634 million Africans have no electricity access: microgrids could be the answer
Africans got mobiles without ever having landlines
In 1994, in sub-Saharan Africa, there were 0.1 mobile phone and 1.1 fixed line subscriptions for every 100 people. Twenty years later in 2014, there were 71 mobile phone subscriptions per 100 people, whilst fixed lines were still at 1.1. A generation of Africans has grown up regarding land-line telephony as a strange, quaint artefact with no application in their real lives. For mobile phones, the investment case has been clear. Annual capital investment in mobile services in sub-Saharan Africa from 2012 to 2014 was between $8 bn and $9 bn, with a total of $72 bn expected in the following 5 years. In 2014, the mobile phone industry contributed $104 bn, or 5.7%, to GDP.
Energy in Africa needs more investment
In 2012, total generation capacity in sub-Saharan Africa was 82 GW. Excluding South Africa capacity was 38 GW; this is about the same as Sweden. In 2013, the latest year for which data is available, 32% of sub-Saharan Africans had access to electricity at home, falling to 17% to rural areas. This is as low as 1% in rural parts of Burkina Faso, Sierra Leone and Chad.
Many studies have shown a clear, positive causal link between energy use and economic growth. It has been estimated that it would take annual capital investments of $27 bn plus $14 bn O&M costs just to maintain and grow generation capacity at 10% to meet suppressed demand, keep pace with economic growth and expand electrification. In reality, from 2002 to 2012, generation capacity grew at a rate of just over 1.5% per year. The slow progression of development in electricity infrastructure is choking the development needed to lift large parts of Africa out of poverty.
Microgrids are not a cheap option
Just as the mobile phone leapfrogged fixed-line telephony, an alternative to the traditional comprehensive large-grid electricity model, potentially suitable for off-grid rural areas, is an archipelago of distributed microgrids. There are various microgrid models, which may include renewable or conventional energy, or a mixture of both. Renewable energy, such as wind and solar, has the advantage of avoiding the costs and risks of shipping fuel to remote areas. However, it brings other challenges, such as matching of load to generation and network control. The continuing fall in energy storage costs is opening new possibilities for the balancing of renewables with load, whilst avoiding reliance on conventional generation. Possibly the most critical part of the microgrid is metering and control, which allows continuous, synchronous network operation so as to ensure a stable and reliable supply of power.
However, this is an expensive way to make electricity. As I have shown in a previous blog, a microgrid solution with renewable energy in the USA could theoretically produce electricity at just over 20 US cents / kWh. This would seem to make it viable in some of the high electricity cost African countries. However, as was also shown in this blog, this does not necessarily reflect the real cost of installing microgrids in developing countries where the local infrastructure, metering and transport facilities need to be built from scratch. In fact, the real cost of supplying power in this way can be in excess of 1 $/kWh.
Poor people pay a lot for energy
Where it is available, electricity prices in Africa vary widely from country to country (see Fig. 1), but are generally lower than comparable prices in Europe.
Fig 1: Residential electricity tariffs across Africa
However, Africans with no access to electricity pay a lot for their energy. A rural Ghanaian might pay about $1.70 for a litre of kerosene. If they burn this in a lamp, they will consume 42 ml/hr, which means they are paying 7.1 USc/hr for a little low quality light and some noxious and unpleasant fumes. In terms of the actual light delivered, this is the equivalent of paying more than 50 $/kWh for LED lighting; this does not even consider the health and well-being benefits of not inhaling kerosene smoke. There are a number of commendable schemes intended to allow people in developing countries to swap kerosene and candles for portable solar lamps. However in terms of development, these are stopgaps. In order to allow consumers sufficient energy to take part in real commercial growth, larger volumes of energy are needed. On this basis, smaller scale networks could offer a boost to remote communities.
Things may be starting to move
Although there has been speculation some time that microgrids could be a solution to energy supply in sub-Saharan Africa, it is only relatively recently that there has been real activity in the sector. Ongoing reductions in renewable energy and storage are continuing to reduce prices and make the technology more viable. A consortium of US based companies, including MAECI Solar and GE, is implementing a 5 MW solar microgrid on Annobon Island, of the coast of Equatorial Guinea. Italy’s Enel Green Power is developing a microgrid solution which will provide 1 MW to 20,000 households in Kenya.
If microgrid solutions are to become a truly viable large-scale solution, they must become bankable, even without subsidies or development funding. The technology being used is now largely mature and, as we have seen, prices are coming down. There are real opportunities to be had for private investors to bring both capital and expertise to bear in order to develop effective, efficient and relatively affordable solutions. A major challenge is however likely to be ensuring a steady long term stream of income from, often poor, consumers. Possible solutions may learn from, and leverage off, the experiences and customer base of mobile phone suppliers. For example, pre-pay meters, potentially topped up by mobile phone, may soon predominate.
This is not a one-size-fits-all fix, and in some instances, large-network implementation may be the best and most efficient way to supply energy to the people. However, microgrids will become an increasingly viable option. It is a 21st Century opportunity which should not be limited by lack of imagination or inertia born of 20th Century thinking.