The Involvement of the Private Sector to Ensure Sustainability of Systems

The need to enhance electricity access in rural areas of developing countries is universally recognized. However, tremendous challenges remain to finance electrification initiatives, to ensure the long term sustainability of rural electricity systems. In Lao PDR, one of the targets the government sets to achieve is the provision of electricity to 90% of the households by 2020. Considering the topography of the country and the low density of population, this ambitious objective can be reached only if innovative financing and operating mechanisms are developed and if private and public investors work closely together. A strategy based purely on government funded grid extension will not lead to the achievement of the objective.

Exploring small hydro-power generation and the operation of village grids, energy provider Sunlabob has developed an innovative private-public partnership aimed at producing clean, reliable and affordable electricity in remote areas, empowering local communities, and promoting the use of electricity for productive and social purposes. The innovative features of this partnership include, mutual leverage of public and private funds for infrastructure development, community ownership and management of the fixed structures of the mini-grid (small dam, power house, transmission poles and lines), a combination of different efficient and reliable modern renewable energy technologies privately installed and owned which provide electricity 24/7 at low cost, training of local technicians who become energy entrepreneurs, empowerment of local communities for management and decision making as well as participatory work with local communities to identify productive and social uses of electricity. Both private and public partners have clearly defined roles and responsibilities. Linking affordable electricity generation on the one hand and development of productive and social activities on the other hand is a new approach which is needed to ensure the viability of the mini-grid and to maximize the positive impact on the socio-economic development of target villages.