November 10, 2017 Read More →

Africa Poised to Bypass Tradition Electricity-Expansion Model by Embracing Microgrids and Renewables

The Economist:

Thanks to a happy combination of innovation and falling costs for renewable energy, Africa may now be able to leapfrog ahead not once but twice, skipping both polluting fossil fuels and, often, the electricity grid itself.

Last year Africa added a record 4,400MW of renewable-power capacity, roughly enough to meet Nigeria’s current consumption, according to the International Energy Agency (IEA). This is partly due to falling costs: the price of solar panels has come down by more than 80% since 2010, and that of wind turbines is also dropping fast. A recent study led by Anton Eberhard of the University of Cape Town found that grid-connected wind and solar renewable energy in South Africa is now among the world’s cheapest.

Yet generating power is useful only if it can be sent to where it is needed, and in many parts of Africa electricity grids seldom stretch beyond big cities. Adding a house to the grid even in a compact country such as Rwanda typically costs about $2,000, which is more than the country’s average annual income per person. The APP reckons that expanding grid power across Africa to reach almost everyone would cost $63bn a year until 2030, compared with the $8bn a year that is being spent now.

Another set of innovations is offering to sidestep this problem with mini rooftop solar installations that can power a home, or slightly larger “micro-grids” that can light up a village. Rooftop solar systems usually consist of a small solar panel and a small rechargeable battery and controller which typically powers four lights, a radio and a phone charger.

Most systems have a built-in connection to the mobile-phone network that allows the provider to switch it on or off remotely. Instead of shelling out $250 or so upfront for an entire system, customers can buy electricity for the equivalent of 50 cents a day using mobile money. If they run out of cash, their power is cut off until they are in funds again. Thanks to this new “paygo” model, venture capital is pouring into an industry that now has at least half a dozen significant firms. The largest of them, M-Kopa, has electrified more than 500,000 homes and is adding almost 200,000 more a year. Across the industry as a whole perhaps a million families now have rooftop power. At current rates of expansion, the total may double every 18 months or so.

Prices for these systems are also falling fast. The Global Offgrid Lighting Association reckons that prices of small solar-powered lights fell by 80% between 2010 and 2015. It forecasts that those for a large home system, including low-powered lights, television and radio, will fall by 45% between now and 2020.

The electrifying growth of rooftop solar energy is now sparking another round of innovation, some of which may in time travel back to the rich world. Azuri Technologies, a company based in Cambridge, England, is programming its systems to forecast how much power each household will use that evening. It then subtly adjusts the brightness of lights or the television to reduce power consumption on cloudy days.

The main problem with rooftop solar systems is that they produce only small amounts of power. They enable clinics to keep functioning at night and to keep vaccines cool, and small shops to stay open longer and offer chilled drinks. But they cannot run power-intensive machines such as welders or mills, which require much larger solar installations and bigger batteries. Still, in the past few years a growing number of energy-intensive businesses such as mines have been putting up solar panels to replace diesel generators. The IEA reckons that this can cut a firm’s energy costs by half.

These bigger systems are also beginning to play a role in powering villages with “minigrids”, which are much cheaper and easier to install than full-scale national power grids. Data on the spread of minigrids and their economic impact in Africa are scarce, but a study by the Rockefeller Foundation in India found that when minigrids were installed in villages, small businesses increased their sales by 13% and incomes rose across the area. The Smart Villages Initiative, which has brought together scientists from Cambridge and Oxford Universities to get minigrids adopted more widely in poor countries, found that once smallholder farmers have electricity, they quickly adopt a range of other technologies such as irrigation pumps and smartphones to get long-term weather forecasts.

Minigrids have been relatively slow to take off because of their high capital costs, but several organisations are trying new business models to spread the expense. The Rockefeller Foundation is exploring whether mobile-phone companies can become anchor customers of minigrids.

That would help to secure the finance needed to build the grid, but also to reduce one of mobile-phone companies’ biggest expenses: diesel for the generators that power their masts. By one estimate this accounts for as much as 60% of the cost of operating their networks in Africa. Minigrids can thus help to spread not just energy but, just as important, phone and internet connectivity.

More: Africa might leapfrog straight to cheap renewable electricity and minigrids

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