HomeRegional NewsAfricaEd's note: How to make a minigrid business model fit for purpose

Ed’s note: How to make a minigrid business model fit for purpose

The CEO of Power for All, Kristina Skierka, said something that I have believed to be problematic in increasing the provision of electricity to urban and rural communities.

She stated that neither centralised nor decentralised energy could end energy poverty alone. My reaction: “Yes, this is my belief as well”. The minigrid business model – as fitting as it is in its endeavour to provide clean power – alone is not a best-case solution.

In my view, combining grid-tied, minigrids, and off-grid systems will best serve Africa’s electrification agenda. The challenge is in finding fitting solutions whereby technologies and models work together to achieve this common goal.

Naturally, companies are competitive and will push their technology to secure funding and projects. It is how the corporate world operates, but is there another way? One in which expansion of the grid-tied network is not abandoned entirely for off-grid projects and the minigrid business model?

According to Skierka, the answer lies in partnerships and leveraging comparative strengths. This alignment will allow traditional utilities and minigrid or distributed renewable energy companies to create a new frontier fighting to end energy poverty.

This new frontier is the way ahead!

However, with the cost for one average grid extension connection being around $1,400, where grid extension is the only method of service provision, in a country like Uganda the required investment would be in the range of $7 billion to achieve universal electrification access. This investment would be nearly 20% of the country’s current annual GDP.

All is not lost. A recent Ugandan project, the Utilities 2.0 Twaake pilot, is designed to halve this cost by relying on integrated energy. This pilot is a great case study into leveraging the strengths that Skierka alluded to.

The Utilities 2.0 Twaake project combines centralised and decentralised technology, including solar home systems, minigrids, grid and smart grid systems. All are combined into an intelligent and interactive energy network that can deliver customer-centric and clean energy solutions.

Another benefit, which places this type of project as a clear winner in the fight to end energy poverty, is that it comes in at the lowest cost.

Are you still not convinced to partner your minigrid solution with a less clean, grid-connected project?

In another example, the successful deployment of Nigeria’s first rural commercial undergrid minigrid shows how power developers need not be seen as competition to utilities or vice versa.

The project brought power to Mokoloki Village communities through a partnership between the Rocky Mountain Institute, Ibadan Electricity Distribution Company (IBEDC) and Nayo Tropical Technology. Within three months of operation commencement, the pilot connected 230 residential, 48 commercial, 11 public and one anchor load customer.

That is a fantastic turnaround time, and with four additional productive use loads anticipated to come online over the next year, it shows scalability is designed into the model.

The utility found that persuading villagers to pay for electricity, which they had not been doing before, was one of their biggest challenges. However, concerted efforts to educate the customers around smart meters and training locals to help run the system have paid off for IBEDC.

The Ugandan and Nigerian projects are just two instances of integrated energy systems that are working. There must be more and I invite you to share these projects that hold the key to Africa’s new frontier in increasing energy access.

Let us come together to deliver transformation faster than any isolated approach could hope to achieve.

Until next week.

Nicolette Pombo-van Zyl
As the Editor of ESI Africa, my passion is on sustainability and placing African countries on the international stage. I take a keen interest in the trends shaping the power & water utility market along with the projects and local innovations making headline news. Watch my short weekly video on our YouTube channel ESIAfricaTV and speak with me on what has your attention.