The Anchor-Business-Community Model for Rural Energy Development: Is it a Viable Option?

Abstract

The Anchor Business Community (ABC) Model is a proposed method of rural energy development in which energy companies leverage anchor customers to reduce the risk of business in areas of uncertain demand, thereby incentivizing electrification of all customer types in a community. However, practitioners observe a lower implementation rate than expected of the model. This study examines possible barriers by using HOMER, an economic analysis modeling tool, to compare the levelized costs of rural electricity among eight scenarios. In most cases, the ABC model produces electricity at a lower cost than electrification absent the model, but cost distribution burdens individual customer groups and creates an economic disincentive to engage. Therefore, the ABC model requires public intervention (cross-subsidization, spatial analysis and planning, and forums for customer engagement) to be a viable option.