The ABC Approach to Microgrid Development in Frontier Markets
Addressing this financial issue is an emerging model for rural microgrid installation, the phased “ABC” deployment approach. This approach is based on first addressing an (A) anchor client (typically the largest user in a community), next expanding the system to meet the local (B) business demand and finally expanding to serve the broader (C) Community, including residential areas. The phased roll-out simplifies the financing process required to launch the microgrid. Starting with a single client makes evaluation and due diligence much simpler. The process avoids the potential complexities of residential billing, payment systems, and pre-paid meters often present when selling immediately to a community.
As a starting point, the anchor client can be any significant energy user including a factory, commercial building, telecoms tower, or water-pumping facility. These power users will typically already have a commercial basis for their operations. They will also often have banking relationships and credit histories that make them more “bankable” as off-takers. If they’ve been operating for several years, they will be relatively stable from a financier’s perspective. As the microgrid replaces or reduces fuel consumption from expensive diesel generation, the reduced fuel costs can provide clear cost savings and economic rationale for adopting a renewable microgrid.
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