Project developer: Winch’s subsidiary “Winch Energy (SL) Limited”
Funding partners: UK’s Department for International Development (DFID)
Tender implementor: United Nations Office for Project Services (UNOPS)
Customer: The Ministry of Energy
Beneficiaries: Local Community Health Centres (CHC) and the communities themselves.
Winch Energy is a global energy group creating specialised and sustainable solutions for off-grid distributed power. We are reinventing power generation, electricity distribution and telecommunications access for the +1 billion people across the globe who do not have access to electricity, running water and communications. Access to power is about so much more than energy, it is the conduit for opportunity and prosperity. Winch Energy provides sustainable, higher tier access to power at more affordable rates than rural communities currently spend on their energy consumption. By enabling access to energy, we are empowering communities, creating wealth, transforming lives and creating freedom for individuals.
Sierra Leone was one of the countries worst affected by the Ebola virus, which was declared an international health emergency by the WHO in August 2014, resulting in an estimated 3,955 deaths. Before the Ebola outbreak, Sierra Leone was already facing stress on rural health infrastructure due to a long period of conflict. Winch’s Rural Renewable Energy Project (RREP) was established to strengthen rural health infrastructure in the event of future epidemics or pandemics such as the COVID-19 crisis. DRE was the most feasible solution to the problem due to its ability for rapid and cheap deployment in a country where on-grid electricity infrastructure is limited and constrained to large towns only. In Sierra Leone, only Freetown and some of the large district towns have access to electricity through a formal main grid. The health care facilities electrified by Winch can use the power for critical appliances and communications, which are essential components of the rural response to virus outbreaks. All the CHCs have a deep freezer where they keep vaccines. In addition, each room in the CHC has a bulb and one socket. The average number of bulbs in a CHC is 8. The average demand per facility is 4.06 kWh. They have access to up to 6.6 kWh each day for free as part of the project, with the option to pay for more electricity beyond this at the same rate as the rest of the community.
RREP puts CHCs at the centre of each minigrid. The project started in 2017 through a public mini-grid tender. The first 12 health centres were electrified in 2018 and were later expanded into village mini-grids, commissioned by Winch in March 2020. The whole process, from contract signing to having all 12 mini-grids fully operational and serving customers, took one year. The second set of 12 villages and health centres is planned to be commissioned by Winch in Q2 2021, with the aim to have them operational by July 2021.
The solution was to install solar power plants in pre-identified rural villages, which serve the local CHC with reliable, clean and affordable electricity. The excess electricity generation is distributed to the surrounding households and businesses through a low voltage network. The CHC has access to a limited amount of free daily electricity to ensure cost is not a barrier to the service they can provide to the communities. The projects are 100% renewable, avoiding the need for expensive diesel supply chains and storage costs. The total capacity of the project is 1,107 kWp, generated by 24 mini-grids. Each mini-grid consists of:
The total estimated project cost was EUR 6.5 million, financed through a combination of private (Winch) and public sector (DFID) funding, which was injected into the project through in-kind subsidies with the aim of reducing the tariff to the end customer and encourage a return for investors to ensure the long-term sustainability and efficiency of the project. The private sector financing is a combination of debt and equity raised through Winch’s mini-grid portfolio financing platform. The proportion of the financing sources will be approximately: 31% grant, 35% equity and 35% debt. The ownership of the first 12 mini-grids remains public, while the second set of 12 mini-grids will be private. All 24 mini-grids are privately operated and an agent in the village is trained to conduct basic system operations as well as reloading credit for customers. The maintenance is done by Winch staff.
The settlements have a combined population of approximately 50,000 people across the 24 villages. Winch has connected over 1,200 business and household customers so far and will aim to connect over 4,000 customers once the final phase of the project is complete. The projects will connect 25 CHCs, as well as approximately 20 rural pharmacies. So far, the project has created 30 local jobs, including community support staff, technicians, project and technical managers, office staff and drivers, which are expected to rise as more villages come online. The mini-grids also connect larger industrial users such as milling and welding businesses, which have additional benefits for the local communities. Since the projects are 100% renewable, they will also continue to displace GHG emissions in Sierra Leone, helping the country to meet its climate change targets.
One of the many barriers to overcome in this project was affordability. The project required a subsidy to bring the tariff down to the affordable levels expected by regulators. The balance between donor subsidy, regulator tariff expectation and private sector internal rate of return expectation implied a lot of careful thinking for this project. Having tender implementors such as UNOPS involved in the project helped considerably to tackle some of the usual problems with regulations and project development that can sometimes be overwhelming for the private sector alone to tackle. Furthermore, access to some of the Winch sites in Sierra Leone has been a problem. The sites are remote and some of them have river crossings, without bridges, which the company can only navigate with raft crossings. Due to the early success of the project, there are already plans to expand the project to other villages in Sierra Leone that currently do not have access to a reliable electricity source. Other mini-grid developers are also operating in Sierra Leone, partially due to the new clear mini-grid regulation developed in the country as part of this project. To allow further replication in other countries, it is recommended that future projects follow this public-private partnership approach, whilst adopting high enough subsidies to ensure the tariff for customers is low as possible.