39 Replies Latest reply: Mar 3, 2014 4:42 AM by gunjanpatel RSS

    E-Discussion #1 - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions

    1231309 C4D Extraordinaire

      Setting-up a mini/micro-grid or providing energy services to communities is often a question to be addressed by entrepreneurs looking forward implementing a Telecom-Energy decentralized energy supply business model. There is no right or wrong answer to this question, rather a choice to be made for one or another, or a combination of both, depending on multiple factors such as distance, customer base or payment technologies to only cite a few.

       

      This e-discussion facilitated by Mohua Mukherjee will address this question based on practitioners' experiences and insights on what are the factors that could influence this choice.

        • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
          C4D Connoisseur

          As a former telecom person (Sprint, Hughes, Citizens Utilities), I would like the to know if any study explores how many cell-towers have fiber optic connectivity, especially in rural areas, country by country, region by region. I would like to know what the lifecycle costs of fiber deployment to a cell tower are compared to grid-extensions. I expect such costs to be much lower for fiber deployment especially when operating costs are included, which would include transmission losses and electricity theft.

           

          If fiber optic connectivity exists to cell towers, then the 4G/BWA or equivalent can bring broadband connectivity to the region even as the cell towers are hubs for solar generation and micro-grids. My view is: fiber optic deployment should be viewed along with micro-grid deployments for aggregate economics analysis. This bridges two distinct infrastructure industries, and thus is likely a wholly new way of looking at networks.

           

          Mohua's focus on business models is right - the discussions about emissions' warming impact and public policy (Rio+ 20 and equivalent, for instance) have served their purpose. We are at the next phase of hard-nosed business economics.

          • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
            C4D Explorer

            I would like to hear more about what energy sources are being used for mini-grids in this sector in different parts of the world -- e.g. diesel oil generation, renewables, natural gas, other --- and what are the key considerations for choice of fuel and technologies?  Thank you.


              • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                C4D Enthusiast

                Elaine, my experience is that solar PV is the most common energy source these days for mini-grids in different parts of the world, especially in India. The economics of solar panel prices falling and efficiencies rising, together with diesel prices rising, have brought something close to parity per kWh between solar and diesel, which was unthinkable a few years ago.  Of course there is the cash flow question: with the solar panel you are paying your bills for the next few years upfront, and have a tiny amount to pay later.  With diesel gensets you invest upfront in a relatively cheap and durable generator, and pay your bills as you go along, in terms of the price and logistics of diesel transport and security (which can be very complex due to the high risk of diesel theft).  There are also some mini-grids operating on biomass-derived gasifiers that run modified generators to produce electricity from gas; this is suitable principally in areas with high agricultural residue and waste that is available year-round.


                I request others to add their thoughts please

                 

                thanks, MM

                  • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                    C4D Explorer

                    Mohua / Elaine, It has been my experience in Africa that diesel genset remain the core source of power generation.  The ready supply of diesel, service expertise and known power generation characteristics make this an easy choice for base power.   On top of this there is demand for other liquid fuel solutions as it simplifies storage of energy - easier to store energy in a liquid fuel for use when needed than to keep batteries charged.  As for solar, you are correct that price parity is starting to become possible on a kw/h generated model but the storage of solar energy for significant autonomy still require large battery banks.  Thus solar only remains a limited proposition.  Use of wind in Africa is limited ( general statement I know, shorelines and certain parts more feasible).  Bio gas very small in the markets we operated in yet with abundant natural gas this may become an interesting driver for natural gas fed fuelcells or a resurgence of gas generators.  An interesting option would be micro-hyrdo in parts of central africa with strong flowing tributaries but to date I have no knowledge of a working solution in this regards.

                  • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                    gunjanpatel C4D Enthusiast

                    Dear Elaine,

                     

                    i would like to take this opportunity to discuss about biomass energy for mini grids in different parts of the world. Biomass Gasifiers are ideal in the region where biomas is available near the site. This is a best source of energy for distributed power generation. I work for gasifier company and my company has developed gasification system of 11 kwe power output which is ideas for telecom tower. This system can run 24/7 with the same output energy. If you are interested i could mail you our corporate brochure and different models which will help you understand better this alternative way to produce power or you can reach out to me at gunjan.patel@ankurscientific.com

                  • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                    C4D Explorer

                    Growth of societies and communities based on oil/ petroleum products has been tremendous.

                    Electricity generation, transportation, agriculture and food have huge dependence on petroleum products like petrol, diesel, LPG, CNG.

                    Of course, this has helped to develop mammoth power plants, huge cities, food industries and so on..

                     

                    In this race rural socities have suffered - especially in developing economies/ countries. Rural micro econmics as well their basic needs have been neglected. This huge population is deprived off electricity and derived benefits of electricity. These communities need energy for basic needs like milling, farming, clothing apart from education and health.

                     

                    Technical development and deployment of alternate energy sources like solar, wind, bio-gas, waste-mass should be helpful in setting up mini power plants and mini-grids for rural communities. I believe the initiative of rural electrification by setting up mini-grids using such mini power plants will be economical. The model will be most successful with available energy sources locally rather than importing.

                    Thanks for opening this interesting and important discussion.     

                    • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                      C4D Enthusiast

                      Hello  everyone.  Welcome to the discussion, and many thanks to those who have started us off -- Mahesh, Elaine and Chandrakant

                       

                      Through our discussions and exchanges here, we seek to grow a community of practice on rural electrification, consisting of highly experienced members bringing different perspectives and lessons learned in connection with this activity.  Who are we? and whom are we still looking for? So far, some of us are investors/social entrepreneurs, some are financiers, some are technology developers, some are micro and mini-grid operators, some represent the cellular telephone operator community, some are technical and IT specialists working on innovations to reduce transactions costs, some are from commercial banks, some from bilateral development aid agencies, some from regional development banks, some from multilateral banks, some from the "private sector arms" of those banks, some are from private foundations interested in social impact investing, some are coordinating large scale "multiple pilot projects" on behalf of others, some are interested in legal and contractual aspects of micro-grids, some are interested in regulatory aspects,
                      and some represent the policy-maker's perspective.

                       

                      We hope that this excellent mix of diverse focus and wide-ranging interests will help us identify
                      exciting opportunities and innovative solutions to the challenge of ruralelectrification that has brought us all together.

                      We would love to hear from all of you, and look forward to an active and engaged discussion.  If you know others who are interested in our community, please encourage them to join or refer them to Yann Tanvez (ytanvez@worldbank.org).  Today, we are excited to launch our first
                      e-discussion and would like to request you to share your thoughts on the
                      following topic:

                      Rural electrification is only a tool for achieving a larger objective:
                      ultimately we are trying to support the rural community to engage in productive
                      uses of electricity to increase their incomes and to improve their overall
                      quality of life

                       

                      In most places rural incomes are too low to afford  to buy the appliances that run on
                      electricity, such as fans, TVs, irrigation pumps, milling and grinding
                      machines, refrigerators, etc. How do we accompany the rural customers as they
                      climb the energy ladder?

                      Would it be better to work instead on access to delivery of services
                      from these appliances, through some sort of rental or leasing arrangement, that
                      is immediately affordable to low income customers?
                      So they would rent charged lights, or charged
                      fans, or TVs, through a monthly subscription,
                      or come to a central location to use a milling machine belonging to an
                      entrepreneur, and pay per use? 

                      Or, should we continue to focus on building access to electricity,
                      e.g. through micro-grids and mini-grids, or even grid connection, and let the customers
                      use the electricity  initially  only for light-bulbs and mobile charging, until they can afford to buy other
                      appliances in future and enjoy the productive uses?  These are two different development models.
                      Are there nuances to these models or hybrids of these models?

                       

                      What are your
                      views on this?  For those who have
                      first-hand experience with customers of micro and mini-grids, please tell us
                      whether the electricity is mainly used for lighting, in limited quantities
                      related to affordability, or whether the other appliances start to appear
                      relatively quickly? Please also share any other technical or non-technical
                      issues that affect consumer demand. (Please be sure to tell us in which
                      country, and where, your mini-grid experience is located).

                      For those with experience in delivery of energy services (derived demand for electricity) and productive uses of energy, please share your thoughts and insights with us.

                       

                      We look forward to hearing from
                      you and discussing this issue over the next 3 weeks.  Thanks!

                       

                        • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                          C4D Connoisseur

                          Hi Mohua, folks - My view is that access to electricity is like access to telephony, only even more basic. Just like telephony applications took off once access was available, applications for electricity - TVs, microwave ovens, induction cookers, fans, -- will happen with private enterprise. None of these appliances, individually, are too expensive any more. Thus, I favor access for rural households, not applications.

                           

                          For B2B, for instance for office buildings, I prefer the service model. Why incur capital costs when variable costs can deliver the benefits? Office rentals can bring all the benefits of air conditioning, refrigeration, quality air, efficient lighting, ... for a monthly fee. The service provider can optimize for utility instead of charge by buckets of kilowatt-hours. Residential rentals for apartments can work this way too (like staying in a Residence Inn).

                           

                          Access is difficult enough for rural communities. For instance, I would like to see self-sufficient, off-grid, multi-generation source (that is, combinations of solar, wind, bio fuel, fossil fuel  ...) micro-grids that serve say 25, 50, 100 households. Ideally, with minimal need for storage due to complementary generation sources. Does anyone know an optimum solution that is rapidly, cost effectively extensible? Research toward such a solution - a systems optimization effort - might be funded by the World Bank or IFC. In fact, this should be a priority, 

                            • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                              C4D Enthusiast

                              Hi Mahesh - My company, Redavia ( www.redaviasolar.com ) offers a leased solar power solution that is quick to deploy and very flexible to scale up and down. We have so far focused on remote mining applications to get access to frontier markets, particularly in West Africa. We are interested to build on this segemtn and serve rural towns as well, because our solution is very well suited to this segment as well. To be clear, due to the intermittency of solar generation and the high price of power storage, you still need a significant / majority share of regulatable power (either biofuel/gas/mass or fossil fuel (mainly diesel at the micro-grid scale).

                               

                              One of the outstanding issues that has come up in my conversations with potential partners for this segment is how to get the power from the micro-grid plant to the home: who will own and install the local wires? Or do you not use wires, but rather operate a charging station?

                               

                              Redavia has the solution for the power generation part of the equation. Pre-payment solutions and business models exist to manage payment risk etc. But I have not seen an analysis of the optimal model for the local distribution of power. Any links/hints/potential partners very welcome.

                                • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                  C4D Connoisseur

                                  Hi Erwin, About getting power from microgrid to homes, I think the "cooperative" (as organizational form) model is one option. I wrote about "Solar Power, Amul Style" that might interest you. http://www.thehindubusinessline.com/opinion/solar-power-amul-style/article4058561.ece

                                   

                                  I agree with you that there is not enough work on optimal model for combining multiple sources of generation and its local distribution. The NREL has a microgrid that is used for military bases NREL: Technology Deployment - Microgrid Design.

                                   

                                  I believe this solution might be modified for rural deployment in emerging economies, and I propose the World Bank (with infoDev or equivalent?) help develop it. I would love to be involved - an NGO in coastal Tamil Nadu on India's east coast has asked me how to implement just such a microgrid for their farmers.who are already a part of a milk cooperative.

                                    • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                      C4D Enthusiast

                                      Mahesh, I would like to ask you and other mini-grid or micro-grid experts to share with us their experience in terms of some figures:

                                       

                                      (1) what is the average cost of connection per household on a micro-grid if there are 100 connections in a low income, off-grid area? what happens to the cost per connection if there are 500 households?

                                      (2) how much power is drawn on average per month per low income household on a micro-grid?

                                      (3)What is the average level when there are no productive uses, i.e just lights and phone charging?  and what is the average amount if the household is also engaged in some productive use activity?  it would be interesting to know the range


                                      Someone has given me a figure of 200W capacity required per household.  And a cost of $1200 for that capacity. Does this sound right to you?


                                      Look forward to hearing from you and others.  Thanks

                                        • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                          C4D Connoisseur

                                          Hi Mohua, I think 200W PV system is likely too little for a family of 4 for anything more than lights. The $1,200 (at $6/W) appears too high. I would design a system for at least 500W for even poor households. Kerala state, for instance, is encouraging 1,000W PV systems on homes, and I expect that to roughly cover half the usage of the family. There is raw capital cost and subsidies, both may be converted to monthly bill equivalent. One goal is to so spread the subsidies and capital that the bill per month with solar is always less than what would be the case if the household did not install the PV system. This is for areas with grid electricity. Others may please weigh in, I hope I am correct.

                                           

                                          Regarding microgrid - In principle, of course cost per connection should be less for 500 households, assuming they are in a cluster, or in a housing colony, or campus. But what is the optimum mix of generation sources - solar, small wind, battery, bio-diesel, micro-hyrdo, biogas, ...  all combined to deliver reliable service? The technical issues of integration and optimization would be typically geography specific for the resources available. We would need to define several scenarios to analyze. To me it appears the household load is easily determined; the supply part requires work. This is a worthy systems integration problem for sophisticated modeling, not only the technologies but also the economics. Maybe, we are lucky and this has already been done.

                                           

                                          NREL has done some work in this space albeit for non-rural applications, for instance for military bases. Could the World Bank or some UN organization sponsor or collaborate in someway with them? May be there are other institutions or organizations who may also do this. But I don't know of any. We can talk offline to discuss this - +91 932 185 9690 cell in India.

                                           

                                          Please consider the upside of such work: If an integrated microgrid solution were defined for rural areas, robust, scalable, and replicable, at grid parity or close, it would be extensible also to urban areas, and in so deploying, we would de-stress the present grid. This also has commercial potential.

                                            • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                              C4D Explorer

                                              Mohua, Mahesh, Erwin,

                                               

                                              Price parity with central generation and distribution will take some time if ever  - the deep government  subsidies applied to the sunken infrastructure cost of central generation capacity will not translate to distributed power.  Rather to set price parity as a goal is to make sure that the demand side management systems implemented on the micro-grid solution optimally charge which ever class of user is connected and demand power at any given time.  In such a model you could implement variable pricing out the gate - we may be targeting rural consumers but they are savvy to the benefits of variable pricing as can be seen in the complex pricing packaged successfully deployed by mobile operators. 

                                               

                                              Household demand should be measured in kW/h or W/h demand and costs are broken down by capex deployed and opex to generate - diesel generated power comes in $1.50 kW/h for efficient deployments up to 50kVA systems, if this can be translated back into various tarrif / time/ demand options you should be able to offer a service below grid parity for a rural household to charge a phone and run led lights for the night - anything more than that the price will increase as demand does.

                                               

                                              An alternative price comparison point is what a rural family will spend on kerosene per month and translate this back as to their disposable income for energy ( lights) - with this as the metric there can only be a commercially viable micro-grid solution to rural consumers if you can beat this price.

                                                • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                  C4D Enthusiast

                                                  Laurentius - thanks for your inputs. I agree diesel gensets are the default and have a significant ease of use benefit. The key is to reduce their environmental impact and costs.


                                                  I think solar can play a role in that.  For example, solar farms can run in parallel with diesel genset in a battery-free setup. This drastically reduces the price of solar to around USD 0.20-0.25 / kWh depending on the size of the solar farm. This is below the grid power costs for MW-scale diesel-fired mini-grids (e.g. medium sized remote town, remote mines, etc.) and well below kW-scale micro-grids (compared with the 1.50 USD/kWh you mention). Limitation is obviously that at night you're back to 100% diesel, so solar without storage can only replace 15-20% of total diesel power, but at a significant cost (50+%) discount per kWh vs. diesel.

                                                   

                                                  Creating daytime load is key: Here I like your variable tarrif suggestion - due to the low cost of solar compared to diesel power, daytime power is much cheaper than nightime power - tariffs should reflect this. Do you know where I could access further info on how tariff structure might affect load/usage (even cell phone related)?

                                                   

                                                  Also, the solar component can be increased if/when more effective storage technologies become available / more experience with a specific micro grid is available / more daytime load emerges.

                                                   

                                                  The key for solar is to focus on MW-scale grids and micro-grids with a significant daytime load. Do you know where I could get hourly load profile information for different types of mini/micro grids?

                                                   

                                                  Thanks again for your inputs.

                                                  • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                    C4D Connoisseur

                                                    Hi Laurentius, You are right to say, "to set price parity as a goal is to make sure that the demand side management systems implemented on the micro-grid solution optimally charge which ever class of user is connected and demand power at any given time.  In such a model you could implement variable pricing out the gate."

                                                     

                                                    In this context, I would like to point to an article titled "The GridShare solution: a smart grid approach to improve service provision on a renewable energy mini-grid in Bhutan," Environ. Res. Lett. 8 (2013) by Quetchenbach et al from Cal State Univ, Humboldt. A micro-hydro source - steady power generation - is combined with information display for each household about the status of demand using bars as appear on cell phones, and users are discouraged to use water heating or cooking when the demand is high - the bars become orange instead of green. Thus, time-shifting of use serves as a proxy for variable pricing. This has reduced brown-outs.

                                                  • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                    1203634 C4D Enthusiast

                                                    Thanks for a very interesting discussion on microgrids as the new paradigm for electrification. French Roadmap by ADEME on Smart Grid and Electricity Systems Integrating Renewable Sources is an excellent resource for visualizing application on energy clusters or microgirds. I kindly want to emphasize on usefulness of microgrids in urban settings as well. Power quality and reliability benefits of microgrids along with suitable tariff regime in competitive electricity service market should make them lucrative solutions. Microgrids can help in

                                                    1. Maintaining stability of grid in-terms of power quality and reliability without or without connecting with macrogrid

                                                    2. Economic or environmental optimization of generation and demand resources

                                                     

                                                    The second function can be simulated in HOMER. HOMER helps in choosing optimal generation mix when resource profiles (biomass, wind speed, solar radiance, etc.), load profiles, and modular generation options are provided. This could help in answering questions on cost of supplying with microgrid. I have carried out some illustrative simulations and I'd be glad to share them.

                                                     

                                                    Finally, I want to bring to your attention LBNL publication on cost benefit analysis framework for microgrids - ' A Framework for the Evaluation of the Cost and Benefits of Microgrids." Though the scope of this framework goes beyond rural electrification, it helps in understanding the value proposition of microgrids in some depth.

                                                     

                                                    Thanks,

                                                    Gunjan Gautam

                                                    SEGEN/ESMAP

                                          • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                            C4D Enthusiast

                                            Mohua,

                                            People do not want electricity, they want the benefits it brings to them. Thus we should concentrate on creating business models which either:

                                            1. Gives them the same or better services which they enjoy today at lower costs OR
                                            2. Creates additional revenue, which more than offsets the costs of the energy provision.

                                            In the Western world the third and now standard model, is to provide an excess of electricity and persuade them to move disposable income from one activity to something using electricity - i.e. essentially the luxury end of electricity - hairdryers, large TV sets; electric blankets; This is NOT viable in Rural Africa - there is no spare disposable income, so we fall back on the above 2 models.

                                             

                                            It makes no sense to talk about grid parity prices. These people have no hope of having grid connection. What you need are economic models that make sense to people who have only kerosine, and open wood fires....and live on $2 a day....

                                             

                                            An example of model 1 is "pay-as-you-go solar power systems for the house. Currently in Rural Africa light is provided by kerosine lights, candles and dry batteries.They buy what they need when they need it at a weekly cost of about $2:80. One can provide a small solar system with 2 lights and a cell phone charger and charge $1.40 per week as a pre-payment for the week's services. After $100 has been paid the householder owns the system outright and has no further payments. OR they can upgrade to say 4 lights and a radio and continue to pay $1:40 per week. Like the candles it replaces and unlike micro-credit when times are tough, one simply misses the pre-payment and goes for a week in the dark. The system is not repatriated - there is no village shame in being unable to meet a payment. And the model does not eat into their micro-credit rating, so they can use financing to support their farm (better seeds).  The next steps on the energy escalator might be a B/W TV, colour TV; internet access, sewing machine (the latter may provide a source of income). So what is the connection to telecoms:

                                            1. Pre-payment needs cell phone coverage to activate the systems and to monitor them
                                            2. The business selling sim cards and pre-payment plans for cell phones also sells the pre-payment tokens for the lights, as well as installing, maintaining and upgrading the kits.
                                            3. This provides a double income stream to this business (one per village), and thus lowers costs for the cell phone operators and the Rural electricity provider.
                                            4. By providing local re-charging facilities (either a service by the above entrepreneur or the solar charging units in the home), cell phone usage rises by 20% making rural towers more viable.

                                            Africa Power is an Independent Power Provider, and we will purchase install, maintain and operate green power systems for the telecom operators and power systems for the people in the village. In each case, the power system will be sized for the required load and must be commercially viable on a stand-alone basis. Given this, there is little margin for sharing power. Since the critical sizing is the battery storage for the power needed overnight, house A cannot trade power with house B since we do not know in advance whether one will have excess power at the end of the evening. Nevertheless the systems will come with interoperability capabilities, so that as the numbers in a region increase and one gains small benefits in power sharing, then they can be interconnected.

                                             

                                            One clear model of power sharing might be a school and a religious building (Church, Mosque). The former needs power Mon-Fri and the latter on Saturday /and/or Sunday. A shared system (pico-grid) makes sense.

                                             

                                            An example of model 2 is drip-feed irrigation. Drip feed irrigation minimizes water consumption, fertilizer use (being delivered to each plant in the correct dose) and hence minimizes the power requirements. A 1kW pump can serve 40 smallholders plots and the income form the sale of a second dry season crop of vegetables is about twice the amortized cost of the system over about 4 years, including on-going maintenance, agricultural advice, fertilizer, improved seeds and the like. The water tank acts as the energy storage, thus alleviating the need for batteries in this case. Potentially as part of a micro-grid one could use any excess power from a business that say used power Mon-Fri - excess power could be used to run the pumps longer at the weekend, giving a top-up to the reservoir and say expanding the agricultural cooperative from 40 to 50 plots. BUT the key point is to make the system economically viable as a STAND-ALONE power system. Any synergies from interconnecting units can be shared as increased profits and lower charges to the customers. This only works if the reservoir is sized for > 1 weeks water storage and thus can act as smoothing function to absorb excess power when available and yet still provide a continuous supply of water (the service) when needed.

                                             

                                            What is the connection to telecom power?

                                            1. The systems need maintenance and so it makes economic sense for an Independent Power provider (IPP) to have as many power systems in the same region as possible.
                                            2. Telecom power must be 99.99% reliable (up-time) and the power systems are thus sized for the worst (rainy season in the case of PV systems). Thus there is an excess of power in the dry season. Interconnecting towers with drip-feed irrigation schemes must provide some economic benefit and hopefully enough to justify the costs of the interconnections (additional wired controllers, billing complexities and the like).

                                            We are studying this at present and welcome input from partners who would like to join us on Grant applications to provide enough pilot schemes to determine whether this model is better as two stand-alone systems or interconnected.

                                             

                                            If anyone is interested in working with us on such scheme, please contact me directly outside this forum, using the contact details on my profile.

                                             

                                            Alastair Livesey, CEO Africa Power Ltd.

                                              • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                C4D Enthusiast

                                                Dear Alastair


                                                Thanks for sharing your insights and your research interests.  I am sure that there are many on this forum who will be interested in continuing the discussion with you further.  For my part, I am in the process of seeking some funding to pursue very similar research to what you have outlined, and I will be in touch with you bilaterally when we succeed in getting the resources organized for this kind of work.

                                                 

                                                best regards, Mohua

                                                • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                  C4D Connoisseur

                                                  Alastair, Thank you for your insights into the interconnection among cell phone towers, water tanks as energy storage, role of churches and mosques, and powering homes with electricity. Two thoughts:

                                                   

                                                  1. Water tanks with solar-powered pumps with drip irrigation can be standalone systems, independent of the rest of the micro-grid.

                                                  2. The school & mosque can serve as a hub for residential electricity generation and also as telecom hub for Internet connectivity for the school's use, fed by the cellular tower's (hopefully fiber-optic) link for backhaul of traffic. The cell tower plus school combo with solar panels, diesel, batteries, and small wind turbines may be optimized using an Integer Programming technique for electricity supply stability and nighttime operations. The economics of such an integrated generation solution should determine prices which may well be higher at night - no solar generation, and the need to operate expensive diesel or battery.

                                                    • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                      C4D Enthusiast

                                                      Mahesh and Alastair,

                                                      thanks for this fascinating discussion.  The idea of taking existing assets as both hubs and productive use loads at the same time is an excellent one.


                                                      I have been tackling this idea from a slightly different angle, as follows:  I have been checking with some innovative pre-paid meter developers on whether it may be possible to design GPS coordinate-specific pre-paid meters for schools, clinics, streetlights, mosques, churches etc, in order to make these into another type of anchor load.  The public sector budget, which is supposed to pay for electricity at these "social infrastructure facilities", rarely has the delivery capacity to ensure that funds allocated at the ministry level, actually reach down to the grass roots.  My idea is to see if we can get a pre-paid electricity payment allocation for each month of the year in one go, sent down to the village in the form of 12 pre-paid cards with stored value, that will only work for a specially designed public facility pre-paid meter that can be unlocked with those cards.  If the holder of the cards tries to move the meter from the school or clinic to his own house and enjoy the prepaid electricity courtesy of the public sector budget, it won't work.  The prepaid meter should switch off as soon as it is moved from a particular GPS-specified location.  So we would deal with "attempted theft" in that way.  On the other hand, the mini-grid supplier to the public facilities will need to receive the prepaid card for e.g. January from the school official, and then take this card to a bank to trigger the movement of funds from the school's electricity account to the mini-grid operator's account, and activate the stored value prepaid card that obliges the electricity supply for the month.  The mini-grid operator programs the meter to deliver the pre-paid amount of electricity, at the desired intervals, e.g. not continuously and not at 2 am for example when the school is not occupied.  On January 31st, the arrangement ends until the school official triggers the pre-payment for the new month and so on.  This would also improve transparency of public sector expenditures, particularly if designated expenditures were locked into stored value cards that could deliver services only at approved locations.

                                                      One should also have a crowd-sourced feedback mechanism, i.e. if the kids get to school and find out that there is no light, someone is not doing their job, and there should be an easy way to record that feedback to make quick corrections.

                                                      I have been told that there is even no need for school officials to go back and forth with cards and so on, and that the whole thing can actually be administered by means of SMS messaging across the parties.  SMS can also allow the minigrid operator to turn power on and off, and can show the school official how much balance remains on the pre-paid power etc.

                                                       

                                                      I want to thank Mahesh separately for bringing to our attention the paper on avoiding brownouts in micro-hydropower rural stand-alone grids in Bhutan (it is of great interest to me because I also work on Nepal, where there are lots of micro-hydro projects currently offering a flat one size fits all power supply and tariff, and this innovation would be tremendously useful.  There is also talk of "surplus power" relative to the low levels of demand at these community micro-hydro plants and people often talk of the possibility that such plants could connect up with each other or with the main grid, and trade power.  Such a technology would possibly enable that to happen faster, through careful demand-side management).  I have located the paper cited by Mahesh and will request Yann to post it on this site for anyone else who is interested.

                                                • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                  C4D Enthusiast

                                                  Could we please hear from some mini-grid experts? And do you have information on what your customers use the electricity for? are there productive uses that have emerged after electricity access?  any evidence of daytime load, or is it simply expenditure switching, from kerosene lights to electric lights?

                                                   

                                                  Please share your thoughts with us about mini-grids and micro-grids and whether these give rise to productive uses, and under what conditions.  Thanks!

                                                    • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                      C4D Explorer

                                                      Mohua, The user patterns will develop and change as the reliability and stability of the micro-grid offerings are proven.  The first application will be safety (light at night), education ( light to read), entertainment ( tv) and communication ( recharge) and from there I would predict second and third tier applications / needs will develop.  User / consumer education will be critical.  It will be near impossible to deploy an economical solution that will be able to drive stoves for cooking, electrical pumps, air conditioners and other high amp / high power consumption devices.  This will have to be a second phase when the micro grid gets upgraded to a generation source that can deliver this - and at the moment this is only diesel gensets.

                                                        • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                          C4D Enthusiast

                                                          hi LAurentius - What are the reasons you expect that "It will be near impossible to deploy an economical solution that will be able to drive stoves for cooking, electrical pumps, air conditioners and other high amp / high power consumption devices." Is this because the load is not there from the start, or because you believe no economical source of power (beyond diesel) exists for this? Thanks again!

                                                            • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                              C4D Explorer

                                                              Hello Erwin, the capacity planning (dimensioning) of the micro grid solution will be complex as you will have to dimension for peak load demand that could be every pump, stove, aircon or element switched on at the same time - not an effective way to keep costs down on the generation side.

                                                                • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                                  C4D Enthusiast

                                                                  Yes, agreed, depending on the number of independently varying loads on the microgrid, but this is a downside of any microgrid, with a limited number of individually varying loads.

                                                                   

                                                                  I agree that a more lumpy load would make things more difficult to size, but I'd say that a micro grid with 50 cell phones is as easy/difficult as a grid with 50 TVs/pumps/etc (leaving aside inrushes for the moment). I'd say that, if you have a micro-grid with already 50 cell phones on it and you add 50TVs, 50 pumps and 50 A/Cs, then clearly you need to upgrade the grid/generation, but with the additional load, the grid should start to look (a bit) more like an integrated grid with a stochastic/probabilistic load, which should smoothen the load profile, rather than create more load steps (measured in terms of % of total load) (again not looking at inrush currents and other types of complex loads). Do you agree?

                                                                  • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                                    C4D Enthusiast

                                                                    Laurentius, Mahesh, Erwin and others

                                                                     

                                                                    thanks for the fascinating discussion so far. I wanted to share a concept which I find very appealing when we are talking about access solutions for a remote areas that currently have zero access and the communities are entirely reliant on kerosene lamps and diesel generators.  This approach says that you must first do an intense market analysis of what the current energy expenditure is, and let that be the proxy for affordability which will drive your choice of initial technology (that will later be progressively upgraded).  Market research is likely to show that will be a proportion of families that spend $1, $2 and $3 on kerosene per week in each given group.  So you get their totals and you also see how far they walk to buy kerosene and how frequently they have to go.  Take the total expenditure by weight and that defines a ceiling for the cash flow stream that the community can afford to pay for a new solution.  In fact take 5% less because they should expect to save money over their current coping cost, in order to make them loyal customers for a new clean energy provider.

                                                                     

                                                                    Now assume that the social entrepreneur who will come in to service this community (with technology X), needs to hold back part of the cash flows received as his 10% nominal return, so in effect you have reduced the "wallet size" of the community by 15% relative to whatever cash flows the market research has revealed.

                                                                    Experience has shown, apparently, that the path for sustainable access solutions begins with a battery charging solution.  Customers will walk the same distance as they used to go for their kerosene purchases, to go and get batteries charged and bring them home.  If LED lighting can be found, they will get more lumens for fewer watts of power consumption and can use the rest of the stored energy in the battery to do other things.  The private developer is probably looking at a 1-3 year payback period.  This amount of time for introductory access to electricity is also about right for the community to improve its income to the point where they have more demand for hours of power and would look for a mini-grid solution (initially without battery storage, again to reduce costs).  This would be best done with a prepaid meter and allow them to pay for their electricity (and see their remaining balance) with cellphones or some other way to minimize transaction costs, but pre-payment is key for both sides (the customer, to manage his expenditures and the developer, to be acceptable to a commercial bank that will not tolerate taking on credit risks of such a population under a post-paid arrangement, to depend on loan repayments).

                                                                    Once the payback has been achieved on the prepaid minigrid without battery storage, the developer can then move up the curve to introduce a battery, and be able to offer something closer to 24/7 power (DC power).  Then we get to the point where incomes are hopefully improving to look for productive use applications, need for AC power and so forth.


                                                                    What are your views on this phased approach to access to electricity that begins with a market research assessment and is always closely tied to community affordability based on competing with what they are currently spending?  (I appreciate the point made by Laurentius on the deep subsidies that all of us enjoy who are using grid power, and it is very unfair of course, but it is a given and we have to live with it.  The question is how to find a solution for unelectrified populations that does not depend on waiting for similar levels of subsidy for them, but can get started right away).


                                                                    I would be interested in your feedback on this approach which someone shared with me recently.  Thanks

                                                                      • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                                        C4D Enthusiast

                                                                        hi all,

                                                                         

                                                                        fascinating discussion indeed.  With 1.3 Billion people w/o electricity there HAS to be more than one approach, one model, one solution and one pricing plan.

                                                                         

                                                                        In my experience, the issues that all of you have mentioned in this discussion are not well understood by the general public and are potentially politically difficult to swallow (especially when it comes to the unit cost of kWh). But they are our reality and we have but two choices: wait for the right policy and government funding to be put in place to subsidize grid extension to the 20% (!!) of the world's population without power or try something and let the market dictate what works and what does not work.

                                                                         

                                                                        Ultimately what I think Mohua is suggesting is to a) know your customer and b) start small but dream big.  This is easier said than done.

                                                                        • It requires weeks, not day-trips in uncomfortable settings understanding how people live and their wants and needs.  (When is the last time you literally spent an overnight in a rural village, used a squat latrine (if there was one), drank chlorinated well water etc, slept on a grass mat? when is the last time you spent a week doing this?)
                                                                        • It requires being methodical in your New Product Introduction process. Introducing new products and services and seeing how your market reacts, what they like and dislike...And most importantly being able to distinguish a failure in the human process of training, education, marketing and pricing from a technology problem. I honestly know of more than one ESCO that is happy to share their financial models as they believe the proof of their pudding is in the execution and delivery of the actual service
                                                                        • It also requires vision to innovate. Do you think Apple would have designed the iPhone or iPad based on our "current" needs? Phone charging is important for off-grid people today but what about tablet charging, blenders for mixing spices  for curry, irrigation pumps etc...
                                                                        • Lastly it requires the money to innovate: There is a massive need to help support more funding to the sector! Both in the terms of soft money for innovation, public funding to underwrite the risk and attract more private funding and more investors. I currently have an energy product provider who can't move on the offer of a contract with an operator as they are still in the process of raising their Series B! The investors who are interested in them are in turn struggling to close funds. Where they are in discussions with investors the due diligence process can be crippling.

                                                                         

                                                                        I could go on but I will leave it for now

                                                                         

                                                                        M

                                                                        • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                                          C4D Enthusiast

                                                                          Mohua,

                                                                          I believe that OMC improve on your model and actually deliver the recharged solar lanterns thus removing the need for the customers to "walk the equivalent distance they did to buy kerosine", which they probably walked weekly, whereas solar lanterns or batteries need generally daily charging or are significantly heavier than the kerosine you are displacing. This also creates new jobs in the village.... As Mary Roach says, get to know your customer....

                                                                           

                                                                          We prefer the model that each house hold has a fixed solar, LED  lights, cell phone recharger system and pre-payments via the cell phone network (see my previous reply).

                                                                           

                                                                          I note everyone is concentrating on domestic use and missing out on business applications of power, which can generate enough new income to pay for the higher costs of power which will be inevitable in Rural areas. Otherwise grid connection would be viable....

                                                                           

                                                                          Again see my previous post above for some ideas...

                                                                           

                                                                          Alastair Livesey, CEO Africa Power

                                                                    • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                                      C4D Enthusiast

                                                                      Laurentius, I agree fully with what you say about the phases and the energy ladder.  In fact some market research in India has already shown that the requirement for safety, education (reading) and entertainment (TV) follows in exactly that sequence.  The question I want to pose is how the incomes rise so that you can reach the second phase of productive uses, i.e. more income is needed in order to buy appliances and learn how to use them.  This is where the energy service delivery model (rental of power tools for example) comes in, when as Alastair said, people want the services that electricity can give them, rather than electricity itself.  OMC is renting out its own fans, lights, lanterns etc, so people are benefitting from the use but not having to take a loan to get those benefits.

                                                                      Even under the OMC model, though, I can't see how the average residential customer's income actually increases in order to get to Phase 2 and enter the "productive uses" game.  Who should trigger the shift to productive uses by bringing in capital equipment and moving the production process of the community to another level through use of improved, mechanized technologies?  Would it have to be a third party NGO type of player?  Who has examples of productive uses to share with us, and how were those equipments financed?

                                                                  • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                                    C4D Explorer

                                                                    We should also remember that in many parts of the world the early days of telephony developed in remote  / rural  areas by virtue of the phone companies following the power companies rather than the other way round. There is every potential for this to be replicated in areas where there is no existing network coverage. The Telco's are always seeking to enlarge their subscriber base, our market survey has revealed a surprisingly high capacity for rural communities to pay for electricty, the wealth generation that electrification creates will attract the network operators to tap into this previously ignored  customer base as well.

                                                                     

                                                                    Mark Foley, Sincronicity Power

                                                                      • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                                        C4D Enthusiast

                                                                        Mark, I'd like to ask you the same question that I posted to Laurentius a moment ago.  We always like to believe, and regularly talk about "the wealth generation that electrification creates" as you have put it in your posting above.

                                                                         

                                                                        Can we please take a moment to drill down into that and remind ourselves how that works?  If a household is saving money on kerosene and getting clean light and saving money on batteries and paying less for entertainment (radios, or watching TV etc), this is an expenditure switching arrangement, with some savings.  For productive uses in the true sense, I believe that some capital equipment must be brought into the picture, which would (a) improve productivity and (b) increase output for a given level of effort.  If all that extra output can be sold, then there is the beginning of wealth creation as a result of having access to electricity for productive uses.

                                                                         

                                                                        In your model, the ESCO is also planning on investing in solar powered kiosks containing appliances and equipment, which will be rented out to existing micro-enterprises in the community so that e.g. the tailor who was using a manual sewing machine will now have access to an electric one, and can produce more garments in one day, or the soft drinks seller will sell cold beers for which there is a bigger market than for warm beers.

                                                                         

                                                                        So in your case the ESCO will supply the capital consisting of the electric sewing machine or the fridge, and this will be rented out to the right person in the community, who has already demonstrated the knowledge to run this business without electricity (and we presume they will be more successful when they have the appliance).

                                                                         

                                                                        But I would like to ask our other experts what kind of productive uses models they are familiar with.  if not the ESCO, who typically triggers productive uses?  Do NGOs come in and provide these when the electricity arrives? or do micro-lenders come in?  How does it typically happen?

                                                                        thanks, mm

                                                                      • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                                        C4D Explorer

                                                                        Apollo Solar provides technical solutions in the form of the power electronics for conditioning, control, and monitoring of PV systems that provide electrification where grid power is either absent or unreliable. In most instances the economic models for the deployment of the systems and the Apollo product solutions comes are based on NGO and Government funding. The business opportunity for ESCOs is valid, with the understand that the ROI requires quantification of overall local and regional economic improvements rather than simply of the infusion of investor capital.

                                                                        • Re: E-Discussion - Rural electrification using Telecom-Energy Business Models: Choice between Mini-Grid and Energy Services Solutions
                                                                          C4D Enthusiast

                                                                          Daniel TwoEagles--thanks for your important point about needing to include quantification of overall local and regional economic improvements as part of the return on investment (instead of simply limiting it to the financial return on investor capital).  We are aware that Social Impact Investors are precisely interested in capturing these social and environmental returns in addition to their financial return (which has to be positive as well of course--they are in it to make money, but their objective is also to create impact).  We are keen to hear how people like you, who are thinking about this, may have come up with ideas on how to systematically measure such improvements.  There is a real need for a standardized methodology to measure and track social and environmental benefits from using renewable energy solutions, so that such benefits can become a routine part of the "claims" and the "arguments" for investing in such projects.  Please share your thoughts with us.

                                                                          Eventually the goal is to take a large cluster of small community power projects, maybe across different geographical zones or even in different countries, and to be able to seek funding for that bundle from a social impact investor whose unit of account could start with e.g. $5 million.  He would have to clearly understand the benefits (financial returns as well as non-financial returns) that he is expecting for making available his $5m.  For this we need to have a fairly clear and non-controversial way to define these other benefits.