Sustainable Microgrid Development for Productive Use

Productive use of electricity - the use of electricity for income generating purposes - is a key driver of long-term electrification and economic growth in the developing world, and, in particular, Sub-Saharan Africa where hundreds of millions of individuals are predicted to lack electricity for years to come. Productive use also promises to bolster the financial viability of microgrid developers who seek to provide electricity to those who would otherwise lack electricity over the coming years.

The client of this project, Zambia-based microgrid developer Standard Microgrid, is seeking to understand if productive use of electricity may offer a viable option for increasing their revenue. This project aims to provide a baseline understanding of the current state of productive use on its microgrids by comparing productive use customers to consumptive use customers - customers who do not use the electricity for productive uses. In particular, the project answers two key questions:

1. Do productive use customers pay more per unit of electricity consumed?

2. Do productive use customers pay more frequently?

   Answering these questions provides the client with helpful information regarding whether productive use customers perform better than other customers and also informs areas where they can improve their strategy to better maximize the revenue from these customers.

   This project leverages datasets provided by the client to answer the key research questions. These datasets include information regarding their customers and their appliance subscriptions, sales made to these customers, and the customers’ electricity use. In order to answer the research question, the customers were categorized as productive use or consumptive use customers based on assumptions driven by the types of appliances each customer was subscribed to. An additional category, productive potential, was added to account for errors in this methodology. Several confounding factors like the location and age of the microgrid were also included in the analysis. Several multiple linear regression models were created and analyzed to answer the central research questions.

   The models found that productive use customers do not pay a significantly different amount for every unit of electricity they consume but they do appear to pay more regularly. Productive use customers pay more for a day of energy, however, since they consume much more energy per day than consumptive customers, the rate they pay per unit of electricity is not significantly different. Notably, though, productive use customers purchase more days of electricity with every transaction. This finding in addition to the fact that productive use customers consume much more electricity shows that productive use customers offer more reliability as customers.

Based on the promising findings showing some indication that productive use customers may perform better than other customers, the following recommendations were made to the client:

1. Consider raising rates for productive use customers as they could potentially be able to pay more as they also derive value from the electricity use.
2. Pilot a survey to further analyze current productive use customers and also identify new productive use customers as well as new productive use applications.