Quick Summary
In this article, we are talking about the seven main points from the Solar Offgrid & Renewables:
- Wing 1: Mini-grids are essential for rural electrification target
- Wing 2: Policy plays a key role in mini-grid roll-out
- Wing 3: Solar can displace Diesel in productive use of Power
- Wing 4: Local currency and funds raising are challenges
- Wing 5: The emergence of Blockchain
- Wing 6: Women at the front line of the community challenge but still under-represented
- Wing 7: East Africa, a bloc in effervescence
ARTICLE
*Hujambo dear RiA-der! Habari Yako?
As usual, I am always excited to come back to you. Well, I just returned (my body only, not my spirit lol) from another amazing trip in the Motherland! This time, I traveled to Dar Es Salaam, and on my way there I transited in Kigali, a city that by herself symbolizes the emergence of emergence of East Africa. I’ll come back to that.
As they did earlier in the year in Ghana with the Clean Energy summit, Solar Media pulled out another impressive conference in the country of Julius Nyerere. You don’t him? It is the guy the airport is named after. He must be an important figure then, don’t you think so? Check the link.
The forum provided all attendees many insights from the industry and usual, your devoted RiA servant than I am has summarised seven key point. I have called them: the seven wings of the Kilimanjaro.
Mini-grids are essential for rural electrification target
The UN SDG 7 goal is challenging us to provide affordable, reliable and sustainable electricity and modern energy to all by 2030. Africa as a whole presents the lowest electrification rate, only 52% (although progress has been reported from 2016 according to latest IEA report) and the picture is even more concerning for rural areas where the figure dropped to 32%. In a country as big as Tanzania, the grid expansion is not financially viable in remote areas with low density and also islands, which the country is very fortunate to have. Mini-grid and offgrid systems appear to be the best solutions. The Tanzanian recognised this fact and has been taking measures to boost the sector. The RBF (Result Based Financing) first call proposal, led by the Rura l Energy Agency has selected 22 projects to develop green mini-grids and a second call is expected to happen in January 2018. Are you a developer in search for opportunities, well get on the starting block, this is your window. Remember, should you need some help; RiA is here to support you.
Policy plays a key role in mini-grid roll-out
Compared to the rest of Africa, mini-grids are more popular in East Africa, especially in Kenya and Tanzania. The policy plays a key role for the roll-out as it pretty structured the sector and Tanzania has certainly the best framework from the entire continent. Since 2001, the successive governments and lawmakers have adopted a series of measures to strengthen the sector and provide ammunitions to reach the target of 75% electrification by 2035. However, the central issue at the heart of the debate has been to deal with the question of what mini-grids would do when the grid arrives. In this area as well, Tanzanian government is a step ahead of everybody and through the work carried out by Tatedo and WRI (World Resource Institute), they are currently developing a third generation framework for SPP (Small Power Producer).
Solar can displace Diesel in productive use of Power
From the 109 mini-grids listed in Tanzania, the majority is run through fossil-fuels and less than 1% use solar. The picture is similar in neighbouring countries like Uganda. To reverse the trend and deploy more green mini-grids, they need to be economically competitive. Well, the good news is that through the brilliant study supported by the World Bank and conducted in Ethiopia, Melessaw Shanko from MEGEN Power Consultancy has demonstrated that solar has the power to displace diesel. For various productive uses of power like water pumping, solar is not only the cheapest renewable energy source, it is also less expensive energy source, apart from the grid.
Local currency and funds raising are challenges
So if mini-grid and offgrid solar are part of the solution so why can’t we accelerate the deployment then? Well the answer usually stands in five letters: M.O.N.E.Y. Like all the other projects in the renewables sector in Africa, funding is the key challenge and it is particular space, it is even more acute. We are dealing here with smaller size systems (usually 50 -60 kW) and customers with very limited revenues so achieving profitability is a real challenge to say the least. This issue could be approached from different angles but one of the solutions resides in the ability to provide more than electricity but services instead. Doing so contributes to create a local economy and transform peoples lives as we are preaching here at RiA.
An additional issue is the problem of local currency. Borrowing in hard currencies and getting revenues in local currencies could expose businesses to the risk of volatility and shock depreciations. The mitigating option would be to borrow in local currency and hedge the risk. For local developer, dealing with these issues might be a big ask for them. It is strongly recommended that they establish collaboration with financial partners that focus on these questions while they look after the delivery part.
The emergence of blockchain
One new concept is literally changing the game for renewable energy as well as many other industries: the blockchain. This distributed and decentralised system acts as a public ledger that records transactions across many computers. There many associated advantages: immutable, transparent, secure, efficient and above all, it is a fantastic tool to raise money to finance clean energy projects. In her fantastic presentation, Morwesi Ramonyai from SunExchange has demonstrated how the concept has been used to fund many projects in South Africa, from as low as 15 kW to 1 MW projects. With the financial struggles highlighted above for mini-grids and offgrids projects, this could well be another solution that would unlock the potential of the sector.
Women at the front line of the community challenges but still under-represented
This issue has been widely discussed at the conference in Accra earlier this year and one thing we could confidently say is that it is definitely not a regional problem that would eventually affect west Africa alone but instead an issue for the whole industry. Women are clearly under-represented and this is a fact. Less than 15% according to few statistics that could be collected. However, women are nevertheless at the centre of the rural electrification problem. Whether we are talking about lighting or clean cooking for households, women are at the front-line. If we are to solve this problem, we must make sure we engage with women and encourage them to join sector. The conference ran a workshop on the topic and I gently that it happened towards the end of the conference, hence not allowing delegates to fully participate. Many delegates, including myself had to depart in the middle of the workshop to prepare for the return. Nevertheless, we strongly support Solar Media is raising and addressing the question.
East Africa, a bloc in effervescence
The summit confirmed one thing that was already apparent before, the dynamism of East Africa and their embrace of Clean Energy. Ethiopia, Kenya, Tanzania, Uganda are all driving forward in their agendas and opportunities are popping up from many places. If you are an investor or a developer, I simply say to you TIME IS NOW.
A country that symbolizes well the effervescence of the bloc is Rwanda. I had the pleasure of stopping for few days in Kigali and I was very much impressed by the work the city and country have accomplished since 2000. They have completely rebounded from the dark episode of their history and are fully embracing the spirit of Ubumuntu (i.e Greatness of heart).
You could be admirative of the cleanliness of Kigali and the magnificent infrastructure. Friends of mine who are now living in the city also share with me that as part of the 2020 strategy plan, the government is planning to build seven secondary cities. These cities will be constructed as smart cities, fully integrating renewable energy and sustainability at the core of their architecture. No wonder why I was charmed. Kigali, to quote Rwandair, you are flying the dream at the heart of Africa. **Asante Sana!!
* Hujambo! Habari Yako?: “Good Morning! How are you? ” in Swahili
** Asante Sana: “Take you very much” in Swahili
Swahili is the national language spoken in Tanzania.
Sources
1- Solar & Off-grid Renewables Africa: EAC & SADC: http://sogr-africa.solarenergyevents.com/
2 – Tatedo, Accelerating Mini-grid Deployment in Sub-Saharan Africa: Lessons from Tanzania: http://www.tatedo.org/downloads.php?download_id=37
