If You Want to See the Future of Electricity, Look to Africa and India

September 29, 2015 • Blog Post • By Atlantic Re:think

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IN THIS ARTICLE

  • Energy-poor communities around the world have been gaining access to electricity by using small, independent energy systems fueled by the sun, called solar microgrids
  • The Internet of Things and innovations in digital technology are beginning to transform the microgrid industry, with many companies using cloud-based software to remotely monitor their grids

Just as developing countries skipped right over landlines to mobile phones, theyre leapfrogging industrial nations in how they power their communities

 

Hunting down an outlet to charge a mobile phone is something we find ourselves doing on a regular basis. Its not the most impressive feature of modern life, but once we plug in, were able to power up our devices while using a behind-the-scenes, century-old system of wires, power plants and transformers known simply as the grid.

 

But for more than 1.2 billion of Earths inhabitants, there is no grid access, no electricity and powering up a phone is considered a luxury. In rural Africa, in fact, its common for people to ride their bikes to another village just to get their cell batteries out of the red. And in India, there are more people lacking electricity than there are people living in the United States.

 

The high cost of expanding grid infrastructure, not to mention rampant corruption of state-owned utilities, has left many of the worlds poor and rural-dwelling in the dark for far too long. Theres not a lot of people who want to invest in nuclear and coal plants and large transmission lines because they dont have enough money to pay for it, notes Peter Asmus, an analyst on microgrids with Navigant Research.

 

But in the past few years, a growing number of energy-poor communities have gained access to electricity. And theyve done it by circumventing the grid entirely in favor of small, independent energy systems fueled by the sun, known as solar "microgrids".

 

 

It's not that conventional grids have gotten cheaper. Its that within renewable energy sources, the price is plummeting and the pace of technology is advancing. In just one example, the price of solar panels is down more than 65 percent from five years ago when photovoltaic solar panels were first invented. This new math is pushing microgrids from the margins to the mainstream where they have the potential to fast-track development in poor countries, shift the balance of power toward renewables and upend conventional energy across the globe.

 

"The potential [for microgrids] is extremely large", Asmus notes, with estimates putting the markets value by 2022 anywhere between his organizations estimate of $8 billion to upwards of $25 billion. And its not just startups getting in on the microgrid game. Global solar energy giant SunEdison is in the pilot phase of a microgrid project in rural India. And power and automation multinational ABB has announced its partnering with Samsung to use its lithium-ion batteries to promote microgrid solutions globally, including in emerging markets.

 

In fact, many companies are betting that the energy-poor just might "leapfrog" the grid altogether. Just as they skipped right over landlines to mobile phones, places like rural India and Africa are fast becoming the test markets and beneficiaries of some of the most keen advances in renewable and distributed energy.

 

"The analogy that people always use is they skipped landlines and went to cellphones, and theyre going to do the same thing with energy", says Asmus, who adds that the demand for cellphone charging is also one of the key drivers of demand for electricity. "It's actually the cellphone towers that are bringing electricity to these regions."

 

There are already 600 million mobile phone users in Africa, and those phones are indeed one of several pivotal tools that are accelerating a microgrid revolution. Yes, telecommunications towers are power-hungry and phone users need to charge up, but beyond that, mobile phones are serving as the backbone for important flexible payment models that are key to financing microgrids in emerging markets.

 

For example, customers of SteamaCo, a Kenya-based solar company, use their phones to add money to their accounts and then pay for electricity flowing from the nearest microgrid on an as-needed, pay-as-you-go basis. Customers also receive SMS notifications when their accounts are low.

 

As the price of renewables has gotten more competitive in recent years, storing that sun in an affordable and reliable-after-dark way was, for years, the missing link to making renewables mainstream. But breakthroughs in battery storage are putting this last piece of the puzzle in place.

 

"Battery technology is experiencing a massive and positive disruption", says Zeina El-Azzi, vice president of SunEdison. "Costs are coming down significantly. In addition to that, efficiencies are improving, so the number of times you can use a battery without having to replace it is increasing as well."

 

SunEdison has purchased 1,000 advanced vanadium flow batteries from Silicon Valleybased Imergy Power Systems Inc. to help power its India microgrid projects. Imergy batteries can be recharged and discharged indefinitely and last 20 years or more, and they are crucial to keeping the power on around the clock. "Our goal is to work with Imergy to continue to find ways to reduce costs over time, and that includes increasing the lifecycle of the battery", says El-Azzi.

 

While mobile technology and advanced batteries are sorting out payments and storage, the Internet of Things and innovations in digital technology are also beginning to transform the microgrid industry in ways that werent thought possible just a few years ago. The Internet of Things very much applies to this business in a very big way, notes El-Azzi, who says connecting devices and remote monitoring is key to bringing down costs and running microgrids as efficiently and smartly as possible. "We need better meters that can allow us to remotely turn on and off individual household usage. We need to be able to very seamlessly interact with cellphones and mobile money platforms. We are in the infancy of whats possible in that space, and we think its going to grow tremendously."

 

Data analytics and cloud computing are already being rolled out by microgrid companies in Kenya, where more than 75 percent of the population currently lacks access to electricity. SteamaCo uses cloud-based software to remotely monitor its grids. This extends to troubleshooting drips in battery voltage, tracking a customers power usage or even identifying spare energy and directing it to other uses.

 

Powerhive is another company working to make microgrids smarter in Kenya. CEO Chris Hornor says "data is very, very important, and a very key part of what we do." The company leverages precise, real-time data to show customer demand for electricity and payment history to banks and other financial investors who may be averse to investing in poor parts of Africa and India. "What's more powerful is when you can actually hook up customers and track their patterns and then show that they switched immediately to modern electricity from using kerosene or candles or batteries without batting an eye", says Hornor.

 

In May, electric car company Tesla upped the ante on smart microgrid solutions when it announced that its new lithium-ion battery would be packaged with Internet-connected software. While the developing world is probably not the target customer for Teslas $3,000 units, batteries that can "talk to one another" could someday become an industry standard, allowing microgrids to easily shift loads and respond seamlessly to peak demands.

But as technology advances, costs come down, and as the business case is proven for solar microgrids, they are causing a sea change in the old-fashioned, pole-and-wire world of the grid. Data centers, some of the worlds biggest energy users, are increasingly looking to microgrids to take the load off the conventional grid, lower their footprint and save money. HPs Palo Alto data center, for example, uses an integrated solar-powered microgrid to help it consume net-zero energy from the grid.

 

Some progressive-minded states are incorporating solar microgrids into their energy mix as well. California is issuing $26.5 million in grants, most of which is going toward renewable microgrid projects. The state of Vermont is working toward a distributed energy system, with Green Mountain Power planning to build out 2.5 megawatts of solar power, some of which will be built around microgrids.

 

What's clear is that as microgrids move in and provide electricity for televisions and refrigerators, and onward to schools, health clinics and small businesses, the desire for energy grows. "People want power. As long as we can deliver the power at a reasonable cost to them, they will use more and more power, just like we did at the turn of the century here in the United States and in Europe." says El-Azzi "We shouldn't treat it any differently (in the developing world). Electricity is a commodity and it should be offered at a cost-effective rate to everybody."

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