Almost all of a solar mini-grid's cost is paid upfront: panels, batteries, inverters, poles, wires and meters. After that, running costs are fairly low. So the key question is: how much of what the system can supply actually gets used?
What load factor means
Load factor compares a community's average electricity use with its peak use.
Load factor = energy used in a day (kWh) ÷ (peak demand in kW × 24 hours)
The system has to be big enough for the peak. If use is high for only a few hours and low the rest of the day, most of that capacity sits idle.
A simple example
| Village A | Village B | |
|---|---|---|
| Who uses power | Homes, mostly 7–11 pm | Homes in the evening, plus a mill and a cold room in the day |
| Peak demand | 50 kW | 50 kW |
| Energy used per day | 180 kWh | 420 kWh |
| Load factor | 180 ÷ (50 × 24) = 15% | 420 ÷ (50 × 24) = 35% |
Both villages need a system sized for a 50 kW peak. Village B sells more than twice as much energy from similar equipment, so the cost per kWh can be much lower. (These are illustrative numbers.)
What the data shows
World Bank analysis of mini-grids across Asia and Africa found that, in a sample of nine sites, raising the load factor to 40% lowered the cost of electricity from about $0.70 to $0.57 per kWh, roughly 18%. These are averages across very different sites and are illustrative, but the direction is clear.
How to escape the trap
- Find daytime users: mills, cold rooms, pumps, workshops and clinics.
- Price to shift demand: cheaper daytime rates can encourage heavy machines to run when the sun is up.
- Size carefully: don't build for demand that may never come.
Sources and notes
- World Bank presentation summarising Mini Grids for Half a Billion People (ESMAP): load factor and cost of electricity.
- The village example is illustrative and does not describe a real site.