LAUSR

Abstract This paper deals with an economic aspect of distributed generation systems which rural energy cooperatives may mainly support, since they can effectively coordinate the different stakeholders within an energy access initiative. Members of a rural energy cooperative would share the costs of deploying a distributed generation system, so that each of them can benefit from it. To minimise the overall investment cost, such a cooperative must consider both technical sizing and cost allocation among its members. For the latter, an important issue to take into account is the so-called willingness-to-pay. For obtaining the design of the distributed generation system we propose to use facility location covering (FALCO) models. The solution of the FALCO model provides both the structure of the distributed generation system and the investment cost to be covered by the members of the cooperative. We take advantage of the structure of the primal and dual optimal solutions of the FALCO model to endogenously determine the minimum and maximum willingness-to-pay of the cooperative members and then to apply rationing techniques to obtain the final allocation of costs to each member. Thus, our approach optimises the generator locations and minimises the total system cost, while assigning to each member at least her minimum willingness-to-pay. From our point of view, this method may help the beneficiaries to accept the investment cost allocation. Finally, a case study based on real data from a rural village in Maharashtra, where a group of farmers wanting to buy and share an energy system to pump water for irrigating their fields, is used to illustrate the working of the proposed cost allocation methodology.