Scalable solar mini grids will continue to play a major role in the rural electrification agenda in developing countries in the future. This will be fueled by the increased entry of private players into the field, and the change of regulations in respect to generation and supply of power from scalable mini grid solutions. These two are already being witnessed in Kenya. This year, Kenya is witnessing a major solar micro-grid project expected to demonstrate exactly how these power solutions can fit in rural electrification agenda now that the country is targeting 100% electricity access by 2030. The project is notable as it marks the first scalable community micro grid project since last year's granting of the first utility concession for off-grid power supply.
How does a mini-grid work? Solar panels capture sunlight, which is converted to electricity. The electricity then goes to an inverter that converts direct current into alternating current, which is then fed directly or indirectly (via the batteries) into the electricity network. The electricity reaches all customers connected to the network. Image Credit: FRES
The project, which is an investment between U.S-based Powerhive and Enel Green Power (EGP) seeks to build and develop solar mini-grids in 100 villages in the Western part of Kenya, in the counties of Kisii and Nyamira. The solar mini grids will have an installed capacity of 1MW and will bring clean power to households, small businesses, schools, and healthcare centers and serve a total of 90,000 people. The micro-grids will be powered by First Solar’s solar PV technology and operated with Powerhive’s control technology. Francesco Venturini, CEO of EGP indicated the micro grid rural electricification solution will be linked with advanced mobile payment or billing systems, meaning it will adopt a mobile phone prepayment application. The system will use solar power panels, battery storage, and local distribution facilities.
Powerhive became the first company to receive a utility concession from The Kenya Energy Regulatory Commission (ERC), which allows it to generate, distribute, and sell of-grid electricity to the public. The granting of the permit also signified a positive turning point for power generation in the country and more changes are expected in the regulations of off grid and micro-grid energy sectors, because previously, the government has used public utility for power generation and supply. It could end their monopoly, although the strategy is meant to help supply power to areas where there are difficulties in extending the grid, said Powerhive. Director of Renewable energy at the ERC, Pavel Oimeke said last year that the deal would not as such threaten a well funded Kenya Power Lighting Company (Kenya's public energy utility and electricity distributor), and that it would be a win-win for Kenya - it will allow more people to access power. In addition, he said more players are expected to come on-board if they made a good business case.
Private players key to increasing energy access
Emerging markets may witness more mini grid connectivity in the future as more private companies continue to invest in off-grid power alternatives. From January this year, Caterpillar Ventures, Total Energy Ventures, First Solar, Tao Capital Partners, Pi Investments and other firms will join Prelude Ventures and Powerhive in their $20M Series A financing round to support Powerhive's expansion of its micro grid energy portfolio in Africa and the Asia-Pacific, according to a company press release. Powerhive said the completion of the financing round will allow more people in East Africa to access power from renewable micro grid solutions. CEO of Powerhive, Christopher Hornor said each investor will bring unique experiences and expertise.
Noting that Powerhive's proprietary technology has made it possible for them to become early movers in off-grid rural electrification, Caterpillar said their equity investment in the venture will advance the company's goal to adopt, develop and integrate sustainable, innovative and reliable solutions to its customers. It added that Powerhive's solutions can complement caterpillars solutions including their energy storage and photovoltaic (PV) panel solutions. Enel Power said the rich and differentiated technology mix of Powerhive was a unique platform that offered an opportunity for Enel's development in Africa. Total said through its chief executive, Patrick Pouyanné that the platform paved the way for distributed energy management models.
By granting the permit, the government recognizes that allowing private players into the market was the "fastest and least expensive approach to reach 100% electricity access" according to Powerhive East Africa’s Managing Director Zachary Ayieko. Speaking about the granting of the permit, Dr. Frederick Nyang, director of economic regulation for the Kenya ERC said that the permit was granted because off-grid alternatives have a role to play in energy economic regulation.
“The Powerhive permit was granted in recognition of the fact that grid expansion is not always the most economical choice to expand energy access; off-grid alternatives have a role to play,” wrote Dr. Frederick Nyang, director of economic regulation for the Kenya ERC, in a letter. “[Powerhive has demonstrated] that its micro grids are capable of operating in compliance with the prescribed standards for residential and commercial electricity service provision.”
In conclusion, micro grids will play a major role in developing country's rural electrification agenda as regulators make it easy for their penetration. At the same time, this will be accelerated by the entry of more private companies into the field. American Council on Renewable Energy (ACORE), a non-profit membership organization that provides a common educational platform for the renewable energy community, said energy regulators in this region need to seek electricity distribution concessions since concessions incentivize suppliers and make projects bankable for purposes of expanding them. Regulators also, according to ACORE, can establish cost-reflective tariffs as opposed to fixed tariffs that limit rural electrification by putting a price ceiling. In addition, they need to boost private financing by offering investors risk-reflective rates of return, planning for future by prioritizing preference to appliance-compatible systems that support economic activities and systems that have potential to grow over time, as well as streamline regulations in the energy sector.