shown in Table 11.

Table 11. Business Case for Carpentry Tools

(illustrative information based on E4I data)

VARIABLES VALUES UNITS 

Capital Cost 1050 $

Assumed revenue 245 $/month

Assumed cost 150 $/month

Energy consumption 18 kWh/month

Net profit 95 $/month

Profit margin 39 %

Simple payback 11 months

Especially in the case of the more expensive PU appliances such as mills or machine tools, the cost of 

financing must be considered. In this case, if the $1,050 was borrowed at a 15% interest rate with a 

one-year term, monthly payments for principal and interest would be about $95, so the business would 

have a significant cash constraint during the first year of operation while the profit was being used to 

pay back the loan. However, a two-year term would allow for payments of about $50 per month and a 

much more favorable operating environment for the business owner. Typically, the terms for loans are 

determined by the lending institute or entity. 

Figure 11 shows an example carpentry workshop with saws, drills, painting machines, and other tools 

powered by a micro-grid.

Figure 11. Example carpentry workshop

Source: Samuel Booth, NREL
31

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

6.4 Egg Incubation

Many households in Africa keep chickens for eggs and meat. Incubators can allow households to 

hatch more eggs than a hen could (they allow a hen to lay more eggs rather than incubating eggs, as 

during incubation hens stop laying eggs), but they require electricity. A hen can hatch about 20 to 30 

chicks per year but using the same hen with an incubator one could get up to 300 chicks per year

(Sure Hatch 2018). Egg incubation can be an attractive business for rural villages because of its low 

up-front investment cost and potentially high returns. The success of the business depends on demand 

for and supply of eggs and chicks, proper use of the incubation equipment, the quality and fertility of 

the eggs before incubation, and the level of competition. The business case for an egg incubator is 

shown in Table 12. Figure 12 shows example egg incubation equipment.

Table 12. Business Case for an Egg Incubator

(illustrative information based on E4I data)

VARIABLES VALUES UNITS

Size of incubator 100 eggs

Power rating of incubator 100 W

Capital cots 122 $

Operational hours 24 hours/day

Amount of power consumed per day 2.40 kWh/day

Operational days per month 21 days

Tariff / Cost of power 0.90 $/kWh

Cost of power 45 $/month

Avg. Expenses per month (including electricity) 83 $/month

Avg. Revenue of sales per month 125 $/month

Net profit 42 $/month

Profit Margin 34 %

Simple payback 3 months

In this case, the cost of the incubator is $122 and financing or the capital cost of the incubator is not included in 

the average expenses. It should also be noted that power with a high level of service is an important factor in an 

egg incubation business, which lends itself to supply from a micro-grid power system as compared to utility power 

or power from a personal or community diesel engine.

Figure 12: Example egg incubation equipment

Source: E4I
32

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

6.5 Water Treatment and Sales

Clean water for drinking, cooking, and hygiene is essential for sustainable development in rural 

Africa. The many methods of treating water in rural areas include chemical treatment, reverse 

osmosis, and filtration. In addition to water pumping, many of these methods require electricity to 

power treatment equipment, which provides great opportunity to co-optimize the production of 

electricity with the provision of clean water. A case study of this application and the potential 

business opportunity was developed for this report in cooperation with Healing Waters 

International.16 Healing Waters International supplies compact water treatment solutions to Jibu, a 

company that helps provide clean water in East Africa by working with local entrepreneurs.17 This 

case study was based in part on information gathered from Jibu’s experience. The case study focused 

on a representative remote village in Uganda using a Solar Pure Ultrafiltration UF system from 

Healing Waters powered by a micro-grid to produce and sell clean water at a village kiosk. A 

summary of the business case for water treatment and sales is provided in Table 13. Additional 

information can be found in Table A4-3 in Appendix D.

Table 13. Key Data Inputs for Water Treatment Modeling

(illustrative information based on Healing Waters data)

LOCAL WATER DEMAND VARIABLES VALUES

Number of households in village 200

Average household water use per daya 12 L

Total commercial use per average day assuming one bar, restaurant, clinic, and school 240 L

Total water demand per day 2,640 L

WATER TREATMENT EQUIPMENT VARIABLES

Plant Capital and Operating Costs 

Ultra-filtration water treatment system $10,500

Additional costs for other infrastructure, customs, installation, etcb $9,100

Total system installed cost $19,600

Store operating hours per day 10

Plant operating hours per day (1,800 L/hour capacity) 2

Plant power demand 400 W

Additional shop power demand 25 W

Total electricity use per year 383 kWh

Tariff / Cost of power $0.90/kWh

Plant Electricity Costs per Year $345 

Plant O&M costs per day $47 

Plant Revenues and Financials

Water pricec $0.06/L

Annual revenue from water salesd $57,658 

Annual costs for operations $17,573 

Annual profit $40,085 

Profit margin 70%

Simple payback 4 months 

 16 For more information, see http://www.healingwaters.org. 17 For more information, see jibuco.com.
33

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

a Estimate is a conservative average based on Healing Waters experience and is consistent with 

World Health Organization information (Howard and Bartram 2003). b Costs for these items will vary by system and country. c Current prices in Uganda range from $0.06/L to $0.14/L. d Assumes a full willingness to pay from villagers and a conversion of water needs for drinking, cooking, 

and other uses to water sourced from the treatment plant. This is consistent with Healing Waters 

experience but would require additional analysis from a prospective entrepreneur. 

The scale of the investment in terms of capital costs for the water treatment equipment is much higher 

than other potential businesses such as egg incubation, e.g. ~$20,000 versus ~$100, but the profit 

margins are higher, and the simple payback is similar. With a system cost of this size, financing 

would likely be required which would reduce profitability and extend the simple payback.

Additionally, a higher level of skill from the operators would likely be required to run a water 

treatment plant over an egg incubation business. Given the need for clean water and the additional 

economic and health benefits provided by access to clean water, the co-optimization of energy and 

water production appears to have large potential and deserves further analysis. Figure 13 shows clean 

water produced by a Healing Waters treatment system filling bottles.

Figure 13: Healing Waters treatment system and bottle filling

Source: Healing Waters International

6.6 Other Productive Uses

Many other PUs are not illustrated by these business cases. Some other common examples can be 

found in the PowerGen data in Section 4 (Williams et al. 2018). Additionally, other common uses 

have not been discussed or researched to date. For example, welding machines are common in many 

villages in Africa where they are used to repair milling machines, bicycles, and other items. Welders 

use large amounts of power over short periods, so they would require careful consideration as to the 

value proposition of connecting them to micro-grids.

Though this report is not an exhaustive list of PUs and it covers only a small fraction of the potential 

options for micro-grids, it does present a common framework through which options can 

be compared. 
34

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

6.7 Business Case Comparison

Figures 14 and 15 compare the initial investment requirements and financial performance of several 

different PU business cases and their monthly electricity consumption. For developers, the figures

show which of the PU opportunities considered have high investment requirements and the likely cost 

of promoting different PUs through the provision of equipment to business owners. The figures also 

show the electricity demand for the different equipment, which helps inform the anticipated installed 

capacity of the micro-grid. For entrepreneurs, the figures show the expected investment cost for the 

different PUs compared to the anticipated monthly sales and net profit. The figures also increase

awareness among entrepreneurs of the likely range of power consumption for different appliances, 

which allows them to start thinking about how to consume electricity more efficiently.

Note: annual profit does not include recovery of capital cost

(illustrative information based on E4I data)

Note: annual profit does not include recovery of capital cost

(illustrative information based on Healing Waters Data)

Figure 14. Investment requirements and financial performance of different Pus

$0

$500

$1,000

$1,500

$2,000

$2,500

$3,000

$3,500

$4,000

$4,500

Freezer Milling Services Carpentry Egg Incubation

Capital Cost Annual Revenue Annual Profit

$0

$10,000

$20,000

$30,000

$40,000

$50,000

$60,000

$70,000

Water Treatment

Capital Cost Annual Revenue Annual Profit
35

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Figure 15. Electrical consumption of different PUs

(illustrative information based on E4I and Healing Waters Data)

0

1,000

2,000

3,000

4,000

5,000

6,000

7,000

8,000

Freezer Milling Services Carpentry Egg Incubation Water

Treatment

Annual kWh consumption
36

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

7 Impact of Productive Use on Micro-grids

Creating a sustainable revenue model to serve rural communities is a key challenge for the micro-grid

sector. The cycle of growing demand, increasing revenue, and lowering costs through the addition of 

PUs hopefully results in a more viable micro-grid business model. PUs, generally being the largest 

consumers of electricity, clearly play a key role in contributing to the economic viability of microgrids.

7.1 Financial Impact

7.1.1 Optimal System Design

When designing micro-grids, the specific characteristics of loads, such as timing, magnitude, and 

seasonality can have a large impact on the financial viability of the overall system. For this reason, the 

specific power requirements of a PU business may positively or negatively impact the design, 

operation and resulting costs of power. This impact may be especially pertinent for smaller microgrids 

where any specific PU may have an oversized impact. In the following section, the report looks at the 

potential LCOE impacts of supplying power to a specific PU under several different use conditions, 

demonstrating that how the PU is incorporated into a micro-grid application will impact the resulting 

benefit. 

In a fashion similar to that described in Section 4.3, the analysis used NREL’s base case model of a 

representative village in Tanzania developed previously for analyzing tariffs (see Reber et al. 2018) to 

compare the techno-economics of adding a 10-kW (sizing based on E4I data) maize mill to a new 

micro-grid. The design of the micro-grid to serve this load along with other residential and 

commercial loads using NREL’s REopt (Renewable Energy Optimization) tool was analyzed.

REoptTM is a techno-economic decision support model used to optimize energy systems for buildings, 

campuses, communities, and microgrids. REopt recommends an optimal mix of renewable energy, 

conventional generation, and energy storage technologies to meet cost savings and energy 

performance goals.18 The analysis compared various operating scenarios for the mill with the base 

case to examine techno-economic impacts. The scenarios evaluated included the addition of a,

1. 10-kW mill operated on weekdays throughout the year for 8.0 hours per day from 9:00 AM to 

5:00 PM with an average loading of 33% during operational hours: loading is the fraction of time 

the mill is operating over the course of operations during each day. In this case, the mill would 

operate for 2.6 hours each day at full load. It is useful to calculate overall energy requirements in 

terms of kWh that the micro-grid must meet while also ensuring the micro-grid can meet the 10-

kW peak power requirements of the mill.

2. 2.5-kW mill with the same operations as mentioned previously (#1) to compare the impacts of 

size. It should be noted that E4I data indicate that mills operate for approximately 2 hours per day 

on average, while discussions with developers indicate that some mills operate more hours per 

day than this and some operate less. 

3. 10-kW mill with the same operations as mentioned previously (#1) except that it is operated at 

50% and 16.5 % loading in two separate scenarios.

4. 10-kW mill with the same daily operations as mentioned previously (#1) except that it is operated 

seasonally for either three months of the year (December to February) or six months a year 

(November to April) to coincide with the maize harvest season and to examine the impacts of 

seasonality in two separate scenarios.

5. 10-kW mill with the same daily operations as mentioned previously (#1) except with 50% loading 

from November to April to coincide with harvest season and at 16.5% loading for the rest of the 

year. 

 18 For more information see, https://reopt.nrel.gov/.
37

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

These scenarios compare the techno-economic impact of mills on the final system life cycle cost of 

power for a micro-grid system that meets the requirements of size, loading, and seasonality. Figures 

16–21 illustrate how the overall techno-economics of the system change under various scenarios. For 

simplicity, a final LCOE is provided to represent the relative cost of suppling power inclusive of the 

larger load while in an operating power system it could be that a PU operator is charged a higher tariff 

to make up for the need to supply a higher level of service to that specific PU. It is also assumed that 

the load from the mill is applied during weekdays between the hours of 9:00 AM to 5:00 PM. If a 

different load pattern was assumed, the results could be quite different. Details of the system costs and 

other economic parameters can be found in Appendix D.

Figure 16. LCOE of scenarios for hybrid systems

Figure 16 shows how the LCOE of hybrid PV, battery, and diesel systems vary under the different PU 

mill loading scenarios. Some of these scenarios increase overall system costs compared to a system 

without the mill (the “original” case), while other scenarios reduce overall system costs. This clearly 

indicates the need for careful consideration of adding a mill to a micro-grid as the extra equipment 

costs must be balanced against the additional sales of power. The highest loading of 50% which 

corresponds to the highest capital costs (Figure 17) shows the lowest overall cost of $0.73 per kWh 

and indicates the potential of PU to lower system costs. Alternately the lightest loading of 16.5% 

increases costs over the base case from $0.81 to $0.88 per kWh since the micro-grid design is required

to cover the high cost of supplying power to the mill even though it does not use very much power to 

defer the higher costs.

$0.50

$0.55

$0.60

$0.65

$0.70

$0.75

$0.80

$0.85

$0.90

$0.95

$1.00

LCOE ($/kWh)

PV-Battery-Diesel System

Original

10kW 33%

2.5kW 33%

10kW 50%

10kW 16.5%

10kW 33% (Nov-Apr)

10kW 33% (Dec-Feb)

10kW Harvest
38

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Figure 17. Capital costs and life cycle costs of mills scenarios for hybrid systems

Figure 17 shows how capital costs and life cycle costs change for these systems. Life cycle costs 

increase in all scenarios because additional load is being supplied. CAPEX increases in each scenario 

as well because the optimizer adds new generation sources to meet the mill load. However, the 

optimal generation mix changes based on mill loading with PV more favored at higher loading levels

of 33% and 50% and diesel generators favored at lower loading, as shown in Figure 18, as it is more 

efficient to provide short duration, high load cases with diesel in place of PV and inverters. Lower 

levels of PV and higher levels of diesel use are also found with seasonal loading. Figure 18 shows the 

sizes of the generation selected. 

Figure 18. PV and generator sizing for hybrid systems

Figures 19–21 review the results of the PV and battery only scenario analysis. Figure 19 shows that 

LCOE impact varies again by milling loading with some scenarios lowering overall costs and some 

$0

$20,000

$40,000

$60,000

$80,000

$100,000

$120,000

$140,000

$160,000

CAPEX LCC

PV-Battery-Diesel Systems

Original

10kW 33%

2.5kW 33%

10kW 50%

10kW 16.5%

10kW 33% (Nov-Apr)

10kW 33% (Dec-Feb)

10kW Harvest

0

2

4

6

8

10

12

14

16

18

PV size [kW] Generator size [kW]

PV-Battery-Diesel Systems

Original

10kW 33%

2.5kW 33%

10kW 50%

10kW 16.5%

10kW 33% (Nov-Apr)

10kW 33% (Dec-Feb)

10kW Harvest
39

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

increasing costs. Figure 20 shows the capital and lifecycle costs, and Figure 21 shows the resulting 

component sizes.

Figure 19. LCOE of PV-battery systems ($/kWh)

Figure 20. Capital cost and life cycle cost of PV-battery systems

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

LCOE

PV-Battery Systems

Original

10kW 33%

2.5kW 33%

10kW 50%

10kW 16.5%

10kW 33% (Nov-Apr)

10kW 33% (Dec-Feb)

10kW Harvest

$0

$50,000

$100,000

$150,000

$200,000

$250,000

CAPEX LCC

PV-Battery Systems

Original 10kW 33% 2.5kW 33%

10kW 50% 10kW 16.5% 10kW 33% (Nov-Apr)

10kW 33% (Dec-Feb) 10kW Harvest
40

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Figure 21. Optimal generation sizing for PV-battery systems

Overall the REopt analysis helps to illustrate the complexities of adding PU loads to a micro-grid in 

terms of their impact on the overall business model and costs. Careful consideration of loads is needed 

to understand their peak loads, average loads, and seasonality to determine their impact on key 

financial metrics like LCOE and capital expenditures and to determine if/how they should be 

connected to a micro-grid system and under what type of tariff. Also, the size and mix of optimal 

equipment changes depending on the loads; optimization is critical to make sure the equipment is 

properly sized for the PUE application.

7.1.2 Existing Oversized Systems

Based on E4I experience, it is common for many micro-grids currently operating in Africa to be

oversized. This can be caused by many factors but a key one is poor demand prediction. Thus, a large 

fraction of existing systems operates far from the optimal design. A common response to address the

underutilization of power systems is to work to expand the load, and encouraging the addition of PU

loads is an approach that has additional local benefits. However, the ideal solution would be to 

appropriately size the system during the design phase. Adding PU loads can increase capacity 

utilization of installed but underused assets and improve revenues. Capacity utilization in this context 

is a measure of the potential generation capacity of the micro-grid compared with the actual sale of 

power to micro-grid customers. Having high levels of capacity utilization is especially important for 

micro-grids that include renewable energy generation sources as this generation has high fixed costs 

but low operating costs. Increasing the capacity utilization reduces the overall LCOE of the project as 

the fixed costs are spread out over a larger number of kWh of power sales. As was indicated in section 

7.1.1 however, care must be taken to increase utilization at the appropriate time if possible. Expanding 

evening loads in a PV-battery system may increase the use of the batteries, resulting in capacity 

limitation issues. Adding additional loads that force the use of expensive diesel fuel may also result in 

increasing the overall costs of operating the power system.

7.2 Social Impact

Very little empirical research has been done on the social impact of PUE in micro-grids. This section 

highlights some expected social impacts, but many of these must still be validated. Furthermore, many 

0

10

20

30

40

50

60

70

80

90

PV size [kW] Inverter size [kW] Storage size [kWh]

PV-Battery Systems

Original 10kW 33% 2.5kW 33% 10kW 50%

10kW 16.5% 10kW 33% (Nov-Apr) 10kW 33% (Dec-Feb) 10kW Harvest
41

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of these impacts and benefits can only be realized if there is a strong local support network, including 

business mentoring, access to appropriate appliances, affordable finance, and access to markets.

7.2.1 Job Creation and Induced Impacts

Access to electricity can create jobs by helping existing businesses expand and new ones form

(Akella, Saini, and Sharma 2009). Also, jobs created by PUs can have a multiplier effect as workers 

spend part of their income on the local economy, increasing spending in other sectors such as retail 

and leisure, which, in turn, can create additional “induced” jobs (EUEI-PDF and GIZ 2013). The

multiplier effect may also help the local economy progress from traditional economic activities to 

more value-added ones such as processing and manufacturing.

7.2.2 Environmental Considerations

Access to clean power for PUs can potentially contribute to the mitigation of climate change. If 

productive power emerges from a renewable energy source, local demand and need for fossil fuels

may be reduced, thereby reducing CO2 emissions. Renewable PUE can reduce a community’s

dependency on dangerous and polluting fuels such as kerosene or diesel fuel. For example, 

RVE.SOL’s KUDURA center at its micro-grid in western Kenya led to a 72% reduction in kerosene 

usage in the local community (RVE.SOL n.d.), which led in turn to a 74% increase in disposable 

income19 (ARE n.d.). Further, the expansion of PUs within a community leading to the expanded 

availability of local products and services such as clean water, milled flour, or ice, reduces the 

transportation and fuel consumption impacts of bringing these products in from nearby communities.

7.2.3 Gender Equality

PUE can empower women through employment. However, the evidence to back up this theory is 

mixed. Studies in South Africa, Nicaragua, and Guatemala showed that women were 9%–23% more 

likely to gain employment outside the home following electrification. Electrification, generally 

through grid extension (although the results are likely similar for isolated micro-grids), saved women 

time and enabled them to complete domestic activities in the evening, thus allowing them to 

participate in paid work during the day. Electrification has also helped challenge gender norms, with 

women in India reporting an increase in autonomy, as measured by factors such as the ability to 

participate in household decision-making (EUEI-PDF and GIZ 2013).

E4I has found that female entrepreneur participation in its PU mentoring activities has been low. In 

previous E4I programs, only 27% of entrepreneurs were women. This is in part explained by the fact 

that these programs focused on existing businesses, most of which are owned by men in rural Africa. 

The programs also focused more on industries that are more likely to have male owners, such as

manufacturing or carpentry. Most of the women were active in retail trade and services activities, 

while, these programs focused mainly on business activities in fishing, agriculture, agriculture 

processing, and manufacturing.

Given the considerations mentioned previously, it is important that any market engagement program 

is gender-sensitive and considers participation by women. Mentoring activities must be tailored to the 

specific challenges faced by women in accessing skills, capital, collateral, financial and technical 

literacy, asset ownership, product marketing, contacts throughout the value chain, saving and credit 

services. 

 19 Percentage increase in disposable income after five years of micro-grid operation.
42

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8 Risks and Mitigation Strategies

This section looks at the key risks and mitigation strategies related to the promotion of PU in microgrids, excluding the technical risks covered elsewhere in this report.

8.1 Poor Estimation of Expected Demand from PUE

The main risk for a micro-grid developer in relation to the development of PU is in assessing the 

power needs of PU. Most developers overestimate the demand from existing or new PUE, leading to 

underuse of the micro-grid which is likely to drive up costs as was seen in Section 7.1. There are 

many reasons demand from PUs may not meet expectations. The demand assessments may be 

unrealistic, the entrepreneurs may lack the necessary skills and access to finance and PU equipment, 

or they may simply have limited appetite for risk because of a lack of information about market 

opportunities (GIZ and EUEI-PDF 2013).

There are several potential mitigation measures that can address this risk:

1. Gaining a better understanding of the specific drivers of PU within a community leading to 

the identification of specific PU focused programs such as providing business mentoring for 

the entrepreneurs and establishing PU information and demonstration centers.

2. Improve access to capital, such as through setting up a fund to provide grants or 

concessionary funding for the purchase of PU focused electrical equipment. 

a. For example, E4I made an agreement with a microfinance cooperative (Ukerewe 

SACCO) to provide loans to the PUs of Jumeme’s micro-grid on Ukerewe island in 

Tanzania (Contejean and Verin 2017). 

b. E4I also partly guaranteed the loans to encourage the SACCO to lend to higher-risk 

customers that did not necessarily meet their borrowing criteria. 

3. Another option is aligning or applying for support from local government or 

donor development programs that focus on economic development in rural areas (Energy 4 

Impact and INENSUS 2016). 

4. Developers may also be advised to take a more conservative approach to demand 

assessments; for example, by assuming only 50% of PU demand is likely to be realized.

8.2 Payment Risk

Payment risk is another challenge for developers. Some customers may be unable to afford the initial 

connection charge or ongoing electricity bill, and PUE are not immune to this problem. This is 

particularly the case in agricultural areas before the harvesting season, when financial resources are 

more limited (Manetsgruber et al. 2015) and expenditures in specific PU applications may be reduced 

even though the operating costs of a PUE may not be similarly reduced. Although less likely than 

when providing electrical service, some PU customers may be unwilling to pay because they are not

satisfied with the electricity service, for example, because of metering or connectivity issues or 

because of unrealistic expectations about the quality and cost of service.

There are various mitigation strategies for payment risk. 

1. Most micro-grid operators operating in remote rural areas require their customers, both 

residential and commercial, to pre-pay for a certain service or level of consumption, usually 

one month in advance (see Section 3 for more information). While this addresses the shortterm payment risk, it cannot guarantee the long-term revenues of the micro-grid and may be a 

barrier to entry for some energy intensive PUE.
43

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2. Because PUE are typically high energy users, mechanisms that would not readily apply to 

residential customers, such as a variable cost of power, a seasonal payment reserve, or service 

guarantees may help reduce payment risks.

8.3 Knowledge and Skills

Many rural microenterprises lack the technical knowledge and skills needed to run a business (EUEIand GIZ 2013).

There is no easy solution to this challenge, and it often requires sustained engagement over a long 

period of time. One potential solution is providing local business and financial mentoring. E4I is 

doing this in support of entrepreneurs though a process it has developed over many years of providing 

related support. Appendix A provides some details of the E4I process and could serve as a guideline 

or starting point for others looking to develop similar efforts or support programs.

8.4 Social Acceptance Risk

Another challenge for micro-grid operators is social acceptance by the local community. If an 

operator is not transparent about its plans and does not consider local public opinion, the risk of the 

rural electrification development failing is high (Manetsgruber et al. 2015).

These risks can be partially mitigated by engaging early with the community and running community 

awareness campaigns. The engagement process should typically include a kick-off meeting, training 

on electricity usage and business matters, awareness raising about the potential impact of productive 

appliances, and training on the installation and operation of those appliances. Micro-grid operators 

must also be sensitive to the displacement of existing local businesses created by enabling PU 

particularly if the new PU business owner is from outside the local community. 

8.5 Technical Risk

Technical challenges and risks for micro-grid developers were discussed extensively in Sections 4 and 

5. These risks can be mitigated through appropriate systems design and analysis of PU loads. 

Depending on the risk a variety of mitigation strategies can be used, and it is essential that both the 

developer and the entrepreneur understand the level of service that the micro-grid will provide.
44

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9 Conclusions

The PUE in micro-grids holds great promise to both local economic development in rural areas of 

Africa and the financial viability of micro-grids. Successfully designing, developing, and operating 

businesses in rural Africa can be difficult. This report illustrates some of the challenges and 

opportunities for local entrepreneurs in a few key industries. The report is a resource that 

entrepreneurs, governments, and non-governmental organizations can use to help design programs, 

policies, and incentives to encourage economic development in these areas. Additionally, developers, 

engineers, and organizations studying and designing micro-grids can use this information to inform 

their technical and business decisions resulting in better understanding, faster uptake, and increased 

success with adding PU loads to both new and existing micro-grids. 
45

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Early Insights into Mini Grid Operations in Rural Kenya. Vulcan Impact Investing.

Blodgett, Courtney, Peter Dauenhauer, Henry Louie, and Lauren Kickham. 2017. “Accuracy of 

Energy-Use Surveys in Predicting Rural Micro-Grid User Consumption.” Energy for 

Sustainable Development. 41: 88–105

Contejean, Arthur, and Louis Verin. 2017. Making Micro-Grids Work: Productive Uses of Electricity 

in Tanzania. Working Paper. London: International Institute for Environment and 

Development (IIED).

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South Africa. Mimeo, University of Michigan

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Barriers to Growth and the Potential Role of the African Development Bank in Supporting the 

Sector. Green Mini-Grids Market Development Programme. GMG MDP Document Series: 

no. 1. African Development Bank. http://greenminigrid.se4all-africa.org/assets/GMG-MDPDocument-Series-N1.pdf. 

EUEI-PDF (EU Energy Initiative Partnership Dialogue Facility), and GIZ (Deutsche Gesellschaft fuer 

Internationale Zusammenarbeit). 2013. Productive Use of Energy — PRODUSE: A Manual 

for Electrification Practitioners. https://www.giz.de/fachexpertise/downloads/giz-eueipdf-enproductive-use-manual.pdf.

GIZ and EUEI-PDF. 2013. Productive Use of Energy — PRODUSE. Measuring Impacts of 

Electrification on Small and Micro-Enterprises in Sub-Saharan Africa. Eschborn, Germany:

EUEI PDF.

https://www.esmap.org/sites/esmap.org/files/ESMAP_GIZ_BMZ_AEI_PRODUSE_Study_F

ullText_Optimized_0.pdf. 
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Global Leap. 2016. The State of the Global Off-Grid Appliance Market. 

https://s3.amazonaws.com/clasp-siteattachments/The-State-of-the-Global-Off-GridAppliance-Market-Report.pdf.

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Performance of Micro and Small Enterprises?

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Health Organization. WHO/SDE/WSH/03.02. 

http://www.who.int/water_sanitation_health/diseases/WSH0302.pdf. 

Ireri, Makena. 2018. Grid Powered Refrigeration for Productive Use: Study of 172 Micro-Enterprises 

in Uganda to Understand the Case for Off-Grid Appliances. Energy 4 Impact. 

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%E2%80%93-new-study. 

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Customers in Tanzania.” IEEE Power Africa.
47

This report is available at no cost from the National Renewable Energy Laboratory (NREL) at www.nrel.gov/publications.

Appendix A: Energy 4 Impact’s Productive Use

Support Process 

E4I has developed its own unique and holistic process for providing PUE support to microbusinesses 

and micro-grid project developers. It is based on 10 years of field experience incubating 

microenterprises in East Africa and Senegal. It has four pillars (Figure A1-1 and Table A1-1).

Figure A1-1. Four pillars of E4I process for providing PUE support (Source: E4I)

Village and 

enterprise 

assessment

Enterprise 

development

Strategic 

advisory to 

developers

Monitoring, 

evaluation, 

and learning
48

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Table A1-1. Four Pillars of E4I Process for Providing PUE Support

PILLAR DESCRIPTION

Pillar 1 Village Assessment—assessing the village economics (macroeconomics, demographics, and 

agriculture/primary industries)

This step identifies the potential of new productive end-use activities that might be possible, 

once power is available. As per E4I experience, microbusinesses engaged in trading activities 

consume the least power, whereas businesses involved in light manufacturing and agriculture 

processing consume the most power at the village level.

Enterprise Assessment—assessing microentrepreneurs who are interested in getting support 

and have interest and capacity to expand their businesses following the new connection

This results in a short-list of local businesses that can scale-up their business thanks to 

access to electricity and viable productive investment.

Pillar 2 Enterprise Development—comprising:

Enterprise Engagement—includes a kick-off meeting, training on electricity usage and 

business matters, and raising awareness on the potential impact of productive appliances 

Business Mentoring and Technical Capacity Building—providing in field customized business 

mentoring to microentrepreneurs focusing on: business case analysis of PUE, electricity 

usage, and business practices with the aim to sustainably generate higher incomes

We help establish PUE equipment supply chains (i.e., identify PUE appliances, suppliers, 

prices, and power ratings). This facilitates more efficient uptake and creation of demand 

stimulation for PUE. We also help PUE enterprises establish themselves in their supply 

chains, identifying as applicable sources of raw materials, feedstock, and products for 

resale; and helping identify new marketing approaches and routes to market for these 

products/services.

Access to Finance—reaching out to financial institutions to enable access to finance for 

microentrepreneurs so they can invest in electrical equipment to expand and/or launch their 

business idea

This is a key barrier to accessing electrical appliances and has proved repeatedly to be an 

obstacle in day-to-day operations. 

Pillar 3 Advisory to Project Developers—strategic advising, including:

• Development of PUE strategy

• Mapping of priority PU sectors

• Establishment of microbusiness models for PUs

• Setting of tariffs to encourage efficient electricity use

• Technical system design, sizing, and configuration

• Cataloging of efficient appliances

• Development of partnerships with appliance suppliers

• Management of supply chain 

• Asset financing

• Assessment and forecast of electricity demand 

• Management of load 

• Assessment of willingness and ability to pay of end users

• Bespoke demand stimulation tools.

Pillar 4 Monitoring, Evaluation, and Learning—collecting baseline and monthly monitoring data for

several indicators to assess the impact on income and electricity consumption over time

These indicators may include the number of beneficiaries served, business revenues, job 

creation, capital and running costs, electricity consumed, carbon emissions saved, debt service 

performance. Combined with qualitative feedback from the entrepreneurs and E4I mentors, the 

monitoring data are used to learn lessons and fine tune the interventions.

In conjunction with the previous description, E4I created a three-phase approach to implementing 

promotion activities: 
49

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• Phase 1. Mobilization: This phase is about mobilizing resources and planning for the launch of 

the Market Preparation phase. It is important at this stage to understand the current development 

status of the community and to identify and recruit local PUE champions. It is also important to 

ensure effective coordination with all project stakeholders, including the developer, the local 

entrepreneurs and community, and possibly the rural electrification authority or some other 

public institution.

• Phase 2. Market Preparation: This phase is about creating awareness about the income 

generation and job creation potential of PUE activities and informing the community about the 

potential in various value chains. For solar micro-grids, we are talking mainly about agricultural 

processing, food processing, light manufacturing, retailing, energy-powered services, and other 

such activities).

• Phase 3. Market Engagement: This phase is about implementation, including business training 

and mentoring, providing access to finance, market linkages for the entrepreneurs, technology and 

appliance training, and workplace health and safety. 
50

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Appendix B: System LCOE Modeling Data 

and Assumptions

For the LCOE and load profile tools, see Li (2018). Detailed LCOE tool information for the scenario 

analyzed in this report is provided in Table A2-1. 

Table A2-1. LCOE Modeling Inputs and Assumptions

INPUTS BASE CASE COMPARISON

Geographical region Lodwar, Kenya Lodwar, Kenya

Load profile Residential-heavy Business-heavy

Percent of load served 95% 95%

Discount rate 10% 10%

PV/Battery Costs Medium Medium 

Diesel Generator Costs Medium Medium 

Diesel Fuel Price $3.60 $3.60

Total distribution system costs Default Default

Pre-operating soft costs ($/kW) Default Default

Annual labor costs Default Default

Annual land lease costs Default Default

Assumptions

Length of analysis 20 years 20 years

Average solar resource (global horizontal irradiance) 6.1 kWh/m2/day 6.1 kWh/m2/day

Installed PV cost $1,800/kW $1,800/kW

PV O&M $36/kW $36/kW

Useful life 20 years 20 years

Battery storage cost $400/kW $400/kW

Battery useful life 7 years 7 years

Inverter and balance-of-system costs $900/kW $900/kW

Inverter replacement cost $450/kW $450/kW

Battery O&M $25 kWh-installed $25 kWh-installed

Inverter useful life 10 years 10 years

Diesel genset cost $400/kW $400/kW

Useful life 10 years 10 years

Fuel consumption rate 10 kWh/gal 10 kWh/gal

Fuel cost $3.60 gallon $3.60 gallon

Fuel escalation rate 3% 3%

Total distribution system costs $20,000 $20,000

Pre-operating soft costs $1,200 kW $1,200 kW

Annual labor costs $3,000/year $3,000/year

Annual land lease costs ($/year) $800 $800
51

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Figure A2-1. LCOE breakdown by scenario

Figure A2-2. Load profiles used in LCOE analysis

Only one day is shown because simulated loads do not vary across days.
52

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Appendix C: Detailed Level of Service, Performance 

Monitoring, and Metrics Information

Power Quality

Electricity quality is typically measured in terms of voltage and frequency variations. The key 

question for PU customers is whether the power provided is of a sufficient quality to safely and 

effectively meet their needs. Most PU appliances cannot be operated properly if the voltage deviates 

from their design parameters. In addition, transformers draw a higher current at low voltage, 

subjecting the system to greater thermal losses and increasing the risk of burnout and fire. Low 

voltage usually results either from overload in the micro-grid or from long-distance, low-voltage 

cables connecting distant households to the grid. PU appliances, particularly motors, can drive down 

the voltage and disrupt supply to other customers within the same feeder. Frequent monitoring of the 

system voltages and frequencies as well as testing transformers should make it easier to investigate 

and solve issues with power quality. The QAF metrics for power quality are summarized in Table A3-

1these metrics can form the basis of a discussion/analysis of the power provided by the micro-grid 

and the power quality requirements of the PU to determine if and how service can be provided. 
53

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Table A3-1. QAF Metrics and Service Levels for Power Quality

ISSUE BASE LEVEL 

OF SERVICE

STANDARD LEVEL 

OF SERVICE

HIGH LEVEL 

OF SERVICE

AC Power Quality Phenomena

Voltage imbalance <10% <5% <2%

Transients No protection Surge protection Surge protection

Short voltage-duration 

variations <5/day <1/day <1/week

Long voltage-duration 

variations <10/day <5/day <1/day

Frequency variations 48 Hz<f<52 Hz 49 Hz<f<51 Hz 49.5 Hz<f<50.5 Hz

DC Power Quality Phenomena

Resistive voltage drop <10% <5% <2%

Percent ripple 50% peak to peak

(pk-pk) 20% pk-pk 10% pk-pk

DC ripple and switching 

noise Unfiltered Transient noise minimized

Ripple noise also 

minimized

Transients No protection Surge protection Surge protection

Faults allowed per day <5/day <2/day <1/day

Power Availability

Availability is defined as the amount of time a micro-grid can produce electricity over a certain period 

divided by the amount of the time in the period. The key question for PU customers is whether power 

is provided in the amount that meets their expectations and is available for the specified duration. 

The QAF defines power availability levels that mirror the multitier framework defined by the World 

Bank (Bhatia and Angelou 2015) but defines them separately, giving system designers and operators 

the flexibility to specify the amount of energy consumers can expect. As in the multitier framework, 

power availability is defined by three parameters: power draw, energy availability, and duration 

of daily service.

PUE loads generally positively impact the availability of micro-grids. Depending on the service 

limitations of the micro-grid technology, some developers have tried to incentivize PU businesses 

to operate in non-business hours through “time-of-day” tariffs and other methods.

Tables A3-2–A3-4 summarize QAF metrics for power availability and peak level in terms of W and 

kWh. They can form the basis of a discussion/analysis of the power provided by the micro-grid and 

the power availability and level requirements of the PU to determine if and how service can be 

provided. 
54

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Table A3-2. QAF Metrics and Service Levels for Duration of Daily Service

DAILY SERVICE AVAILABILITY LEVEL POWER AVAILABILITY

Level 1 No guarantee of availability

Level 2 Variable certainty: x hours a day with y certainty

Level 3 Full certainty: planned continual availability

Table A3-3. QAF Metrics and Service Levels for Peak Power Levels

POWER LEVEL PEAK LEVEL (W)

Level 1 >3

Level 2 >50

Level 3 >200

Level 4 >800

Level 5 >2,000

Level 6 >5,000

Table A3-4. QAF Metrics and Service Levels for Energy Use per Service Level

ENERGY LEVEL PEAK LEVEL (KWH/YEAR)

Level 1 >4.38

Level 2 >73

Level 3 >365

Level 4 >1,250

Level 5 >3,000

Level 6 >73,000

Reliability

A key issue for PU customers is whether electricity is supplied with enough reliability to meet their 

demand needs. The reliability of micro-grids in sub-Saharan Africa is generally much better than that 

of national grids in sub-Saharan Africa. 

Blackouts can significantly disrupt productive activities, leading to financial losses, the extent of 

which depends on the frequency and duration of the interruption. Some PUs use costly backup 

generators to address this issue. 

Table A3-5 summarizes QAF metrics for power reliability and can form the basis of a 

discussion/analysis of the power provided by the micro-grid and the power reliability requirements of 

the PU to determine if and how service can be provided. 
55

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Table A3-5. QAF Service Levels and Metrics for Power Reliability

ISSUE BASE LEVEL OF 

SERVICE

STANDARD LEVEL 

OF SERVICE

HIGH LEVEL 

OF SERVICE

Unplanned SAIFIXXa <52 per year <12 per year <2 per year

Unplanned SAIDIXXa <876 hours 

(90.00% reliability)

<438 hours 

(95.00% reliability)

<1.5 hours 

(99.99% reliability)

Planned SAIFIXXa No requirement but 

should be defined

No requirement but 

should be defined <2 per year

Planned- SAIDIXXa No requirement but 

should be defined

No requirement but 

should be defined

<30 minutes 

(100% reliability)

a SAIFI and SAIDI are typically assumed for power systems that are specified to provide full-time 24-

hours/day energy service. A subscript is used in the QAF for systems that provide partial hours/day 

service, as the number of planned and unplanned interruptions and length of any interruptions should 

be normalized by the percentage of hours of service.
56

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Appendix D: Additional Details of Milling and Water 

Treatment Analysis

The tables in this appendix provide additional details on the financial impact analysis related to 

milling from Section 7.1 and data inputs for modeling water systems from Section 6.5. 

REopt Modeling 

Table A4-1. REopt Modeling Assumptions

PARAMETER VALUE

Location Tanzania

Analysis period 20 years

Discount rate 15%

Installed PV costs $1,800/kW

PV O&M $36/kW/year

Storage costs $400/kWh

Inverter/balance of system costs $900/kW

Storage O&M $25/kWh-installed/year

Generator costs $400/kW

Generator O&M (fixed) $25/kW/year

Generator O&M (variable) $0.023/kWh

Fuel cost $3.20/gal

Annual fuel escalation rate 3%

Total distribution system costs $20,000 

Pre-operating soft costs $1,200/kW

Annual labor costs $3,000/year

Annual land lease costs $800/year

Table A4-2. Load Characteristics Modeled

LOAD CHARACTERISTICS PEAK KW ANNUAL KWH

Original load 5.71 19,711

10-kW mill, 33% loading 8 hours/day 12.42 26,601

2.5-kW mill, 33% loading 8 hours/day 5.71 21,433

10-kW mill, 50% loading 8 hours/day 12.42 30,111

10-kW mill, 16.5% loading 8 hours/day 12.42 23,156

10-kW mill, 33% loading 8 hours/day (November–April) 12.42 22,573

10-kW mill, 33% loading 8 hours/day (December–February) 12.42 21,380

10-kW mill, 50% loading November–April, otherwise 15% loading 12.42 26,045
57

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Water Treatment System

Table A4-3. Key Data Inputs for Water Treatment Modeling

LOCAL WATER DEMAND

Number of households in village 200

Average household water use per day 12 L

Average residential use per day 2,400 L

Commercial/government water use per day (assuming one of each below)

Restaurant 80 L/day

Bar 40 L/day

Health clinic 40 L/day

School 80 L/day

Total Commercial Use Per Average Day 240 L

Total Water Demand Per Day 2,640 L

Estimated weekly production 18,480 L

WATER TREATMENT EQUIPMENT

Plant Capital Costs 

Ultra-filtration water treatment system $10,500

Ocean Freight $800

Additional infrastructure costs for tanks, pumps, etc. $2,000

Building to house system and shop $2,000

Installation costs $2,800

Customs/duties $1,500

Total Installed Cost $19,600

Plant production capacity per hour 1,800 L

Store operating hours per day 10

Plant operating hours per day 2

Plant power demand when connected to AC micro-grid

90–240 V AC 50/60 Hz, 400

W

Additional shop power demand 25 W

Other power supply: (Use one of the following in addition if city power is 

not reliable) 

Generator 

90–240 V AC 50/60 Hz 1,000

W

Batteries 948-V array 12 V 100 AH batteries

Solar panels (48–300 V DC) 500–1,000 W

Available power vs. production rate when connected directly to solar panels 

50 W 300 L/hour

100 W 600 L/hour

200 W 1,200 L/hour

>200 W 1,320 L/hour
58

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Plant electricity use per hour of operation 0.4 kWh

Shop energy use per hour 0.025

Plant electricity use per year 383 kWh

Cost of micro-grid power $0.90$/kWh

Plant electricity costs per year $344.93 

Plant Operating Costs (Excluding Electricity)

$/Liter cost (assuming 

20,000 liters per week)

Operator(s), paid weekly + commission 0.013024481

Raw water, per liter (if applicable) $0.00163 

Repair pump $0.00014 

Replace pump $0.00017 

Replace UF membrane $0.00032 

Replace activated carbon $0.00007 

Replace polishing filter $0.00008 

Other repair/replacement/technician $0.00035 

1 liter of 5% chlorine $0.000039 

1 liter of 5% ammonia $0.0000044 

Bottle caps and seals (optional) 0.000695

Total Annual Operating Cost Per Liter $0.01652 

Maintenance Costs $0.00117 

Total/Day $47.20 

Plant Revenues

Water price $0.06/L–0.14/L

Water price $0.06 

Annual revenue from water sales $57,658 

Annual costs for operations $17,573 

Annual profit $40,085 

Simple payback 4 months
59

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www.nrel.gov/usaid-partnership

National Renewable Energy Laboratory

15013 Denver West Parkway • Golden, CO 80401

+1-303-275-3000

www.nrel.gov

Samuel Booth 

Senior Project Leader, Microgrids

National Renewable Energy Laboratory (NREL)

Office: +1-303-275-4625 | Mobile: +1-303-513-6786

www.nrel.gov | Samuel.Booth@nrel.gov

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+1-202-712-0000

www.usaid.gov

Katrina Pielli 

Senior Energy Advisor and Lead, Beyond the Grid

USAID | Power Africa

Pretoria, South Africa

Office: +27 12-452-2086 | Mobile: +27 72-710-5162

www.usaid.gov/powerafrica | kpielli@usaid.gov

NREL is a national laboratory of the U.S. Department of Energy, Office of Energy Efficiency & 

Renewable Energy, operated by the Alliance for Sustainable Energy, LLC.

NREL/TP-7A40-71663 • August 2018