Can microgrid technology enable the electrification of the 1.2 billion without electricity?

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The invention of electricity empowered the creation of industries and opportunities for work, lighting and the opportunity to learn and long-distance communication and opportunity to be heard. Whilst in the twenty first century access to reliable, inexpensive and in more recent times’ clean forms of electricity have become an essential service, over one quarter of the global population lives without adequate access to electricity.

Figure 1: Access to electricity across the world (Sustainable Energy for All, 2017)

Multiple solutions have been proposed and executed to assist those living in energy poverty, each with varying degrees of success. The implementation of microgrid technology is one such solution which has been touted as a means to have an extensive impact for those living in energy poverty both on and off grid. Utilising distributed energy generation, energy storage and localised distribution networks over a relatively small geographical region, microgrids are often viewed as a scalable solution for electrifying those who live without light.

Energy poverty doesn’t discriminate

Energy poverty doesn’t discriminate, it persists in Melbourne, Mildura and Mumbai. It is a universal injustice that plagues all corners of the globe with its devastating impact. The Asian Development Bank provides a comprehensive definition to encapsulate energy poverty; “the absence of sufficient choice in accessing adequate, affordable, reliable, high-quality, safe and environmentally benign energy services to support economic and human development” (ADB, 2013).

It is important to recognise that energy poverty occurs at varying levels of severity. The issue is inherent across both the developed and developing world which impacts the complexity and solution sets put forward. For example, a recent study by KPMG in Australia estimated that 42,000 low income families, or 1% of the total population suffer from the effects of energy poverty (KPMG, 2017). The study found that the core cause for energy poverty was mostly bill affordability and that there was an innate link to employment status, education and health outcomes.  In contrast, energy poverty in the developing world goes past affordability, whilst also still a concern, and views technological access i.e. access to a reliable electricity grid, as one of the major inhibitors to enabling access to electricity.

Are microgrids the answer?

Microgrid technology has been endorsed as one of the major technological components to alleviating energy poverty across the globe. The International Energy Association (IEA) have identified a significant role for microgrids in the next decade with predictions stating that “by 2030, more than two-thirds of the rural population that gains access does so with decentralised solutions, with demand served by microgrids reaching 72 terawatt hours (TWh)” (IEA, 2017).

The proliferation of microgrids is being driven by three key advantages held by this technology; grid resiliency, speed of implementation and demand adaptability. Whilst expansion of the centralised electricity grid is often prioritised to develop capacity for those without access to electricity, in recent times these efforts are viewed as ineffective given the advantages of microgrid technology. “The expansion of the centralised network, which has high capital costs and may offer lower effective reliability than dispersed distributed generation” (Illindala et al., 2017). These are the core reasons for pursuing microgrid technology which offers agile commissioning times (1 day – 6 months given microgrid size) and higher reliability standards due to the minimal transmission requirements. Centralised grid expansion projects are also inflexible given shifts in population and advancement of industry once electricity is connected. By comparison, microgrids allow for additional capacity to be added with simple ‘plug-and-play’ generation assets to meet increased demand for electricity.

The advantages of microgrid technology are regularly illustrated as an ‘ideal’ solution for bringing about energy access. However, there are still several challenges which conflict with this view. The most concerning being the cost of implementation and maintenance of microgrid technology. This is highlighted by a simple LCOE comparison, provided by the IEA.

Figure 2: Levelised Cost of Electricity (LCOE) for electricity access solutions (IEA, 2017)

These figures exemplify that the initial cost of rolling out microgrid technology is often uneconomical when compared to an extension of the existing centralised grid. However, its important to note that there is considerable overlap between the cost of grid supply and that of microgrid solutions, meaning that in some instances microgrids are a cheaper solution (although, concerns are also raised from a technical and maintenance perspective). In an ideal situation, microgrid technology has access to a centralised grid to ensure maximum resiliency for the loads which operate under its control. However, technical challenges with grid synchronisation due to voltage and frequency control issues associated with distributed generation exist and continue to make microgrids an expensive endeavour.

Because of these challenges microgrids are frequently referred to as a ‘band-aid’ solution until the centralised grid can catch up and reach those who don’t have adequate electricity access. Nevertheless, weighing up the pros and cons of microgrid technology is context specific and should be treated in this manner when determining its value in eradicating energy poverty, with plenty of examples from developing regions like India and Sub-Saharan Africa on the valuable role that microgrids can play.

What role can Bollywood play in lighting up India?

India is one of the largest generators of electricity in the world. The increasing demand for electricity stems from two core drivers; the growing middle-class population which expect a grid connection in addition to the intensifying growth of domestic markets delivering into the global economy, requiring reliable energy in order to compete at an international scale. However, in rural regions of India 56% of the population is left without access to electricity and “even when they do, many have opted not to connect because of poor reliability and inadequate supply” (Samanta, 2015).

As an emerging world superpower, India has recognised the importance for the electrification of its population with several government schemes implemented, with 14.7MW of microgrid projects forecasted for completion in FY2018/19 across India.

Whilst the initiatives of the Indian government have made significant inroads to electrifying their population at a rate of 1 million new connections per year, on the other hand annual growth in households in same period grows at 1.85 million new homes (Samanta, 2015). The challenge of meeting this demand has been filled with a conglomeration of private business and NGOs all working towards electrifying those whom live in energy poverty by using inventive microgrid solutions. One such example is the organisation Veriown who have pioneered the use of internet connected microgrid technology to bring individual rural households and businesses both electricity and internet connectivity.

Through the use of their innovative solar devices they’ve partnered with the likes of Bollywood movie producers and online education providers to bring added access to entertainment and education material in rural communities. This helps to incentivise the use of electricity and provide additional development freedoms. Whilst the grid may be proven to be a cheaper and a longer-term solution, microgrids, in a rural and remote context, are playing an important role in developing electrification capacity in a safe, cost effective and accelerated manner across the sub-continent which will help bring light to the energy poor.

The sun is shining bright in Sub Saharan Africa

The largest proportion of the population who live without adequate access to electricity inhabit the African continent. In response, Sub Saharan African nations, in particular Kenya, Uganda, Senegal and Tanzania have led the charge in electrifying their populations through use of microgrid technology. Together these four nations currently have a “potential off-grid market of $750 million in annual revenue. It can be a $1.5 billion market if today’s microgrid costs are reduced by 50 percent” (RMI, 2018).

In Kenya alone there are currently 65 microgrids in existence, 40% of all microgrids in Sub-Saharan Africa, with an extensive pipeline of 3000 microgrids by 2021, should policy barriers around foreign investment be removed. The creation of this market has largely been driven by a lack of government response to provide reliability and grid infrastructure that enables electricity access to the wider population. Microgrids hold an enormous amount of promise for this region, in particular for populations that live in remote locations.

Cost barriers have been a reoccurring theme with regards to preventing the impact of large scale microgrid adoption. This can be associated to a number of factors and questions that are asked of a microgrid solution; who will finance the initial project? how will this money be collected from rural regions? And what will the end-user’s willingness to pay be?  However, a combination of both ingenuity initiated by local entrepreneurs and serious investment from international firms, international organisations and NGOs have led sub-Saharan African nations to being considered the ‘the worlds microgrid lab’.

This in part is due to the use of mobile phone payments as a means to pay in real-time for the electricity that users consume and expected reduction in minigrid costs by up to 75% in the region (see figure 3).

 

Figure 3: Average installed solar-diesel-battery minigrid costs can be reduced by 75 percent (RMI, 2018)

Mobile phone payments have been the largest breakthrough in propagating microgrid development in this region as it “reduces transaction costs, lowering electricity costs for consumers and brings down business expansion costs for the solution providers” (TFE Consulting, 2017).  For example, in Kenya 88% of the population owns a mobile phone which enables greater confidence for investors that initial costs will be recouped with a potential return.

Does the future look bright?

India and Sub Saharan Africa serve as important examples of the potential scope and viability of microgrid technology in tackling energy poverty. Nevertheless, energy poverty is a wicked problem which is characterised as a “social or cultural issue that is difficult or impossible to solve for as many as four reasons; incomplete knowledge, the number of people involved, economic burden and the interconnected nature of the problem with other problems” (Kolko, 2012)  The diverse cultural and contextual surroundings for which energy poverty occurs and the inherent limitations of microgrid technology offer a view that it is not the ‘silver bullet’ to empowering 1.2 billion lives with light. Further to this, it is important to acknowledge whether this solution is something that communities without electricity want, for human development is about freedom and “freedoms are not only the primary ends of development, they are also among its principal means” (Sen, 2001).  From this perspective the role for microgrids into the future is an important but limited solution as it fails to address the scale and innate blockades that exist within the wicked problem that is energy poverty.

A world ‘with’ lights

Subsequently, the future for eradicating energy poverty looks bright under a holistic approach that considers microgrid technology, feasible financial models and robust government policy. It would be naïve to propose that using just one of these facets would achieve progress in large scale electrification due to the complex nature of this social issue. As a result, the case for utilising microgrids is best placed in situations that aim to develop electrification capacity in rural and last mile communities where sound financial models such as mobile payment schemes and vigorous rural electrification policies are implemented.

Figure 4: Electricity access rates under the New Policies Scenario (IRENA, 2017)

The examples of both India and Sub Saharan Africa have shown glimpses of this ideal model but the question should be whether we are projecting towards or away from this archetypal solution. The projections are hopeful under a ‘new policies’ future which propels the need for this ideal model with the rate of electrification improving significantly across the globe. More importantly the role for microgrids is viewed as vital with populations “in rural areas, decentralized power systems are the most cost-effective solutions for more than two-thirds of those who gain access” (IRENA, 2017). The future for utilising microgrids is bright but it glows brighter for those who continue to live without adequate access to electricity.