Grid Development in Emerging Electricity Markets

Christopher Barry
November 24, 2016

Submitted as coursework for PH240, Stanford University, Fall 2016

Introduction and Rationale

Fig. 1: A 220 kV transmission tower near Ennore, Chennai, India. (Source: Wikimedia Commons)

Electricity is one of the most transformative resources that a person can be given, and nearly every country in the world's economy is hugely affected by the pursuit of providing electricity to citizens. As of 2009, approximately 1.45 billion people around the world lacked any access to electricity. Merely 3 million of these people lived in countries affiliated with the Organization for Economic Cooperation and Development (OECD), or transitioning countries. The remainder lived in developing nations.

The implication of this statistic is monumental because electricity could be the fastest way to increase prosperity in developing regions of the world. Those without electricity are forced to use biomass such as wood, charcoal, and dung. This causes air pollutants and deforestation, which combined take over 1 million lives each year. [1,2] Gathering biomass is also a time-intensive activity, so it precludes members of households in developing countries from taking on other jobs. [2]

As a result, governments in countries such as Kenya, India, Malaysia, and Laos have taken on massive electrification projects. Their development initiatives generally follow two strategies: grid extension or the pursuit of micro-grids. Each of these replace the use of either biofuels or individual diesel generators for homes. [3,4]

Grid Extension

Grid extension is the classic manner of extending electricity to additional populations. The United States practiced this strategy to near perfection, and now offers almost all of its citizens access to electricity for between 10 and 20 cents per kilowatt hour. [5] Other countries that have achieved universal electrification through the grid include China, Brazil, and South Africa, through impressive amounts of sustained investment. [6] Extending a grid is seen as the most reliable manner to provide electricity because the centralized, state-run entities that distribute power through the grid usually have enough resources to supply consistent amounts of electricity to all who demand it. [7]

Unfortunately, governments in least-developed countries (LDCs) often lack the capacity to serve even their existing customers with electricity. [8] Furthermore, extending the grid to remote villages in countries without extensive highway systems can be incredibly expensive. The head of Malaysia's rural electrification programs indicated that 130 kilometers of grid extension would cost $80 million, which is simply not feasible for cash-strapped nations. [5]

Micro-Grid Solutions

The most popular alternative to extensive grid-extension projects are community micro-grids. As technology for solar cells, wind power, and hydroelectric generation has improved, these solutions have become significantly more viable to deploy on large scales. For remote areas that only need to charge mobile devices or heat up water, this has been extremely successful, especially in Southeast Asia and Sub-Saharan Africa. [4,9]

On the other hand, this energy solution suffers from three severe problems: high costs, lack of reliability, and low power. Even with the most efficient batteries and diesel fuel, costs from these systems would not reach below 40 cents per kilowatt hour. [9] Optimistic estimates for photovoltaic solutions peg costs at 60 cents per kilowatt hour. [10] Furthermore, micro-grids dependent on renewable solutions could be inconsistent given different weather patterns or locations. Most importantly, however, the electricity demanded to power industrial activities exceeds what most micro-grid solutions could possibly supply. [6] As a result, these solutions would only be fitting for villages or hamlets in LDCs, and could hamper the growth of those areas if technology does not improve.

Combinations of Solutions

India has been a fascinating case study in pursuing each of these solutions because of their respective advantages and disadvantages. They have determined that government investment in grid extension, paired with offering subsidies for private sector companies that install micro-grid solutions, could make a massive dent in their energy shortages in the upcoming years. [7,10] This strategy has not come without its roadblocks, however. Only half of Indian grid extension projects that were slated to be finished by 2012 were actually completed, largely due to shortages in federal funding. Furthermore, private company investment in micro-grids has slowed down considerably due to high levels of uncertainty about which areas and villages are targets for grid extension projects. Private corporations have no desire to invest in energy infrastructure in locations in which their efforts would be rendered obsolete in a few years due to connection to the central grid. [7]

Because of this dilemma, it is important for governments that want to provide electricity to more of their citizens in the most efficient manner to communicate exactly which of their towns will receive grid extensions in the upcoming years. Laos' recent electrification projects can serve as examples of this: through a cohesive plan that includes both grid and off-grid solutions, the country has more than quadrupled the number of homes with electricity access in the last two decades. [11] A decisive agenda is the clear way to proceed, and would make combining these two strategies not only possible, but extremely effective. [7]


Clearly, many developing countries have a long way to go with their electrification efforts. However, experimentation in South and Southeast Asia has made clear that combinations of grid electrification with micro-grid solutions can be effective. Furthermore, as technologies related to batteries, solar cells, and other renewable sources becomes more widespread and cost-effective, each of these strategies will receive a boost in feasibility and cost-effectiveness as well.

© Christopher Barry. The author grants permission to copy, distribute and display this work in unaltered form, with attribution to the author, for noncommercial purposes only. All other rights, including commercial rights, are reserved to the author.


[1] G. Legros et al., "The Energy Access Situation in Developing Countries: A Review Focusing on the Least Developed Countries and Sub-Saharan Africa," United Nations Development Program, November 2009.

[2] D. Holm, "Renewable Energy Future for the Developing World," International Solar Energy Society, 2005.

[3] A. Yadoo, "Low-Carbon Off-Grid Electrification For Rural Areas in the United Kingdom: Lessons From the Developing World," Energy Policy 39, 6400 (2011).

[4] N. Vandaele and W. Porter, "Renewable Energy in Developing and Developed Nations: Outlooks to 2040," University of Florida, Summer 2015.

[5] B. Sovacool, "Rejecting Renewables: The Socio-Technical Impediments to Renewable Electricity in the United States," Energy Policy 37, 4504 (2009).

[6] S. Bhattacharyya, "Energy Access Programmes and Sustainable Development: A Critical Review and Qnalysis," Energy Sustain. Dev. 16, 270 (2012).

[7] J. Urpelainen, "Grid and Off-Grid Electrification: An Integrated Model With Applications to India," Energy Sustain. Dev. 19, 66 (2014).

[8] J. Romero, "Blackouts Illuminate India's Power Problems," IEEE Spectrum 49, No. 10, 11 (October, 2012).

[9] K. Bullis, "How Solar-Based Microgrids Could Bring Power to Millions," MIT Technology Review, 4 Oct. 2012.

[10] P. Loka et al., "A Case Study for Micro-Grid PV: Lessons Learned From a Rural Electrification Project in India," Prog. Photovoltaics 22, 733 (2013).

[11] M. Bambawale et al., "Realizing Rural Electrification in Southeast Asia: Lessons from Laos," Energy Sustain. Dev. 15, 41 (2011).