If you build it, how much will it be used? Understanding mini-grid electricity demand

Last-mile consumers hugely inflate expected energy use, ballooning system costs (by 4 times in Kenya sample). Using aggregated data is the best forecasting tool, but mini-grid companies need to share to scale

Renewable energy powered mini-grids can provide clean, sustainable energy to the millions of people around the world who currently live without electricity access. A key factor to determining if a mini-grid is financially viable is the appropriate sizing of the mini-grid to the community’s electricity need. Each watt-hour (Wh) of over-predicted electricity demand can cost up to $6 of surplus equipment costs. 

A widely employed method to estimate demand is through an energy use field survey; potential customers are asked which appliances they possess and plan to possess if they are connected to the mini-grid. Default appliance rating (in watts) and hours of use are used to estimate a daily consumption requirement. 

In an analysis published in a recent paper, Dr. Henry Louie (Seattle University), Peter Dauenhauer (U of Strathclyde), and I used data from 8 solar mini-grids in Kenya owned by Vulcan Inc. to look at the accuracy of this demand prediction method. The research was based on responses from appliance surveys of customers conducted before the installation of the mini-grids, actual measured consumption over a 31-month period, and a follow-up appliance audit of a subset of the customers.

Measured consumption of electricity across the 8 mini-grids was an average of 113 Wh/customer/day, One mini-grid site (Entesopia) drives the average up, with the highest average of 230 Wh/customer/day. The top four appliances possessed by customers were lights, TVs, phone chargers, and radios. 

We compared actual consumption to estimates from the appliance survey and appliance audit. In addition, we used actual consumption data to create a proxy approach under the assumption that the average consumption of one mini-grid should provide an accurate prediction of another grid. The average error (demand estimation compared to actual consumption) and potential extra cost from overestimation of demand for each method can be seen in the table below. 

Screen Shot 2017-11-20 at 08.52.55.png

Potential causes for error include: generic survey process errors such as interviewer bias and satisfying behavior; appliance rating variance; and inaccurate estimations (assumed and from survey responses) for duration of appliance use. As can be seen, the most accurate method for calculating demand was to use aggregated data, making the case for the importance of sharing data. The level of inaccuracy of the survey approach is striking: very few customers were able to correctly predict their future consumption to even within +/- 25% of actual consumption (see figure).

Screen Shot 2017-11-20 at 08.53.14.png

When people use electricity is important for understanding how to size energy storage: night users require energy storage while day users can use solar electricity as it is generated. As seen below, we generated load profiles of a subset of customers and, in the paper, highlight a case study for each type of user. 

  • 43% of users are “Night Users” and consume 75% of energy between 18:00 – 6:00; 

  • 17% are “Day Users” and consume 50% of energy between 6:00 – 18:00; 

  • 40% are “Mixed Users” consume most energy during the night but also consume some energy during the day. 

This research demonstrates that the commonly used appliance survey method for estimating customer demand provides poor predictions, resulting in a system costing four-times the amount system would have cost if it had been sized to meet actual demand. A data-driven approach is a more accurate alternative method of demand prediction.

Courtney Blodgett, Peter Dauenhauer, Henry Louie, Lauren Kickham, Accuracy of energy-use surveys in predicting rural mini-grid user consumption, In Energy for Sustainable Development, Volume 41, 2017, Pages 88-105, ISSN 0973-0826, https://doi.org/10.1016/j.esd.2017.08.002

News release: Tangible benefits of accelerating electricity access in developing countries where 1 billion still lack power

New report urges greater use of decentralized renewable energy as quicker, less costly option

Also reveals evidence of significant black carbon emission reductions

BONN, November 16, 2017: Rural and vulnerable populations in developing countries could miss out on multiple wide-ranging benefits if they are forced to wait years, or even decades, to get access to electricity through first-ever power from the grid instead of through quicker to deploy decentralized renewable energy solutions, according to a report announced by Sustainable Energy for All (SEforALL) and Power for All today. 

The “Why Wait? Seizing the Energy Access Dividend” report presents a first-of-its-kind approach to developing a framework for understanding and quantifying the financial, educational and environmental dividends for households through accelerated access to decentralized electricity, such as solar home systems and clean energy mini-grids. 

The report indicates that households in Bangladesh, Ethiopia and Kenya – which were used as report case studies – can save hundreds of dollars, equivalent to the average annual income of between 61,800 and 406,000 people depending on the country and timeframe to deliver universal access, by bringing electricity access forward  through use of solar to power household services like lighting and mobile-phone charging instead of kerosene or costly external phone-charging services. 

Another benefit from decentralized services is more time for studying—equivalent to the time spent in school each year of between 142,000 and 2 million students depending on the country and timeframe to deliver universal access.

Announced at the UN Climate Change Conference in Bonn, the data also shows significant black carbon emission reductions across the three countries – as much as 330 million metric tons of CO2 equivalent emissions, or roughly the emissions from 60 million passenger vehicles driven for one year– due to reduced kerosene use. 

Why Wait? uses a framework for estimating the dividends of electricity access that is designed to help government leaders and other decision-makers assess the comparative advantages of different electrification options and services – ranging from more limited Tier 1 electricity service (a few hours of power a day) to more robust and costly Tiers 4 and 5 - to achieve Sustainable Development Goal (SDG) 7 of universal access to affordable, reliable, sustainable and modern energy for all by 2030.

Speaking on the announcement, Rachel Kyte, Special Representative to the UN Secretary-General and CEO, Sustainable Energy for All, said: “Decision makers are faced with competing priorities against finite resources. “Why Wait” provides powerful evidence on the development gains that can be achieved by focusing on integrated energy strategies that advance energy access. Household savings and hours of study time that are won because of access to energy. Denying those gains by not prioritizing solutions to energy access risks holding back whole generation decentralized renewable energy as an attractive option for closing the energy access gap quickly, especially for remote rural areas. This work shows it can bring prosperity and education outcomes as well as other services energy provides.”

"Default approaches to electrification that rely on slow, expensive, fossil-fuel-powered centralized generation are out of date and out of time," said Kristina Skierka, CEO of Power for All. "The Energy Access Dividend challenges business-as-usual by valuing 'time to access'—for the first time specifying the opportunity cost of large-scale projects that may never reach the 1 billion people around the world who still have to live without the benefits of electricity. Properly supported, decentralized renewable energy can deliver socio-economic dividends faster and at a lower cost."

The report, produced in partnership with the Overseas Development Institute, comes just 12 years ahead of global energy goal deadlines, as many countries remain behind schedule in getting there. Just over one billion people are still living without electricity, according to the latest Global Tracking Framework report issued in May. 

Bangladesh, Ethiopia and Kenya were chosen as case studies in the report due to their wide-ranging differences in terms of income levels, demographics and electrification rates. The countries also have significant energy access gaps, accounting for more than 180 million of the one billion people still living without power.  

New energy access frontiers emerging in oft-ignored countries

The Democratic Republic of Congo (DRC) is ranked 184 out of 190 on the World Bank's ease of doing business index and 175 on ease of getting electricity. By comparison, Kenya, a favorite of the donor community when it comes to energy access, ranks 92 and 106 respectively. The World Bank recently credited Kenya $150 million to provide solar to under-served communities. 

A BBOXX crew installing rooftop solar in the Democratic Republic of Congo (photo credit: BBOXX)

A BBOXX crew installing rooftop solar in the Democratic Republic of Congo (photo credit: BBOXX)

Meanwhile, countries like DRC and others perceived as higher risk, continue to see little if any support from donors and development banks when it comes to energy access, despite their frequent calls to "leave no one behind" in the race to deliver universal electricity access to 1 billion people by 2030.

But ease of doing business isn't the only indicator for entering a market, and while most of the low access countries are still largely ignored by institutional funders, a handful of enterprising private sector companies refuse to wait, and are blazing trails into new countries.

BBOXX, one such company and a leader in the pay-as-you-go ("paygo") model for solar leasing, recently entered the DRC, Pakistan (144 on the World Bank index) and Togo (154). In a recent conversation with Power for All, BBOXX co-founder and CEO Mansoor Hamayun explained his company's rationale for doing so.

"The nature of distributed energy makes us less reliant on who's in government," Hamayun said. "We are looking for three things: customers without electricity, access to mobile money and a good telecom signal."

"We've found that consumers in more difficult places are more willing to shift over to mobile money. There is often a lack of banking infrastructure, so that conversion becomes quite easy. Government rules are also quite relaxed and we are often providing the first experience of customer service of any kind to consumers, which is really exciting and gives us huge opportunities.”

The lack of electricity infrastructure (the DRC grid, when and where available, is often only able to provide 2-3 hours of power a day, with most consumers relying on diesel) also provides an opportunity for private companies to expand the paygo approach into bigger systems. For example, BBOXX is installing solar home systems (SHS) as small as 50W and mini-grids up to 10kW in DRC. The larger systems are grid-compatible if ever reached. Currency risk is also not an issue, since the US dollar is the currency used in DRC. 

"We want to solve poverty, not just access, and to solve the problem, we need SHS, mini-grids and a digitalized grid system," Hamayun says, explaining the all-of-the-above approach. BBOXX is not only targeting rural communities either, but any consumers without reliable, quality access to power, including urban and peri-urban.

And despite challenges in Pakistan, the country has a functioning net-metering policy, which Hamayun calls the "magical answer" to rethinking decentralized solutions, because it enables companies to treat their systems as investments, not costs. 

Pakistan's net-metering policy allows BBOXX to export excess power back into the grid. Rooftop permits allow 10kW and owners typically use only 1kW, so BBOXX can rent the roof, install a system, and share revenue from surplus power with the customer, while absorbing the feed-in tariff. The local utilities also welcome additional storage created by the rooftop systems.

"This flips the coin completely," Hamayun says, adding that BBOXX is already experimenting with the approach in Pakistan. 

African countries have yet to put in place clear rules around storage and net-metering, which Hamayun identified as a barrier to further scale. "The grid and distributed energy are not far apart, it's just a question of metering," he says.

Data access is critical to achieving electricity access

Photo Credit: Zola - Off Grid Electric

Photo Credit: Zola - Off Grid Electric

One of the biggest gaps identified by the decentralized renewable energy (DRE) sector is access to quality data and research. The African Development Bank (AfDB) for instance recently said lack of reliable data is one of the single most critical challenges for private mini-grid investors. Power for All’s Platform for Energy Access Knowledge (PEAK) was created 18 months ago to help bridge that gap – both to provide data needed by the sector, and to help make most effective use of the information which already exists. PEAK addresses the gap in information availability and use by supporting the visibility, discoverability and usability of critical knowledge for the sector through research, our interactive knowledge sharing platform communications and advocacy.

Our research has explored key policy drivers for unlocking DRE market potential in high growth markets and tracking the establishment of energy access targets in low energy access (LEA) countries. Our current research agenda includes exploring evidence of socio-economic benefits from DRE; understanding the relationship between DRE market expansion and workforce development; and developing an analytical framework for exploring DRE implications for utilities of the future in LEA countries. We are also synthesizing existing evidence on mini-grid markets and the innovative productive uses of electricity and micro-enterprise being deployed in India. 

As the head of PEAK and Power for All’s research director, I have the amazing opportunity of engaging with our partners—companies, policy makers, investors, civil society, the media—to constantly understand what type of data is still needed and by whom. In order to have even more direct, frontline engagement, I recently relocated from Berkeley, California to Nairobi, Kenya. 

Kenya is one of the most dynamic, fastest growing DRE markets in the world and while here I am collaborating with researchers at the Strathmore Energy Research Center (SERC) on the Strathmore University campus. 

In the 5 years since its establishment SERC has quickly solidified itself as a leader in energy access, having jointly developed a solar installation training curricula used country-wide, maintaining and operating four grid-tied roof-top PV installations across the campus; and working towards ISO accreditation for solar home system (SHS) product testing. 

In partnership with SERC and other international institutions like the Renewable and Appropriate Energy Laboratory on the UC Berkeley, my team and I are developing a research agenda to explore some of the most critical energy access topics, such as how advances in DRE influence electricity capacity expansion and the future of energy regulation in LEA countries.  

DRE costs have decreased dramatically in the past decade and in some places have become cost competitive with grid power in price and performance. Small-scale generation, efficient DC appliances, demand response technology, ‘behind the meter’ storage options and the rise of promising platforms such as blockchain are allowing customers to produce, store and use electricity onsite more efficiently. In developed electricity markets, such as California, this has begun translating into reduced customer purchases from the utility, a decoupling of utility revenues from such sales and a stronger focus on maintaining distribution networks – an evolution of the utility’s role as primarily a supplier of electrons.

Utilities in LEA countries however confront a very different set of challenges compared to utilities in wealthier economies - they are capital and usually cash constrained and have a relatively low demand base. Furthermore, in LEA countries large portions of the rural population remain without electricity, existing grid systems are often limited, and service and product quality and reliability is low compared to wealthier economies. Given these major political, economic, and social differences, the utility of the future in LEA countries is expected to perform different roles in order to fulfill its public service objectives as compared to  mature electricity market counterparts. 

The next generation utility will need to focus on harnessing demand-side forces, aligning their incentives with those of both the consumer and of the DRE provider; and supporting new regulatory and institutional paradigm shifts. Failure to do so will mean the eventual displacement of an increasingly outdated utility model and can hinder progress to universal energy access. 

We posit that integrated energy planning lies at the heart of this paradigm shift. However utility planning tools and capacity expansion models are often limited in their consideration of DRE, multiple energy access tiers, demand forecasts, distributed solutions, the economic value of reliability, or the costs of technical losses, creating a fundamental barrier to integrated energy planning. Our collaborative research exercise addresses this challenge directly, by using new analytical tools and direct industry engagement to explore optimal models for energy planning and their implications for utility business models and regulatory institutions in low energy access countries.  

Another related data gap in the energy access space revolves around understanding the impacts of energy service technologies. A new report to be released November 16 at COP23 by Power for All and SEforALL, “Why Wait? Seizing the Energy Access Dividend”, marks the start of an important research effort to collect existing data and quantify development benefits from access to electricity. We are collaborating with other institutions to develop a framework that assesses the social, development and human rights benefits that result over time from the delivery of different tiers of electricity service to a household or a community – called the access dividend.

We hypothesize that the energy access dividend will be high when low-tier off-grid access can be rapidly deployed in situations where good quality grid connection remains a distant prospect, and/or where the development benefit of low-tier access is almost as great as high-tier access. Conversely, the energy access dividend will be low when the potential benefits of low-tier access are low, and/or the population is about to gain access to a high-quality grid connection.

Such a framework and the supporting evidences will be directly relevant to policy makers involved in integrated energy planning at the national level, and funders – both locally and domestically – seeking to derive maximum impact from energy investment. 

Complementary to this research, PEAK is also developing an interactive information platform for the sector that will be launched in 2018. PEAK’s technology automatically curates and processes vetted, high-quality open-access research, helping users (e.g., policy advisors, practitioners or journalists) to quickly find and visualize data and draw insights that enable easily shareable, compelling, data-driven stories and proof points needed to advance the sector. PEAK’s technology will help make existing data more readily useable by target audiences and will help identify the gaps that need critical attention. 

Keep watching this space for more about PEAK and our work. And if you have thoughts to share, email PEAK@powerforall.org

 

Fact sheet: SDG7 and poverty reduction

The body of evidence is growing to show that decentralized renewables play an important role in putting more money into the pockets of poor households and farmers, both by allowing them to switch from fossil fuels and also by creating new business opportunities. One estimate is that $40 billion in savings would result annually from replacing kerosene and candles with solar.

See our new Fact Sheet for more details:

Download the Fact Sheet: Decentralized Renewables: Lifting People Out of Poverty here  (61 kb)

 

Research summary: energizing finance

According to a new series of reports from SEforALL, only 1% of international finance goes to decentralized renewable energy, and just 0.1% when it comes to multilateral funders. This is despite the fact that the per-household cost of grid-connected electricity access is about 50-times more expensive than basic distributed solar.

See a brief summary of highlights from the report:

Download the Research Summary: Sustainable Energy for All: "Energizing Finance"  (53 kb)