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Off-grid electrification planning increasingly recognizes the importance of productive use of electricity (PUE) to promote community value creation and (financial) project sustainability. To ensure a sustainable and efficient integration in the community and energy system, PUE assets must be carefully evaluated to match both the community needs and the residential electricity demand patterns. We propose a novel methodology interlinking qualitative interviews, statistical analysis and energy system modeling to optimize decision making for PUE integration in off-grid energy systems in rural Madagascar by aligning relevant PUE effectively with anticipated residential electricity demand patterns based on socio-economic determinants of the community. We find that a possible contribution of the PUE to reducing the electricity costs depends significantly on three factors: (1) The residential electricity consumption patterns, which are influenced by the socio-economic composition of the community; (2) The degree of flexibility of (i) PUE assets and (ii) operational preferences of the PUE user; and (3) The capacity of community members to finance and operate PUE assets. Our study demonstrates that significant cost reductions for PUE-integrated off-grid energy systems can be achieved by applying our proposed methodology. When matching PUE and residential consumption patterns, the integration of PUE assets in residential community energy systems can reduce the financial risk for operators, provided the PUE enterprise operates reliably and sustainably. We highlight that the consideration of local value chains and co-creation approaches are essential to ensure the energy system is addressing the community’s needs, creates value for the community, enhances the project’s financial sustainability and is achieving the overall objectives of decentralized energy system planning.
Schöne et al. (2024) studied this question.