Develop Clear Rural Electrification Selection Criteria

 

Summary

Clear systems for prioritising which communities to electrify first are important for the financial viability of the electricity grid. Rigorous socio-economic assessments can determine which communities can be connected at the least cost, and which have the most to gain from electrification. This ensures that expansion of the grid and electrification are built on a sound financial base. The Thai Provincial Electricity Authority (PEA) has developed a distribution plan which ensures that its projects are targeted at areas with economic growth potential. With this strategy, PEA has maintained its long-term financial viability and successfully electrified 99% of the country's villages.

 

The idea: 

Rural electrification programmes in developing countries cannot afford to electrify all rural communities at once. Emphasis needs to be placed on maintaining a sound financial footing if long-term electrification goals are to be sustained. Electrifying communities prematurely, focusing electrification efforts on communities that are too isolated, and allowing interference from politicians can have severe negative impacts on the financial viability of electrification programmes.

In Thailand, the Provincial Electricity Authority (PEA) put considerable effort into holding down costs and generating the highest amount of revenue possible within those communities that were electrified. This was done by conducting rigorous analyses in which the PEA used three quantitative steps and a final qualitative assessment to determine where to focus its electrification efforts.

Firstly, it determined the number of villages within each province and district where electrification was viable. This involved a considerable amount of analysis of socioeconomic conditions and detailed household surveys to predict potential energy usage. Villages were then ranked according to seven factors relevant to the costs and benefits of electrification. These factors were: proximity to the grid, accessibility by road, village size, number of expected customers in the first five years, potential agricultural and industrial load, number of commercial establishments, and number of public infrastructure facilities.

The result of this rigorous process was a list of communities for which electrification would have the highest initial impact in both social and economic terms, and which could realistically be connected whilst at the same time ensuring the financial viability of the project long term.

This approach not only ensured that electrification proceeded efficiently and effectively, but it also ensured transparency and helped to eliminate pressure from politicians to electrify their own communities - a practice that usually results in connecting communities that generate low revenue for distribution companies, thereby threatening the long-term financial viability of the programme.

The PEA electrification programme has gradually expanded and is now supplying electricity service to 99% of Thai villages, and has done so while remaining on sound financial footing throughout its twenty years of operation. Its distribution plan - with its focus on the more economically dynamic areas - has played an important role in this success.

Where and When: Thailand, 1980s - present

Initiated By: Provincial Electricity Authority

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