6 Replies Latest reply: May 30, 2013 6:17 AM by aklivesey@hotmail.co.uk RSS

    E-Discussion #2 - Brainstorming on the Initiative

    1231309 C4D Extraordinaire

      Dear colleagues,

       

      The e-institute webinar presenting the Telecom-Energy Initiative brought over 100 participants. Many of you have contributed to the discussion through the live chat with excellent questions and very useful comments. We thought this material was interesting enough to start a new E-Discussion around the initiative itself.

       

      Please find below a short summary the different questions and comments made during the webinar:

       

      • Anchors: Can the model work with different anchors? Why Telecom Towers do not get into the power business? How far Telecom Towers can be installed from a WAN?
      • Finance: What is the critical size for a project to be financed? How can we reduce transaction costs? How to finance capital expenditure? Local debt access may also be a barrier to be considered. How can IFC support private sectors companies willing to engage into such business model?
      • Technology: Who ensures that mini-grids are being built to an agreed standard? Is there any mini-grid examples utilizing biomass or small hydro in Africa?  Is battery cost a barrier in itself or are new technologies being available? Do examples using power delivery and mobile banking already exist?
      • Policies and Regulations: Can we use incentive mechanisms based of fossil fuels subsidies’ reductions?
      • Communities: There are many types of communities with different characteristics, this need to be understood by entrepreneurs.
      • ESCOs: What is the foreseen nature of potential ESCOs (origin, national or international, small or large, newly created or already existing)? Is there a distinction between an ESCO supplying power to a community and an ESCO working in the energy efficiency space?

       

      Just pick one thread or start a new one by replying to this post. The project team will join you in a brainstorming effort to define conjointly the best way to pursue this exciting project forward!

        • Re: E-Discussion #2 : Brainstorming on the Initiative
          C4D Enthusiast

          Anchors

          Cell phone companies are telecommunication companies not utilities. They expect a higher rate of return than utility companies typically enjoy and so there is no incentive for them to get into the electricity supply business. Over 90% of cell phone towers world-wide are plugged into some form of major electrical Grid system. Cell phone companies only install their own power systems when there is no other choice. (i.e. remote off-grid systems). Even then they will distort and sub-optimize their coverage, if only to site a tower near an electrical supply, rather than install their own power, or pay for a dedicated grid extension, unless that is prohibitively expensive.There are some examples of cell phone companies testing out community power systems, but these come under the banner of CSR and not from a viable commercial business model (on the whole).

           

          Cell phone towers in developing countries are not attached to optical networks (they don't exist and other than the major trunk routes are too expensive to install (more expensive than building an electricity grid.)) The back-haul (how to get the telephone signals back to the switching centres and on eventually to the nearest tower for the intended recipient) is primarily done by microwave hopping by line of site between the towers. Thus towers are spaced every 15km or so.  Sometimes a relay mast is installed with only the microwave links and no cell phone broadcast and receiver radios in order to connect up the network over say a range of hills where there are no potential clients.

           

          Note that in many cases the optimum siting of the tower may not be in a village but in a location in between villages, so one tower (with a range of 15km) can cover more than one village. For those who still favour a mini-grid approach over powering each customer independently, be aware that you may have many miles of overhead power cables just to reach your first customer after the anchor client, with all the attendant capital cost. You will then need to check the cables regularly. A couple of croc-clips will see some enterprising individuals helping themselves to fee electricity.....

            • Re: E-Discussion #2 : Brainstorming on the Initiative
              C4D Connoisseur

              Hi Alastair, I agree with most of what you say about cellular towers and their siting, microwave links, ... except "For those who still favour a mini-grid approach over powering each customer independently, be aware that you may have many miles of overhead power cables just to reach your first customer after the anchor client, with all the attendant capital cost."

              I think the mini/micro/nano grid should be self-sufficient and independent of long distance power cables. This will require a mix of generation sources, including diesel gensets and some batteries, and Demand Response type solutions built into the infrastructure. This might be expensive, but some power better than no power, and less costly than pure diesel generation or the use of kerosene.

               

              My view is: The electricity business is a local area networking business. Not a wide area networking business at all. 

               

              Only for historical reasons and because fossil fuels are such a concentrated energy source, and because there were no alternatives at the turn of the century, that we have grids with transmission, at least for the most part and except for industrial uses.

                • Re: E-Discussion #2 : Brainstorming on the Initiative
                  C4D Enthusiast

                  Mahesh,

                  My point was two fold:

                  1. Mini-grids require some cost of cabling, and require excess capacity especially when first installed, to allow for growth.
                  2. Not all cell phone towers are in villages and towns. they are placed in the best places for geographical coverage, and with a broadcast radius of 15km, can often be many miles from a settlement. thus these systems would need miles of overhead cables to reach the customers.

                  I do agree with you that the amount of interconnecting cabling needs to be small, but with rural poulations, low population density may preclude this.

                  By providing a power system that exactly matches each customers requirement, then cabling is reduced to zero. As synergies in comnspumption arise and customers are located sufficiently closely, then interconnecting cables can be strung, thus building up the mini-grid from the bottom upwards instead of a designed systeme imposed top down.

                  Alastair

              • Re: E-Discussion #2 : Brainstorming on the Initiative
                944020 C4D Explorer

                Dear Colleagues,

                 

                I would like to seek some feedback regarding Financing. This is especially pertinent at this point because of the forthcoming Investors' conference on Incubating Innovation for Off-Grid Rural Electrification on March 21.

                Financing is routinely identified as a major barrier to be addressed in unlocking the potential for innovative business models and technologies to develop and scale-up. However, there appears to be very little information on what exactly is meant by "financing need". On the one hand, most published reports and studies tend to aggregate financing needs and on the other hand most private and public sector financing agencies are constrained by their specific mandates - in terms of what can be funded by them. Over the past several months, various conversations here on the platform and elsewhere have touched upon different types of financing needs (e.g., debt, equity, commercial loans, grants, working capital assistance, etc), which appear to depend on factors such as (a) the nature of the company (e.g., manufacturer, solution provider, ESCO, etc), and (b) type of operation or stage of development of the company (e.g., R&D, demonstration projects, scale-up, etc.) and therefore may have to target different types of financiers (e.g., donors, foundations, impact investors, commercial bank, IFIs, etc).

                 

                So, is it possible to create a categorization of financing needs? Can we profile companies and their needs in a way that allows us to match financing needs with availability? Does such information exist? If yes, where can we find it?

                 

                And finally, the most important question. Is this line of thought valid and should we pursue this further?

                  • Re: E-Discussion #2 : Brainstorming on the Initiative
                    C4D Enthusiast

                    Hi Monali -

                     

                    I think financing one of the main enablers of renewables deployment in frontier markets and it is one of the main factors that makes deploying renewables different in frontier markets from deploying in developed markets.

                     

                    Financing is particularly important for renewables (compared to fossil-fuel-based power generation) because renewables have a very high up front capital need which then provides power for 20+ years at very low operational costs per kWh (because no fuel to burn!). Compare this to a diesel genset, which has a very low up front costs and then very high operational costs per kWh (fuel).

                     

                    Also, renewables and small scale fossil generation (mainly gensets) have different lifetimes. A genset typically breaks down or needs an expensive rebuild after about 10 years, whereas solar, wind, hydro plans tend to have lifetimes of 20-30 years. This long time horizon is difficult to finance in risky frontier markets.

                     

                    And it's not just the availability of financing, but also the cost of that financing (i.e. the required return for investors to make the investment - for example the rate on debt). The cost of solar power per kWh for example is as much influenced by the cost of capital as by, say, solar irradiation level.

                     

                    So to get low-cost renewables deployed in frontier markets is very much about finding low-cost financing. This is essentially about reducing risks to making revenue from the power plant. There's a long list of risks to be reduced: Regulatory risk, theft risk, offtaker bankruptcy risk, etc.

                     

                    I think my company Redavia Solar solves part of this puzzle by offering rental solar farms, which can be redeployed. Redeployability increases the operational flexiblity of solar farms. This hedges many of the risks associated with deployment in frontier markets (for example, if customer 1 stops paying in year 5, then we can redeploy our solar farm to customer 2  and continue to generate revenue for the remaining 15 years) thereby enabling Redavia to deploy and finance solar farms in countries / with off-takers, which/who are not financable with standard stationary solar farms.

                     

                    (Hope all this post is not too basic / finance 101, but I think it's important to remind ourselves of the underlying economics driving renewables deployment in frontier markets. As for a categorization: i'll leave that for a next post :-)).

                  • Re: E-Discussion #2 : Brainstorming on the Initiative
                    C4D Explorer

                    Technology.

                    I believe that significant progress will only be made when we have technologies

                    for optimally managing power distribution that are universal, flexible, inexpensive,

                    and networked (these are not unrelated).  Just as people in all countries charge

                    phones with USB and USB is therefore cheap and highly interoperable, we need

                    power distribution technologies with the same characteristics.  This would learn

                    lessons from Internet technology development, while recognizing critical differences

                    between data and electricity.

                      I have a technology proposal on this called Local Power Distribution, with the

                    smallest unit of power distribution being a Nanogrid.  This is described further at:

                       http://nordman.lbl.gov/nordman.html#NANO

                    a schematic of a nanogrid is below.  Please contact me if this interests you:

                      Bruce Nordman

                      BNordman@LBL.gov

                      nordman.lbl.gov

                      +1 510 486-7089

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                    nano.jpg