Taquile, a photovoltaic rural electrification pilot project in Peru

Manfred Horn

Centro de Energías Renovables de la Universidad Nacional de Ingeniería (CER-UNI)

Lima / Perú

mhorn@uni.edu.pe

The problem

Nobody doubts that electric energy is today inherent to the quality of life and to modern civilization because of the facility to transport electricity and transform it efficiently in other forms of useful energy, like light, and, specially, because of its imperative use in telecommunication and electronic equipment, like computers. But, whereas in developed countries practically everybody has electricity in his home, about 30 % of Peruvians still don't have electricity in their houses and eventually millions of Peruvians living in rural areas will be without electricity in their houses even within ten or twenty years, because of the very high costs of rural electrification.

The extension of conventional rural electrification, through connection to a electricity grid, costs today in Peru on the average more then $ 1000 per connection point, and this cost will increase significantly within the next years, because the population that still has to be connected to the grid is living in more and more remote and isolated regions.

On the other side, the experience has shown that electrification of remote rural areas with Diesel generators and local grids doesn't represent a sustainable solution and, therefore, on the long run, is even more expensive then the connection to the national grid. A recent example in Peru is the electrification of the island community of Amantani, in Titicaca Lake, where three years ago one million of dollars were invested in a local grid and a 250 kW Diesel generator, in order to give electricity to 600 families: since its inauguration in September 1997 the system, at most, was operating three hours daily (18:00 - 21:00 hours). It didn't operate during 6 months because of the breakdown of a thermal circuit breaker and during the last six months it is standing still because the people are not willing to pay the fuel for a limited and deficient electricity supply (about $ 3 / month and family, for 3 hours per day).

The photovoltaic rural electrification

During the last years the photovoltaic electrification has shown to be a real option for many problems of rural electrification in Peru. In most parts of the country exists a high availability of solar energy: the solar radiation is high and uniform during the year, with monthly means of 5-6 kWh/m²day. A Solar Home System (SHS) that can produce 5-6 kWh of electricity per month costs today less than $ 1000, including the costs of installation, training of the users and post sale service (and including about 40 % of taxes). This amount of energy is sufficient to satisfy the needs of illumination and telecommunications (radio, TV) of a rural family and is something less than the electric energy consumed by rural families that are connected to the public grid. Additionally, a SHS can be enlarged later on, according to the necessities and economical possibilities of its user.

However, the possibilities, characteristics and limitations of this technology are still not well known in Peru, inclusively among professionals working in electrification. This represents a mayor barrier to massive dissemination of photovoltaic rural electrification.

The Taquile pilot project

In order to assess on site the technical, economical and social feasibility of the photovoltaic rural electrification, the "Centro de Energías Renovables de la Universidad Nacional de Ingeniería", CER-UNI (Center of Renewable Energies of the National Engineering University in Lima) proposed in 1995 a pilot project to the "Proyecto para Ahorro de Energía", PAE (Project of Energy Saving) of the Peruvian Ministry of Energy and Mines. CER-UNI got in 1996 from PAE-MEM $ 100 000 for this project, to be developed in the rural insular community of Taquile in Titicaca Lake (people there are peasants and do also some fishing), with the compromise to install at least 100 solar home systems (SHS).

Each SHS consisted of a 50 Wp solar module, a 12 V, 100 Ah battery, a 8 A battery charge controller, 3 lamps with 11 W fluorescent tubes, a connection box with fuses and a DC-DC converter (3 -9 V DC), installation and post sale service. The best bid in 1996 resulted in a cost of each SHS of $ 850 (cash).

An essential characteristic of the project is that the beneficiaries (end users) will buy their SHS, paying most part of the costs, but with facilities: in this first pilot project, they have to pay 70 % of the total cost, in 5 quotes during three years. Most people (mainly in Lima) argued at that time that the peasants don't have the money to buy their SHS, and even if they pay their first downpayment, they will not pay the following quotes.

In 1996 100 contracts were signed with peasants in Taquile and 100 SHS were installed; in 1998 an other 72 SHS were installed in Taquile and the neighboring islands of Uros and Soto.

Today, nearly all of the first 100 beneficiaries are already owners (having paid 5 quotes of $ 150 each; some still have to pay their last quote). Only two beneficiaries stopped to pay their quotes (they could not) and the respective SHS were transferred to other people, without any money lost for the project. With the collection of this money a revolving fund was created and 72 SHS were installed in 1998. Today, there exists a huge acceptance of the photovoltaic technology in the Titicaca region and many families are interested to buy their own SHS under similar conditions as in this Taquile project.

We think that this project has proven that SHS are appropriate for remote rural electrification. We are also convinced that the project has verified the following premises, originally supposed for the Taquile project:

· There exists today a mature photovoltaic technology, still not very known in Peru, that permits to satisfy the basic needs of electricity of the rural population, needs that are mainly for illumination and telecommunication (telephon, TV, radio). However, one has to select very carefully the components of the SHS, specially the battery, charge controller and lamps, because many of these parts available in the market are still of low quality.

· The photovoltaic technology is easily accepted by the rural population and, if known, people consider it useful and want to have it.

· The costs for illumination with candles and kerosene lamps and batteries for radio and TV are to date for a big part of the rural population higher than the costs of a photovoltaic system that would give a better service.

· The experience of Taquile (as well as of other places) has demonstrated that for a basic rural electrification it is best to install in each house individually and independently its own SHS, instead of installing a centralized photovoltaic system in a community.

· The beneficiary has to be motivated to acquire his SHS. Therefore he has to know previously the SHS, its benefits and its limitations.

· Except few cases, the majority of the rural population of Peru doesn't have the economical capacity to pay cash for a SHS, but needs a credit scheme. For a wide sector of the Peruvian rural population one even needs some subsidy, at least an exoneration of the taxes. In this relation it may be remembered that the traditional rural electrification through grid extension is in Peru completely paid by the Government.

· It is basically possible to make in Peru an electrification of remote rural regions within a free market economy where the user has to pay for the service he gets.

Perspectives for a massive photovoltaic rural electrification in Peru

In the present year (1999), CER-UNI has started a second stage of the Taquile project, but this time without any financial support from the Government. The object of this second stage is to evaluate the possibility to realize photovoltaic rural electrification projects practically without any subsidize (CER-UNI is only subsidizing the management and administration of the project). In order to finance this second part, CER-UNI has taken a bank loan of $ 100 000 (using PROER, a fund for renewable energy projects from the Dutch Government). This loan has to be repaid by CER-UNI in 5 yearly quotes, with an yearly interest of 7,5 %.

On the bases of this loan, CER-UNI has offered in May 1999 to people of Taquile, Uros, Amantani and Soto (all islands) and Huancho (community near Huancane on the shore of Titicaka Lake) contracts to get their SHS on similar conditions than in the original contracts of Taquile, but adding one quote more in order to be able to repay the bank loan (that is, in stead of 5 x $ 150 = $ 750, we asked now for 6 x $ 150 = $ 900). Considering the available money and the supposed costs of a SHS, 192 new contracts had been signed within few days The following bid for the SHS resulted in lower prices than the foreseen ones: US$ 630, including installation and 2 year post sale service. Therefore, despite eliminating practically all subsidize, this permitted to offer the SHS again at 5 quotes of $ 150 each and to acquire more SHS, in total 250. This 250 SHS are installed in this moment (October - November 1999).

It is worthwhile to indicate in particular that many people of Amantani are interested in acquiring their SHS, under the conditions of our project, despite that they have a connection to the local grid (see second chapter). The reduced number of SHS available permits however to install at this moment only about 50 SHS in Amantani.

Conclusions

Based on the exposed arguments, we consider that the Taquile project has demonstrated a real possibility to get a sustainable basic rural electrification with solar home systems.

We think that there are two essential ingredients for the success of the project: on one side, that the beneficiaries of the SHS are finally their owners and, on the other hand, that a severe quality control of the equipment and of the installation as well as a post sale assistance had been included (training, monitoring, replacement of defect equipment, etc.).

There are other schemes of management and organization for rural photovoltaic electrification projects, but all these other schemes have still to prove their sustainability. We think that the Taquile project has done it already. We think that it would be convenient if public institutions and authorities working in social projects would visit Taquile and get a direct impression of this project and check with the local population the arguments exposed in this article in favor of a rural electrification with SHS.

We consider it would be convenient to follow the model of Taquile, to improve it and reproduce it in other regions. In particular, it would be necessary to study the amount and the form of the necessary subsidize if one wants reach practically the whole rural population. We suggest that the Government follows this scheme, assuming initially at least the costs of management and administration of the projects and the training of promoters and beneficiaries.

We are convinced that in this way one could reach within few years a real and sustainable electrification of extensive rural regions of Peru, with a limited cost to the Government and in the frame of an ecological sane development of rural regions of the country.

Appendix

In order to evaluate the possibilities of a rural electrification with photovoltaic systems, and in order to identify the characteristics that a massive program has to have and what kind of barriers exist, the CER-UNI had organized in August 1998 a workshop on "Management and administration of projects of photovoltaic rural electrification projects". In this workshop different experiences of photovoltaic rural electrification in Argentine, Bolivia, Mexico and Peru had been presented and the objectives of rural electrification had been discussed, as well as the essential attributes that a rural electrification program should have. The proceedings of this workshop are published (in Spanish) and are also available at http://www.uni.edu.pe/publicaciones/libros.