It is critical that a mini-grid project comply with applicable regulations (national, regional and/or municipal), including environmental permitting and health and safety standards. The stringency and enforcement of EHS standards varies greatly among countries. In some parts of the world, there is little to no enforcement; in others, there are requirements and standards originally designed for much larger systems, which may prove overly burdensome when applied to mini-grids.

Typically, environmental regulations require the project developer to submit a description of the project activities, the location and an analysis of the potential impacts. In some cases, consultations and an assessment of alternative options are required. Health and safety regulations normally establish specific working conditions, training requirements and analysis procedures. National and local regulations may also govern the quality of service delivery.

Where regulations are inadequate, a mini-grid project developer has the opportunity to model best practices and potentially strengthen regulations by working with the local government.

National Requirements in Thailand

In Thailand, small power systems are classified as very small-power producers (SPPs)(<10 MW) and SPPs (10-90 MW). The Ministry of Natural Resources and Environment (MNRE) is the government agency that sets the environmental review requirements. The MNRE requires an environmental impact assessment for projects over 10 MW, while none is required for smaller systems. For power projects over 3 kW, a factory permit is required, in addition to zoning permits.

However, generation capacity is not the only determinant of EHS impacts. For example, some biomass power systems below 10 MW produced air emissions to the detriment of neighboring communities. In response, simplified procedures have been developed to screen projects for potential impacts and develop plans to address those impacts. A code of practice requires, among other things, that an environmental checklist that addresses issues throughout the project life cycle be submitted along with the project application. In 2012, Thailand's National Health Assembly produced a Resolution on Biomass Power Plants that requires the development and implementation of an environmental surveillance plan as part of project permission and approval. It also engages communities with environmental surveillance and requires a health impact assessment. These efforts are still ongoing but are an example of attempts to streamline procedures for projects of different risk levels.

Donors or lenders may also have EHS requirements. USAID-funded projects, for example, must comply with USAID’s environmental regulation, Title 22 of the Code of Federal Regulations Part 216 Agency Environmental Procedures. In most cases, donor and host-country national requirements are complementary but may require some separate analysis and documentation. For projects that are co-funded, there may be multiple sets of donor requirements. In these situations, consult with donors to identify opportunities to coordinate compliance.

Locations well suited for a mini-grid may not have national requirements or standards that adequately address EHS risks. While donor requirements may establish alternative standards, it may also be beneficial to adopt established best practice standards from a third party. These standards could address environmental protection, stakeholder consultation, electricity systems, construction or other considerations. Best-practice standards may be adopted from another country or an independent organization. For example, USAID has produced several sector environmental guidelines, which include best practices for various sectors. Another example is a set of best practice guides, produced by Electrical Safety First, for activities with electrical systems.

Host-country Regulations

Host-country EHS regulations can vary widely. Regulations of particular relevance for mini-grids are those that govern environmental permitting, land use, health and safety, waste management, water quality and service-delivery quality. Working with environmental, electrical and labor authorities (both local and national) can help determine which set of EHS host-country regulations to follow. The regulation and licensing of mini-grids may be dictated by generation capacity (whether or not the mini-grid generates income or collects fees) or the type of technology used.

One challenge with host-country regulations is the lack of EHS procedures for mini-grids as distinct from procedures for large, utility-scale projects. Another common challenge is the lack of regulation or host-country capacity to review documents for approvals. Even where relevant regulations exist, officials may have limited experience in applying regulations to mini-grids. Under either scenario, national or local regulations may delay the approval process, and this should be incorporated into project planning. There may be an opportunity to establish best practices in the host-country through project implementation, which may have the added benefit of shaping future policy.

USAID Environmental Compliance

All USAID projects are subject to an environmental review process under Title 22 of the Code of Federal Regulations Part 216 Agency Environmental Procedures, which takes into account the environmental sustainability of programs (see Resources for a description of procedures, training resources and existing environmental compliance documents). The implementation process is further described in USAID’s policy for Environmental Procedures, known as Automated Directives System (ADS) 204. USAID’s procedures require project developers to conduct an environmental assessment and use the results of that assessment to design a project that addresses environmental concerns. Project design must include a plan for monitoring compliance with environmental regulations.