Glossary Terms and Definitions

# A B C D E F G H I J K L M N O P Q R S T U V W X Y Z

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22 Code of Federal Regulations (CFR) 216
USAID’s environmental impact assessment procedures, created to meet the requirements of the 1970 National Environmental Policy Act (NEPA), as they affect the USAID program. (USAID)

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A

Alternating Current (AC)
Electric current that reverses direction many times per second at regular intervals. AC is measured in hertz (Hz), where one Hz equals one cycle per second. (AC is 50 Hz in most countries but 60 Hz in the United States.)
Analog Meter
An older type of meter that uses a micro-ammeter with a pointer on a dial to show levels of voltage, current, consumption and other information. (Newer digital meters have electronic displays in place of pointers on dials.)
Anchor Client/Load
A customer (usually a business) with a continuous, predictable load (use of electricity). Anchor clients sign contracts to guarantee purchase, and they have a demonstrated ability to pay. An anchor load can reduce financial risk for mini-grid projects in places where residential demand is low. Mini-grid projects with anchor clients have more predictable cash flows and may be more financially sustainable.
Angel Investor
An individual who invests in a start-up company, generally on terms favorable to the company.
Array
A group of solar panels wired together to create a set amount of installed electricity generation capacity.
Average Revenue (per kilowatt-hour)
A measure of electricity sold by a mini-grid. Average revenue is calculated as the total monthly revenue divided by total monthly sales of electricity in kilowatt-hours.
Avoided-Cost Tariff
A tariff designed so that consumers pay the same or less than what they would have paid for an alternative source of energy.

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B

Backup Tariff
A tariff paid by a small power producer (SPP) to the national utility for providing electricity when the SPP is not generating electricity, or not generating enough electricity to meet its loads.
Balance Sheet
A financial statement that summarizes what a company owns (assets) and owes (liabilities) as well as the amount invested by shareholders or owners. Banks and other investors use balance sheets when assessing a company’s loan application or business plan.
Base Rate
A fixed kilowatt-hour charge for electricity that is independent of other charges and/or adjustments. (U.S. Energy Information Administration)
Baseline Data
Data collected at the beginning of a project to provide a basis for comparison with data collected during project monitoring and evaluation. Evaluators use baseline data to determine local conditions before a project starts. Key data for a mini-grid project might include average local income, the percentage of people with access to electricity or the number of businesses with access to electricity in a community.
Baseload
The minimum average demand for electricity from a given grid, system or set of consumers over a given time period.
Battery Capacity
The amount of energy a battery can hold. A new battery has a theoretical capacity of 100 percent, but actual working capacity is lower. As a battery is used over time, its capacity decreases. (Battery University)
Bidirectional Power Flows
Power that flows in two opposite directions. Mini-grids that both purchase electricity from the grid and sell surplus electricity back to the grid have bidirectional power flows. When a grid-connected mini-grid generates more power than its customers use, the operator can sell the surplus to an electric company. When demand exceeds the mini-grid’s capacity, the operator can purchase power from the grid.
Bioenergy
Energy generated from biomass.
Biomass
Organic matter that can be used to generate energy in the form of heat, liquid fuels, gas or electricity. Biomass can come from forestry or agricultural products as well as waste. Biomass can power mini-grids as solid biomass, liquid biofuels or biogas. Currently, biomass-based electricity generation is a niche market in areas with a reliable biomass resource, where electricity is expensive, and where biomass fuel is cheap or incurs a disposal cost.
Biomass Gasification
A method that converts biomass into a gas that can be used to generate power. (U.S. Energy Information Administration)
Bonding
Permanently joining together the metal parts/cases in a piece of equipment. Bonding creates electrical continuity by establishing a conductive path to the equipment grounding conductor.
Bulk Supply/‌Wholesale Tariff
Price paid for large amounts of electricity purchased for resale to retail customers.
Bus/Busbar
The point in a power plant beyond the generator but before the voltage transformation point in the plant switchyard. (Institute for Energy Economics and Financial Analysis)
Busbar Cost
The cost per kilowatt-hour to produce electricity, including the cost of capital, debt service, maintenance and fuel. (Institute for Energy Economics and Financial Analysis)

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C

Capacity Factor
A measure of a power plant’s output, calculated by dividing actual energy output by theoretical output. (Theoretical output is the power the plant would generate if it ran continuously at 100 percent of its rated capacity.)
Capital Cost
The cost of equipment, infrastructure and/or other assets required for a project. Capital costs for mini-grid projects include energy generation technologies and distribution systems. In many cases, developers must pay capital costs upfront.
Capital Expenditure (CapEx)
Funds used by a company to buy or upgrade physical assets such as property, industrial buildings or equipment. Companies often use capital expenditures for new projects or investments. (Investopedia)
Capital Subsidy
A subsidy that decreases the cost of capital for a firm or business.
Captive Generation
Production of energy primarily for self-use and on-site generation.
Carbon Credit
A permit that allows the holder to emit the equivalent of one ton of carbon dioxide (CO₂). Carbon credit holders who produce less than their allotted amount of CO₂ can use carbon markets to sell permits to others. Buyers can use carbon credits to offset their emissions and meet emissions quotas. The Clean Development Mechanism carbon credit system, ratified in conjunction with the Kyoto Protocol, is the most widely used carbon market.
Carbon Market
A market or platform for trading carbon dioxide (CO₂) emission reduction credits (carbon credits). The Clean Development Mechanism carbon credit system, ratified in conjunction with the Kyoto Protocol, is the most widely used common carbon market.
Carbon-Neutral
A state where greenhouse gas emissions are balanced by carbon reductions. In a carbon-neutral operation, the carbon footprint -- the net amount of greenhouse gas emissions -- is zero.
Cash Flow
The net amount of cash and cash equivalents moving into and out of a business. (Investopedia)
Circuit-Breaker Panel
A box or panel that serves as a protective device for opening a circuit automatically when excessive current is flowing through it. A circuit breaker may be reset to restore the circuit after a fault causing excessive current has been corrected.
Collateral
An asset promised as a guarantee to repay a loan. If the borrower doesn’t pay off the loan, the lender can take the collateral asset.
Combined Heat and Power (CHP)
Power generation that simultaneously generates both electricity and usable heat.
Commercial Sustainability
A situation where an entity can recover its operating costs and depreciation on all capital assets, make any required debt payments and maintain reserves for emergency repairs and replacements.
Concession
An exclusive service territory granted to an electricity service provider by a government, local authority or other legal entity. The operator or holder of a concession is called the concessionaire.
Concession Agreement
A contract in which the government, local authority or other legal entity grants an electricity provider an exclusive service territory.
Concessionaire
The holder of a concession, an exclusive service territory granted to an electricity service provider by a government, local authority, or other legal entity.
Concessionary Loan/‌Soft Loan
A loan with no interest or a below-market interest rate. Soft loans have lenient terms, such as extended grace periods (during which only interest or service charges are due) and interest holidays. Soft loans typically offer longer repayment schedules. Multinational development banks such as the Asian Development Fund, affiliates of the World Bank and government agencies make soft loans to developing countries that would be unable to borrow at the market rate. (Investopedia)
Conductor
A material such as metal that allows current to flow through it in one or more directions.
Connection Subsidy
A subsidy that decreases the consumer’s cost to connect a household or business to a grid distribution network.
Contingent Valuation
A method used to determine willingness to pay. The researcher describes a hypothetical electricity service and then asks survey respondents to state the maximum amount they would be willing to pay for that service.
Converter
An electric power device that converts electricity from one form to another, typically from alternating current (AC) to direct current (DC). (Inverters, by contrast, typically convert DC to AC.)
Cooperative
An organization owned and run by members who share the benefits and profits. Many mini-grids are managed by rural electric cooperatives. Rural electric cooperatives are not-for-profit, consumer-owned organizations formed to provide high-quality energy services in remote areas. (America’s Electric Cooperatives)
Cost of Capital/‌Financing Cost
The cost of equity, debt and/or other funds used to finance a business or project. Interest paid on a loan is one common cost of capital.
Cost-Reflective Tariff
A tariff that reflects the full cost of providing electricity to consumers, including the installation, maintenance and operation of a mini-grid. Cost-reflective tariffs enable operators to recover their full costs and earn a reasonable return on their investments.
Credit
Money, goods or services provided with the expectation of future repayment. Loans are one of the most common forms of credit.
Credit Line
When you get to this in a module, change to “line of credit” in text and insert definition for “line of credit.”
Cross-Subsidized Tariffs
Charging higher electricity prices to one group of consumers in order to cover the cost of charging lower prices to another group.
Current
The flow of electrical charge, as measured in amperes. Current can be direct current (DC), such as the current produced by solar power, or alternating current (AC), such as the current typically produced by diesel generation.
Current Transducer
A device that senses electrical current and converts it to a low-voltage signal suitable for measuring instruments.
Customary Law
A custom or rule that has become an unofficial law due to being in use for a long time.
Cycle Life
The number of full cycles of complete charge and discharge a battery can perform before its capacity falls below 80 percent of its original rated capacity (amount of energy a battery can hold). The service life of a battery is measured in number of cycles. Each cycle decreases the battery’s capacity.

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D

Debt Finance
Money for working capital or capital expenditures raised by selling bonds, bills or notes to individuals and/or institutional investors. In return for lending money, the individuals or institutions receive a promise that the borrower will repay the principal with interest. (Investopedia)
Debt Service
The cash required to repay the interest and principal on a debt for a particular time period. (Investopedia)
Debt Service Coverage Ratio (DSCR)
The ratio of cash available for debt servicing relative to interest, principal and lease payments. (Investopedia)
Decommissioning
The process of taking a power plant offline and out of service.
Deep Connection Costs
Costs for grid network strengthening, including extending the electricity line and installing meters. In some cases, customers pay for a portion of the deep connection costs through connection fees and/or tariffs.
Deep Discharge (Over Discharge)
A state when a battery has discharged (used) 1.5 to 2 times its rated capacity. Deep discharge results in a longer charging period, and it can decrease the life of certain battery types.
Deferrable Load
A load (or electricity-use event) that can wait until later in the day (during off-peak hours). Deferrable loads at the household level might include charging a cell phone or using a radio at night.
Degradation Costs
Costs calculated to account for the qualitative deterioration of the natural environment by economic activities. (OECD)
Demand Characterization
An estimate of load (electricity use) profiles over the course of the day.
Demand Growth
An increase in the demand for electricity.
Depreciation
The loss of value of a physical asset over time. As an accounting method, depreciation allocates the cost of an asset over its useful life. Businesses depreciate long-term assets for both tax and accounting purposes. For tax purposes, businesses can deduct the cost of the tangible assets they purchase as business expenses. (Investopedia)
Depreciation Rate
The rate, as a percentage, at which an asset depreciates (is written off for tax purposes). The depreciation rate is calculated as the value of the asset (minus the final salvage value) over the period of time since it was purchased. (Investopedia)
Derated Capacity
A measure of generation capacity adjusted to reflect the actual availability of the resource. (Installed [nameplate] capacity, by comparison, is the theoretical maximum capacity.) The availability of generation is influenced by ambient temperature and altitude, both of which affect cooling rates. For example, the nameplate capacity of a hydropower generator might be 100kW, but the derated capacity might be 90kW.
Diesel
A fossil fuel used to generate power. Diesel generator sets (gensets) can provide energy on demand, but fuel is expensive and systems emit significant greenhouse gas emissions. Diesel has historically been the most common energy source for mini-grids, particularly in remote locations.
Diesel Genset
A diesel generator set that includes the diesel engine, a generator, ancillary devices (such as the control system) and safety devices (such as circuit breakers).
Differential Tariff (Time-of-Use Tariff)
A tariff method that charges different rates per kWh for different levels of electricity at different times of day. Utilities commonly use differential tariffs to decrease use during peak demand periods and encourage customers to use electricity when demand is lower.
Digital Meter
A metering device that displays voltage, current and energy use levels on a digital display. (Older analog meters use needles pointing to numbers on dials.)
Direct Current (DC)
An electric current that flows in one direction only. Solar photovoltaic generates DC power and is, in many cases, converted to AC power for retail use. In some emerging markets, DC renewable energy is being paired with DC appliances for off-grid applications.
Direct Current (DC) Appliances
Appliances calibrated to accept direct current (DC) as opposed to alternating current (AC). While most appliances accept AC, manufacturers are producing DC appliances for the off-grid market. Solar home systems generate DC electricity, so using DC appliances with off-grid, solar home systems is more efficient. Converting to AC requires an inverter, and energy is lost during conversion. The market for off-grid appliances is small in emerging markets, but DC LED lights, LCD televisions, refrigerators and fans are available.
Discount Rate
A measure of the present value (worth today) of future cash flows, expressed as a percentage. The more uncertain the future revenue, the higher the discount rate.
Distributed Generation
Production of electricity at the site where it will be used (e.g. solar panels installed on the roof of a business that provide power to that business). Distributed generation generally smaller in scale than utility-scale generation.
Distribution Losses
The difference between the amount of electricity that enters the distribution system and the amount that reaches end users. Technical distribution losses result from the dissipation of power on lines, in transformers and in other components. Commercial or non-technical losses include theft, meter inaccuracy, non-payment and accounting errors.
Distribution Margin
The average difference between a retail tariff (the price end-users pay for electricity) and a bulk supply / wholesale tariff (the price distribution utilities pay for electricity from generators).
Distribution Network Operator (DNO)
An entity that owns and operates a distribution network that brings power from the national transmission network to homes and businesses. The DNO does not sell electricity; electricity suppliers (usually utilities) sell to consumers.
Distribution System
An electrical network consisting of distribution lines, associated electrical equipment and consumption measurement devices (meters) in consumers’ homes. Larger distribution systems often include step-down transformers that decrease voltage before electricity reaches end users. In larger systems using medium voltage levels, the distribution system can be connected to the electricity transmission system via step-down transformers, which lower voltage before electricity is fed onto distribution lines for residential and commercial end-use.
Dump Load
A load diversion device that absorbs excess electricity when production exceeds consumption and storing the surplus is not an option. Dump loads generally dissipate surplus electricity in the form of heat.

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E

Efficiency
A measure of how much of the energy contained in a fuel source is converted into electricity.
Electricity Service Agreement (ESA)
A contract between a mini-grid operator/owner and village representatives that establishes the electricity tariff, terms of service, service quality standards and the roles and responsibilities of the community and mini-grid operator.
Embedded Generator
A single generator or group of generating plants connected to a distribution network with a medium voltage (typically 33 kV or less).
Emissions Trading
A market-based approach for reducing greenhouse gas (GHG) emissions whereby various parties use a common platform to trade carbon credits. A government or other authority may allocate a set number of credits for trading.
End-of-the-Line Voltage Support
Capacitor controls and other electronic equipment at the end of the line that increase voltage to the desired level.
Energy Density
The amount of energy per unit of volume or mass. Energy density is useful for comparing fuels. (Oil, for example, has a higher energy density than natural gas.)
Energy Loss
The difference between the input and output in an energy system or network. Energy losses occur during fuel conservation for electricity generation, transmission, distribution, conversion from DC to AC voltage and other processes.
Environmental Impact Assessment (EIA)
A process that measures a project’s anticipated effects on the environment. If the likely effects are unacceptable, project designers must find ways to avoid, reduce or mitigate environmental impacts. (U.S. Environmental Protection Agency [EPA])
Equity
Funds invested in exchange for partial ownership of a company. Sources of equity include impact investors, angel investors, venture capitalists, investment firms and multilateral or bilateral clean energy funds.

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F

Feasibility Study
A comprehensive assessment that helps developers determine whether to implement a project. Feasibility studies for mini-grid projects assess available land and energy resources, capital and operating costs, sources of financing, technology options, prospective partners, environmental impacts, risk and other key issues.
Feed-In Tariff
A policy mechanism used by governments to promote renewable energy. A feed-in tariff is the price at which a distributed generator sells power to the central grid. The generator may be a residential customer with residential (rooftop) renewable energy, a mini-grid or a utility-scale renewable energy project.
Feedstock
A feedstock is a material that can be used directly as a fuel or converted to another form to be used as a fuel or energy product. Biomass feedstocks include plant and algal materials used to derive ethanol, butanol, biodiesel, and other hydrocarbon fuels. Examples of biomass feedstocks include corn starch, sugarcane juice, crop residues such as corn stover and sugarcane bagasse, purpose-grown grass crops and woody plants. (U.S. Department of Energy)
Financial Close/Closure
The stage in the renewable energy project development process where financing is secured. At financial close, project financing changes from development risk capital to project finance or balance sheet finance.
Financial Instruments
Public, private and concessional funds that reduce risks and eliminate barriers to investment. Common financial instruments include partial risk guarantees and first-loss facilities.
First-Loss Guarantee
A form of credit enhancement in which a third party agrees to cover a certain amount of loss for an investor. By improving balance sheets and decreasing risk, first-loss loans encourage investors to fund riskier projects than they otherwise would. If the project fails, the first-loss loan provider is the last to be repaid, making it more likely that other investors recoup some of their capital. The World Bank, Asian Development Bank and other multilateral development institutions offer this financial instrument.
Fiscal Incentive
A tax policy or measure intended to increase investment in a certain sector. Examples of fiscal incentives include tax holidays, customs waivers on imported equipment, sales tax waivers and tax credits.
Fixed Operations and Maintenance Costs
Operations and maintenance costs that do not change with varying power output.
Flash Burn
An eye injury caused by welding, in which ultraviolet light from a welding arc injures the cornea.
Flooded Lead-Acid Batteries
When you come to this term in the text, ignore “flooded.” Link “lead-acid batteries” to that definition.
Frequency
The speed at which the waves of alternating current (AC) electricity oscillate. Extreme frequency variations can damage loads (such as motors) that receive electricity.

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G

Generation Capacity
The maximum amount of electricity a generator can produce under specific conditions. (U.S. Department of Energy (DOE) Energy Information Administration [EIA])
Geothermal Energy
Energy produced by the internal heat of the earth. Geothermal energy can be used directly for heating or to produce electric power. (U.S. Department of Energy)
Grace Period
An amount of time after a loan is issued or after a loan payment is due during which the borrower will not be penalized for not making a payment. During a grace period, the lender does not charge late fees, and the loan does not accrue additional interest.
Greenfield Developer
A developer who works on new, undeveloped projects (as opposed to a brownfield developer, who buys and finishes existing projects).
Greenhouse Gas Emission (GHG)
A gas released into the atmosphere that traps heat and contributes to climate change. The main types of GHG emissions are carbon dioxide, methane, nitrous oxide and fluorinated gases.
Grid Extension
Increasing the reach of electricity infrastructure to connect and serve new households and businesses.
Grievance Redressal Mechanism
A process, instrument or tool whereby citizen complaints are submitted, processed and addressed.
Grounding
A safety measure that creates a path from the source (appliance or other component which may become charged) to the ground in order to give electricity a path to ground (and away from a person) in the event that the metal components of the appliance become accidentally charged. Grounding protects both people and appliances.

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H

Heat Rate
The amount of energy used by a power plant to create one kilowatt-hour (kWh) of electricity.
Hybrid
A mini-grid system that uses more than one source of energy, such diesel fuel combined with solar PV or wind energy. Diesel has historically been the most common energy source for mini-grids. However, modern mini-grids are often supplied by a mix of energy sources, such as hydropower, solar photovoltaic (PV) power, wind power, biomass based energy or geothermal energy sources.
Hybrid Tariff
A tariff scheme that combines a subsidy with a cost-reflective tariff to reduce the cost to the consumer.
Hydrokinetic Energy
Energy produced from the motion of water, such as flowing rivers, ocean currents and tides.
Hydropower
An energy resource that can be used to generate electricity. Hydropower generation systems convert the power of flowing water into electric power. A well-established technology, hydropower generation is used in mini-grids around the world.

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I

Impact Evaluation
A method used to measure the change in a development outcome that is attributable to a defined intervention. Impact evaluations are based on models of cause and effect and require a credible and rigorously defined counterfactual to control for factors other than the intervention that might account for the observed change. Impact evaluations in which comparisons are made between beneficiaries that are randomly assigned to either a treatment or a control group provide the strongest evidence of a relationship between the intervention under study and the outcome measured. (USAID)
Impact Investor
An investor who invests in funds, companies, or organizations with the goal of achieving measurable, beneficial social or environmental impacts alongside a financial return. (Global Impact Investing Network)
Impoundment
A type of hydropower facility that uses a dam to store river water in a reservoir. Water is released on a controlled basis from the the reservoir, spinning a turbine, which activates a generator to produce electricity. (Run-of-River [or diversion] hydropower facilities, by comparison, channel water from a river through a penstock.)
Income Profiles
A business strategy of dividing a company’s clients into categories based on their financial status,This is typically the first step in segregating products to meet the needs/desires of each group. In the power industry, developing income profiles is part of the process of developing reasonable tariffs.
Independent Power Producer (IPP)
A corporation, person, agency, or authority that owns or operates a facility that generate electricity for use primarily by the public. (Electric utilities are not independent power producers). (U.S. Energy Information Agency)
Indicator
A variable or metric used in monitoring and evaluation to establish when a project has achieved a specific outcome. Indicators are proxies for outcomes, which may be difficult to measure directly.
Inductive Load
A type of load (device which receives electrical power) which produces magnetic fields. Examples include motors, coils and transformers. It is important to note that inductive loads often have a higher inrush current (maximum rush of current that occurs when an electrical device is first turned on). An inductive load is in contrast to a resistive load, which converts current into heat but generates no magnetic fields (e.g. incandescent light bulbs).
Insolation
A measure of a solar energy resource, expressed in power per unit area or energy per unit area per day.
Installed Capacity
The maximum theoretical capacity (in kW or MW) at which a power generating source can operate. Installed capacity is also called nameplate capacity or rated capacity. Actual capacity is lower than installed capacity due to derating.
Installed Cost/‌Soft Costs/‌Plug-In Cost
The non-hardware costs of installing renewable energy generation, including permitting; permitting, installation and interconnection labor; sales tax; transaction costs; developer’s fee/profit; customer acquisition/business development; installation labor and supply chain costs. (U.S. Department of Energy)
Inrush current
The maximum rush of current (higher than the steady-state current) that occurs when electrical equipment is first turned on.
Interconnection
The process of integrating an isolated mini-grid into the central grid.
Interconnection Agreement
An agreement between the energy project developer and the operator of the transmission system, distribution system or both. The agreement establishes the conditions for connecting the generation system to the grid and operating it once connected.
Interconnection Costs
Costs a project developer must pay to connect to the distribution system. Interconnection costs include any costs necessary to upgrade the district network operator (DNO)’s system to receive electricity produced by a power producer.
Interconnection Point
The point where the energy seller's electric output line or electric system feeds into the distribution system it sells to, whether owned by the buyer or another entity. (Standardized Power Purchase Agreement, Republic of Tanzania)
Interest Rate
The annual amount a lender charges a borrower, calculated as a percentage of the principal.
Intermittency (of power)
A characteristic of power resources that are not continuously available, such as power generated from solar and wind.
Internal Rate of Return (IRR)
A measure of the profitability of an investment. The internal rate of return is the discount that makes the net present value (NPV) of all cash flows from a particular project equal to zero. The higher the IRR, the more profitable a project is expected to be. The rate is often used to compare possible investments against one another. (Investopedia)
Inverter
An electrical device that converts electricity from one form to another, typically from direct current (DC) into alternating current (AC). (Converters, by contrast, typically convert AC to DC.)

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J

Joint Venture (JV)
A business arrangement in which two or more parties agree to pool their resources to develop a new project or any other business activity. In a joint venture, each participant is responsible for profits, losses and costs. The joint venture is its own entity, however, separate from the participants' other business interests. (Investopedia)

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K

Kilowatt (kW)
One thousand watts. A watt is a measure of power in joules per second. It represents the rate at which energy is converted per unit of time.
Kilowatt-Hour (kWh)
One thousand watt-hours. A watt-hour is a unit of energy that expresses how many watts are used over the course of an hour. Customers are typically billed for electricity in kWhs.

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L

Land Easement
The right to use someone else’s land for a particular purpose.
Land Tenure
The legal or customary relationship among people, as individuals or groups, with respect to land. (Food and Agricultural Organization of the United Nations)
Lead-Acid Battery
The most common type of rechargeable battery used in mini-grids. Lead-acid batteries are well-established, relatively inexpensive and available in countries worldwide. Compared to newer batteries, lead-acid batteries have a short cycle life, and they don’t perform as well in temperatures outside a specific range.
Letter of Intent
Statement of intent by a buyer to connect to and purchase power produced by a small power producer.
Levelized Cost of Electricity (LCOE)
A measure of the average total cost of electricity over the life of a generation type/technology/asset, expressed per kWh or MWh. LCOE is used to compare the cost of different methods of electricity generation (e.g., natural gas versus coal).
Levelized Distribution Cost
The rate, as a percentage, at which an asset depreciates (is written off for tax purposes). The depreciation rate is calculated as the value of the asset (minus the final salvage value) over the period of time since it was purchased. (Investopedia)
Life Cycle Assessment (LCA)
A method for determining environmental, social and other impacts at each stage of a project. A mini-grid life cycle assessment includes impacts from fuel and technology inputs (including extraction, processing and transportation), operation and maintenance, and decommissioning. In particular, life cycle assessment can determine a mini-grid’s impact on greenhouse gas emissions.
Lifeline Tariff
A social tariff created to benefit low-electricity consumers. A lifeline tariff classifies electricity consumption into blocks of progressively increasing maximum thresholds. At each consumption threshold, the cost of electricity per kWh increases.
Line of Credit
An arrangement between a financial institution, usually a bank, and a customer that establishes a maximum loan amount the lender will give to the borrower. Borrowers can access funds from lines of credit at any time, as long as they do not exceed the maximum agreed-upon amount, and provided they meet other requirements set by the financial institution, such as making timely minimum payments. (Investopedia)
Listed Component
A piece of equipment, material, or service that meets appropriate designated standards for a specific use based on testing by an independent, accepted organization. Independent laboratories test components and publish lists of approved items and uses. Mini-grid developers must use a listing deemed acceptable by the authority with jurisdiction to evaluate and inspect mini-grids in the project area. (U.S. National Electric Code Article 100.1)
Lithium-ion Battery
A type of battery used primarily in portable electronic devices such as cell phones and laptops. Compared to conventional lead-acid batteries, Lithium-ion batteries have a longer cycle life and better performance over a range of temperatures. Manufacturers are beginning to produce lithium-ion batteries appropriate for use in mini-grids.
Load
Demand for electrical energy. Load can vary over time as different devices on a network are switched on and off, and the load of individual devices can vary over time with use (a computer’s load increases when its fan turns on to cool it, for example). Planners typically estimate aggregate load for households or communities, and plan for increased load over time, as consumers plug in more devices, communities grow in size, or economic development leads to increased demand for electricity.
Load Curve
A graph that shows expected electricity consumption for each hour in a typical day.
Load Efficiency
The ratio, as a percentage, of useful power delivered to a load (output) relative to the input (power generated).
Load Factor
A measure of energy use efficiency. The load factor is the ratio of the average electric load (measured across one billing interval, typically one month) relative to the peak load (measured in intervals, typically 15 minutes, consistent with the grid code) averaged over a period of time corresponding to the billing interval.
Load Flexibility
The extent to which electricity use can shift to flatten a load profile. Examples of flexible loads are washing machines timed to start late at night and water pumps that operate during off-peak hours.
Load Limiter
A device that limits the supply of electricity to ensure that a customer does not use more than their allocated amount.
Load Profile
The variation of an electrical load over a specific period of time. Load profiles vary by customer type (household or business), temperature, time of year and other factors.
Loan
Money given with the expectation of repayment. Loans typically incur interest charges. Borrowers generally repay loans with interest on a fixed schedule over a specified period of time (loan tenor).
Loan Tenor
The length of time until a loan is due.
Lockout
A safety procedure in a power system during which an operator shuts down equipment and places a tag on it, explaining why the equipment was locked, by whom and how to reach the individual. Lock-outs are commonly used while installing renewable energy assets such as solar panels. They help protect installers from electrocution and other harm.
Loss-Leader Investment
An investment in a product or service that will not make a profit, but will be used to attract new customers or sell other products and services. The price charged for a loss leader is equal to or less than its cost. A company uses a loss leader to build a customer base and secure future recurring revenue. The practice is common for businesses entering new markets. (Investopedia)
Low Voltage (LV)
Typically 600 volts and below.

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M

Management System
A set of components that measure, monitor and control electrical loads for mini-grids. Metering and monitoring functions allow mini-grid managers to gather data about energy activities across end users, which informs operational decisions. Management systems may allow for remote control of systems, including shedding loads remotely.
Megawatt (MW)
One million watts.
Megawatt-Scale
Energy generation assets with an installed capacity of 1 MW or more.
Mezzanine Finance
Capital that gives the lender the right to convert to an ownership stake or equity in the company if the borrower does not repay debt on time and in full. Mezzanine finance is generally subordinate to debt provided by senior lenders such as banks. It is considered a hybrid of debt and equity financing. (Investopedia)
Medium Voltage (MV)
Typically between 600 volts and 33 kV.
Micro-Grid
A type mini-grid that produces a small amount of electricity, generally defined as 10kW-100kW.
Mini-Grid
Systems involving small-scale electricity generation (from 10kW to 10MW), and the distribution of electricity to a limited number of customers via a distribution grid that can operate in isolation from national electricity transmission networks and supply relatively concentrated settlements with electricity at grid quality level. “Micro-grids” are similar to mini-grids but operate at a smaller size and generation capacity (1-10 kW). (EU Energy Initiative Partnership Dialogue Facility)
Mobile Money
Money paid or accepted using a cell phone, smartphone or handheld PC. Mobile money makes billing and collections quick and efficient, enabling providers to use pay-as-you-go (PAYG) tariff systems for off-grid customers in emerging markets.
Modular Generation
Power generation that can be easily expanded by adding units.
Motor Soft Starter
An electrical device that protects the motor from the effect of inrush current, the maximum surge of current when electrical equipment is first used.
Must-Take Contract
Also known as take-and-pay, a must-take contract requires the offtaker (purchaser) to pay a fixed tariff for all energy delivered, even if the offtaker cannot take the agreed-upon amount of energy at a given time. (Overseas Private Investment Corporation)

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N

Nameplate Capacity
The theoretical maximum output of a power plant. Nameplate capacity is also known as rated capacity, nominal capacity or installed capacity.
National Regulatory Body/‌Regulatory Commission/‌Regulator
An independent government agency tasked with regulating the electricity sector. This includes, but is not limited to, consumer protection, rate-making and promoting competition. Specific responsibilities may vary from country to country.
National Uniform Tariffs
A tariff structure in which all customers in a specified tariff category pay the same price regardless of location or differences in the cost to supply the electricity.
Non-Cost-Reflective Tariffs
Fees for electricity that do not reflect the full cost of installation, maintenance and operation of a mini-grid.

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O

Ocean Energy
Energy produced from the ocean, including thermal (heat) energy and mechanical energy (energy from an object’s motion or position) from waves and tides.
Offtaker
A purchaser of electricity.
Operational Subsidy
Resources provided on an ongoing basis to cover the difference between the actual cost of supplying power and the tariff consumers are charged for the power. Operational subsidies are common in remote mini-grids where utilities must use expensive diesel fuel to generate electricity but are required to maintain a standard tariff.
Operations and Maintenance (O&M)
Tasks required to run a mini-grid system and keep it in good working order.
Output-Based Aid/Subsidy
A subsidy paid to renewable energy providers based on the number of kWh of energy produced and delivered (performance) and/or number of electrical connections completed.
Overcurrent Protection Devices
Devices that protect conductors and equipment from carrying current exceeding their rated capacity. Common overcurrent protection devices include current-sensing switches, circuit breakers and fuses.
Owner’s Equity
An owner’s investment in his or her business.

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P

Parastatal Utility
A utility that is government-owned but privately-managed.
Partial Risk Guarantee (PRG)
A mechanism that protects lenders and/or investors from losing all of their funds should a project fail. If the project developer fails to meet its contractual obligations, the organization providing the risk guarantee returns some of the lender’s or investor’s funds. In mini-grid projects, partial risk guarantees protect private lenders against the risk of a national utility or other public entity failing to meet its obligations to a private project.
Pay-as-You-Go (PAYG)
A system of paying for energy or energy services in which consumers do not pay the full, capital cost of a system (solar home system, portable solar product, etc.) up front, but instead pay for it over time. Many PAYG schemes for mini-grid electricity in off-grid areas use mobile payments, although some companies continue to use cash transactions.
Per-Light-Bulb Tariff
Fee for electricity based on the number of lights and appliances in a household rather than energy use as measured by a meter. Users pay a fixed fee per light bulb, TV, radio, etc. as an estimate of total energy use. Energy suppliers use this approach when they don’t have meters or other ways to monitor actual consumption. Where meters are available, per-light-bulb tariffs are not recommended, because users lack an incentive to conserve energy.
Performance-Based Subsidy
A subsidy that rewards not how much energy a generator can potentially produce but on the actual number of kWh of energy delivered to consumers. Performance-based subsidies encourage developers to focus on electricity production and delivery rather than simply increasing their plant’s potential. The alternative, subsidies based on installed capacity, rewards generators for their plants’ potential electrical production without regard to how much electricity they actually deliver to customers.
Photovoltaic (PV) Energy
Electricity produced from sunlight by solar cells. Solar photovoltaic cells are made of silicon, a semiconductor. When sunlight shines on a solar photovoltaic cell, the energy in visible light excites the electrons in silicon. The PV cell uses this energy to generate direct current (DC) electricity.
Pico-Solar Lantern
A portable lighting device, common in off-grid and remote areas, that uses solar power to provide lighting.
Plant Load Factor (PLF)
The ratio of the energy produced by a generator relative to its theoretical maximum output. Plant load factor measures how well a generator uses its capacity (capacity utilization).
Point of Common Coupling (PCC)
The point in an interconnection of a small power producer (SPP) to a grid beyond which other lines, customers, or other SPPs are connected.
Point of Interconnection (POI)
The point in a connection between a distribution network and a generator beyond which all technology is the responsibility of the utility.
Point of Supply (POS)
The location where a distribution network connects to a generator. A meter at the point of supply measures electricity.
Power Conditioning Equipment (Power Conditioner)
A piece of electrical equipment that improves the quality of an alternating current (AC) wave, making it smoother and “cleaner.” Power conditioning equipment maintains constant voltage for power to electrical equipment such as appliances.
Power Conversion
The technical process of changing electricity from one form to another. Power conversion may include changing from alternating current (AC) to direct current (DC), changing the frequency, voltage, or any combination of these.
Power House
The building that holds the power generation equipment.
Power Purchase Agreement (PPA)
A contract between the electricity generator (seller/producer) and purchaser (buyer/offtaker). PPAs include the PPA tariff and the terms and conditions under which electricity will be purchased.
Power Purchase Agreement (PPA) Tariff
The price at which the buyer/offtaker purchases electricity from the seller/producer/generator.
Power Tariff
A tariff based on the peak power (watts) consumed. Customers usually subscribe to pay a flat rate for a specific peak demand. Energy providers don’t meter power tariff customers, but they may install load limiters to control use. A per-light-bulb tariff—in which the provider charges a flat fee based on the number of light bulbs and/or other end uses—is a variation of a power tariff.
Prefeasibility Study
A study used to determine whether a project might be viable. A prefeasibility study assesses economic and technical issues associated with a project. Compared to a full feasibility study, the prefeasibility study is simpler and quicker. A mini-grid developer uses a prefeasibility study to decide whether to invest in a full feasibility study.
Preferred Equity/Stock
A preferred stock is a class of ownership in a corporation that has a higher claim on its assets and earnings than common stock. Investors with preferred shares receive dividends before common shareholders. Preferred stock combines features of debt, in that it pays fixed dividends, and equity, in that it has the potential to increase in price. (Investopedia)
Prepaid Meter
A device that monitors energy use after a customer has paid for electricity in advance. A prepaid meter may disconnect service if the customer fails to pay or reaches a certain amount of electricity use.
Primary Forest Resources
Timber and non-timber products found in native forests that have not been significantly disturbed by human activity.
Private Equity
Funds provided directly to a company (outside a public exchange) in exchange for partial ownership of the company. Private equity can fund new technology, provide working capital and/or improve a balance sheet by increasing a company’s assets relative to its debts. (Investopedia)
Private Equity Fund
A collective investment scheme for investors to provide capital directly to a private company (outside a public exchange) in exchange for partial ownership of the company.
Productive Use
An activity that uses energy to earn income or generate other non-leisure benefits. Common productive uses of energy include agricultural processing, lighting for businesses and water pumping.
Project Cycle
A series of steps taken to develop a renewable energy project. The mini-grid project cycle includes feasibility studies, community needs assessments, technical design, installation, operations and maintenance.
Project Finance
Loans or other debt provided based on a project’s perceived risks and expected future cash flows. Usually, the project developer creates a special-purpose vehicle (SPV) whose sole assets are the project itself. This protects the project’s parent company should the project fail. Lenders can seek repayment from the SPV, but have limited or no recourse to seek funds from the parent company.
Provisional Licence
A licence issued by a regulatory authority to allow a project developer to conduct assessments, studies and other activities necessary to prepare an application for a full licence.
Public Investment
Financial resources provided by governments. Public investment can create an enabling environment for mini-grid development. Governments and donors can also invest directly in mini-grid projects by partially or fully covering capital costs.

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R

Radio Frequency Emissions
Electromagnetic waves produced by power lines and appliances. Radio frequency emissions can interfere with radio, television or cell phone reception.
Rated Capacity
The amount of charge a battery has available to perform under normal conditions, as measured in amp-hours (Ah). A rated capacity is typically specific to a certain discharge rate.
Redeployable Generation Asset
A piece of power generation equipment that can be relocated.
Regional Grid
An electric power system that serves one or more regions of a country. Regional grids may or may not be connected to the national grid.
Renewable Energy
Energy from resources that are naturally and continually replenished over a short period of time (not millions of years, as with fossil fuels.) Renewable energy resources include sunlight, wind, water, tides, biomass and geothermal heat.
Reseller
An entity that purchases power at wholesale prices to resell at retail prices to end-use customers.
Resistive Load
An electrical device that converts current into heat without generating magnetic fields. Examples include electric heaters and incandescent light bulbs. (Inductive loads like electric motors, by contrast, generate magnetic fields.)
Retail Tariff
The price at which electricity is sold to retail consumers, including commercial and residential customers.
Retailer
An entity that purchases power at wholesale prices or generates power from its own facilities to sell at retail prices to end-use customers.regulator
Retrofit
A modification or addition to an existing system to increase energy efficiency or output.
Revenue Base
Money received for services that comes from a constant source, as opposed to money from an add-on, surcharge or one-time charge.
Risk Guarantee
A mechanism that protects lenders and/or investors from losing funds should a project fail. If the project developer fails to meet its contractual obligations, the organization providing the risk guarantee returns some or all of the lender’s or investor’s funds. In mini-grid projects, risk guarantees protect private lenders against the risk of a national utility or other public entity failing to meet its obligations to a private project.
Run-of-River (Diversion)
A type of hydropower facility that diverts a portion of a running stream/river through a channel, where the water turns a turbine which then produces electricity. Run-of-River hydropower takes advantage of water that is already flowing downhill (preferably quickly). By comparison, pumped-storage hydropower requires the operator to pump water uphill to a reservoir, and then release it as needed to allow the flowing water to turn the turbine. Because it takes energy to pump water up into the reservoir, pumped storage facilities are by nature less efficient.
Rural Electrification Agency (REA)
Government agency responsible for designing and/or implementing a country’s rural electrification plans in coordination with national grid expansion. An REA’s mandate might emphasize mini-grids and/or renewable energy technologies as off-grid energy solutions for rural areas.

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S

Seasonal Tariff
A tariff whose rates are determined by seasonal variations in the availability of a renewable energy resource.
Semiconductor
A solid material (such as silicon) that conducts electricity under some conditions but not others, making it an effective medium for controlling electrical current. (TechTarget)
Service Drop
An overhead electrical distribution line that connects the utility pole to the end user or customer. (An underground connection, by contrast, is known as a “service lateral.”)
Shallow Connection Cost
The cost that a consumer must pay in order to have his home/business connected to a mini-grid system. The cost covers only the bare minimum of the cost required to extend wires and add equipment necessary to connect his home. The cost does not take into account any other changes made to the mini-grid system in order to accommodate his connection. Deep connection costs are higher
 
 
Shallow Interconnection Cost
A power generator required to have only the bare minimum of upgrade costs to connect the power source to the upstream network. A deep interconnection cost means the power generator is also required to finance upgrade of all other system upgrades necessary to upgrade the rest of the system
Single-Phase (Φ) Power Distribution
Alternating current (AC) electric power in which all the voltages of the supply vary in unison. (Three-phase distribution, in contrast, has three oscillating voltages out of phase with each other by one third of a cycle).
Skinny Grid
A smaller, more nimble mini-grid used to power ultra-energy-efficient appliances such as LED light bulbs and DC televisions.
Small Power Distributor (SPD)
An entity that purchases electricity at wholesale prices from a distribution network operator (DNO) or another bulk supplier and resells it at retail prices to end-use customers.
Small Power Producer
An entity that generates electricity and sells it at a wholesale price to a distribution network operator (DNO), at the retail level directly to customers, or some combination of the two. SPPs typically have power export capacity up to a specific threshold (e.g. 10 MW).
Smart Grid
An electrical grid that uses information and communications technology to automatically gather and use information, especially data about supplier production and consumer usage. Smart grids can improve efficiency, reliability, economics and sustainability of energy production and distribution. A smart grid enables greater control of grid operations and energy use and demand, improved interactions among grid components and better interactions between the grid and the customer. (International Journal of Modern Trends in Engineering and Research)
Smart Meter
A metering device that electronically records information about electricity consumption and communicates that information back to the utility. Smart meters can also receive information from the utility (two-way communication).
Soft Loan
A loan with no interest or a below-market rate of interest. Soft loans have lenient terms, such as extended grace periods (during which only interest or service charges are due) and interest holidays. Soft loans typically offer longer repayment schedules, in some cases up to 50 years. Multinational development banks such as the Asian Development Fund, affiliates of the World Bank and government agencies make soft loans to developing countries that would be unable to borrow at the market rate. (Investopedia)
Solar Home System (SHS)
An off-grid electricity-generating system for a residence consisting of a PV solar panel, a battery, a controller and ancillary equipment. In emerging markets, solar home systems provide between 8-80W of electricity, and many use mobile phones for billing and collections.
Split-Asset Model
A business model in which one entity owns the electricity generation assets and another owns the distribution network.
Standardized Tariff
A tariff set by the regulator to provide small power producers (SPPs) a reasonable rate of return. Standardized tariffs don’t address the cost breakdown of particular energy investments. (Feed-in tariffs, by contrast, establish tariffs specific to different generation technologies.)
Standby Tariff
A tariff that compensates the national utility for providing electricity to a small power producer (SPP) when the SPP is not generating electricity, or not generating enough electricity to meet its loads.
Step-Down Transformer
An electrical device that changes electricity to a lower voltage.
Step-Up Transformer
An electrical device that changes electricity to a higher voltage.
Storage
Capturing and retaining electricity for later use through devices such as batteries.
Subordinated Debt
A loan or security that ranks below other loans and securities in its claims on a company's assets or earnings. Subordinated debt is also known as a junior security or subordinated loan. In the case of borrower default, bankruptcy or business failure, lenders who own subordinated debt won't receive payments until after senior debt holders are paid in full. (Investopedia)
Substation
A key component of an electricity grid that steps down (or steps up) voltage between the transmission system and the distribution system.
Sweat Equity
A contribution in the form of work rather than money. Communities with limited financial resources may be able to provide sweat equity to decrease labor costs for mini-grid projects.

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T

Tariff
Any charge, fee, price or rate for the purchase of electricity.
Task Lighting
Lighting used to complete an activity, such as factory lighting for workers.
Three-phase (Φ) Power Distribution
Electricity in the form of three separate alternating currents of the same voltage, but with phases differing by one third of a period.
Time-of-Use Tariff (Differential Tariff)
A tariff designed to charge different tariffs at different times of day. Time-of-use tariffs are typically higher during periods of peak energy demand to cover added costs like diesel generation or back-up battery use.
Trade Winds
Persistent tropical winds that blow from subtropical, high-pressure centers toward equatorial, low-pressure centers. (National Oceanic and Atmospheric Association)
Transaction Costs
Costs incurred when exchanging a good or service.
Transformer
The part of the distribution system that changes the voltage of electricity. Step-up transformers increase voltage; step-down transformers decrease voltage.

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U

Uniform Tariff
A tariff that is the same for on-grid, retail customers and customers who use off-grid mini-grids.

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V

Vanadium Flow Battery
A battery that stores electricity at a higher cell voltage. Vanadium flow batteries have more power and greater energy density compared to conventional batteries.
Variable Costs
Power plant operation costs that vary depending on output. Fuel is the primary variable cost in energy production.
Venture Capital
Financing for higher-risk enterprises or new businesses with high growth or growth potential. Venture capital is a type of private equity. New projects or businesses may be able to secure venture capital when traditional sources like commercial banks are unwilling to assume the risk.
Voltage
The force that drives electric current through a load. Generation systems and appliances are designed for specific standard voltages, which are generally not interchangeable. Fluctuations in voltage and excessive voltage drops may negatively impact power delivery and performance of devices that draw load, such as appliances and motors.

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W

Watershed
The area of land that drains water into a particular stream, river or basin.
Watt
A unit of power, measured in joules per second, that indicates the rate of energy production or use. A high wattage appliance, for example, is one that uses a high amount of energy in a short time.
Weighted Average Cost of Capital (WACC)
A calculation of how much a firm pays overall for its financial assets. A WACC calculation covers all sources of capital, including equity loans and other forms of debt, weighting each type of capital according to its share of the total. The WACC is the minimum rate of return the firm must earn in order to pay its shareholders, owners, lenders and other investors. (Investopedia)
Wholesale Electricity
Electricity generated and sold to a power provider before reaching retail customers. Wholesale prices are typically lower than retail prices.
Willingness to Pay
The maximum price a consumer is willing to pay for energy.
Wind Power
A renewable energy resource used to power mini-grids. Wind energy varies, but it is relatively easy to monitor and forecast over time. Wind power is site-specific, since wind conditions can vary significantly from place to place. Hybrid mini-grids often combine wind with other power sources like diesel or solar.
Wind Turbine
A technology that generates electricity from the kinetic energy (motion) of wind. A wind turbine consists of horizontal or vertical blades connected to a shaft that spins a generator to create energy.

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Last updated: February 13, 2018

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