How Sub-Saharan Africa is starting to provide opportunities for the energy storage industry through close collaboration with local microgrid developersLast year US President Barack Obama announced his Power Africa initiative, which promises more than $7 billion (EUR5.2 billion), over the next five years, to bring electricity access to 20 million new households in sub-Saharan Africa. In its first phase, Power Africa will add more than 10,000 MW of cleaner, more efficient electricity generation capacity. In addition to tapping natural gas and oil reserves on the continent there are plans to develop the continent’s renewable energy resources. Since the announcement three large-scale solar parks of 100 MW each are planned in Ethiopia. However, with just $2 million being allocated towards microgrid projects under the programme it is hardly surprising that critics see the initiative as little more than an opportunity for US corporations to secure subsidy to develop profitable energy deals of the more conventional kind.
Across sub-Saharan Africa an estimated 550-600 million are without access to electricity, a figure almost as high as the entire population of Europe. But – according to another startling statistic – the continent itself now has more cell phone users than North America. The mass adoption of communication technology across Africa could not have occurred with wires and landlines infrastructure. In a similar vein, microgrids, such as solar and battery-based direct current (DC) systems for powering lights and phone chargers, are already transforming the lives of tens of thousands of people and providing opportunities for entrepreneurs with new business models.
In Africa lead acid is king, as these types of batteries are cheap and accessible. But, as the falling cost of solar PV technology and the rising costs of diesel fuel pave the way for clean and hybrid microgrids, developers have already begun investigating advanced batteries for energy storage. These companies are the ones to watch as they roll out microgrids within communities to provide good quality, round-the-clock electricity supply for powering lighting and appliances.
THE MICROGRID DEVELOPERS
South African company Specialized Solar Systems (SSS), established in 2008, assembles and designs solar energy grids based on DC power, as a renewable, affordable and efficient electricity source for millions of people and communities without access to power. SSS has partnerships with government departments, local and foreign donors, the private sector, non-governmental organisations (NGOs) and other national agencies, though the company works most closely with local communities and their leadership. SSS’s DC solar microgrids are deployed in Democratic Republic of the Congo (DRC), Mozambique and Zambia, often in very isolated rural communities to provide electrification such as lighting, entertainment and refrigeration, and for powering communication devices such as mobile phones and computers, for internet access and so on.
Uptake for SSS’ DC microgrids from the outset has been good and quickly led to the company’s decision to set up a manufacturing plant in South Africa a few years ago. SSS then developed training modules and a support network was established throughout South Africa, Botswana, Angola, Mozambique. Since then, the company has received invitations to follow suit in Kenya, Sierra Leone, Ghana, and Somaliland.
ROLLING OUT DC MICROGRIDS
The SS20 Solar DC Microgrid Smartbox is SSS’s main DC microgrid product, which the company began trialling in 2009 and 2010. The system is designed to provide baseline, or basic, electricity needs for a typical household, but has also been developed in such a way that additional appliances, sourced through SSS, can be added to the system. The systems are financed using a pay-as-you-go model and SSS has designed a web-based system that can centrally manage all paying customers, allowing the company and its franchise partners to set up new customers and monitor their payments.
During 2012 and 2013 deployment has grown at a faster rate and to date approximately 6000 SS20 units have been installed, mainly for households but also larger systems for rural schools, post offices and police stations. SSS has already been contracted to install a further 5000 units in 2014, of which 1500 units will be installed prior to mid-March.
‘The projection for 2015 is 25,000 units. We have now formalised SSS Botswana and Nigeria and the first unit will be supplied to Zimbabwe in February 2014. With the correct training and support infrastructure – all of which takes time – we aim to supply Africa by 2017,’ says SSS CEO Jonathan Hodgson.
Headquartered in Oakland, in California, Standard Microgrid was set up with the goal of standardising microgrids in southern Africa, bridging the gap between technology and know-how between developed, western economies and low-tech, developing markets. Standard Microgrid develops strategic partnerships with commercial businesses and non-profits, as well as manufacturers that are looking to supply a product to these types of microgrid projects in Africa. The company also works close with the United Nations (UN) Foundation, through the organisation’s microgrids working group.
Brian Somers is just one of a few key staff employed at Standard Microgrid, and relocated to Zambia as project manager in early 2013. ‘Our company’s first project, in Zambia, consisted of a 24 kW solar array for a high school, for a non-profit,’ says Somers. His role includes recruitment and training up locals in southern African countries where Standard Microgrid is deploying microgrids (with the exception of Angola and Mozambique). At the outset, the company hired 20 local labourers on a contract basis and has since retained one as a permanent employee. In 2014 the company’s pipeline includes microgrids for safari resorts, schools and rural communities in Namibia, Zimbabwe, Zambia, and Tanzania.
Because many solar-based microgrids are quite technical Standard Microgrid emphasises transfer of knowledge. Projects range from small and very simple such as 3 kW systems – enough for powering lights and cell phone chargers for a local community up to 100 kW systems for mid-sized safari lodges, where loads include refrigeration, lighting and even some power for hot water supply.
POTENTIAL FOR ADVANCED STORAGE
For its systems Standard Microgrid sources lead acid batteries from a supplier in South Africa, and for now the company is sticking with this type of technology. ‘Storage depends on the application – from a maintenance perspective advanced alternatives such as lithium ion batteries are promising,’ says Somers.
‘A challenge for us is to ensure each component it uses in its microgrids can be deployed in what can only be described as low-tech places, so any hardware that is overly technical or hard to install and use is not favoured,’ explains Somers. On the other hand, as more manufacturers look to supply into microgrid markets in Africa they are looking to modify their batteries and energy storage systems to be simpler to install, operate and to require minimal maintenance.
One such company Standard Microgrid has been in contact with is German start-up Qinous, which is investigating off-grid and microgrid markets for its containerised energy storage system that uses lithium ion batteries from Samsung SDI. Qinous, set up in 2013, is building a microgrid demonstrator next to its office in Berlin. The system will include a 100 kW/100 kWh energy storage system, a 100 kW diesel generator and solar panels. Qinous is targeting several microgrid regions and markets such as the Philippines and Chile, looking to work with local project developers and engineering, procurement and construction companies. The company was put in touch with Standard Microgrid through a mutual contact.
For a product such as the SS20 Solar DC Microgrid Smartbox there is a plentiful supply of affordable lead acid batteries, but for bigger or more complex microgrid systems SSS – like Standard Microgrid – is also investigating developments in the advanced battery and energy storage field. These include discussions with some academic institutions that are working on battery technology, which would not only increase the life cycle but also offer a reduction in capital outlay. ‘We have looked at other storage principles, but not yet accepted them as functional in the difficult market, the storage we are talking about here, is battery technology,’ says Hodgson. SSS aims to have the first unit in the field by the beginning of 2015. ‘With this proven to be successful it will change the existing paradigm completely,’ he adds.
The lead acid battery industry is also working on its own solutions to improve deep cycling capabilities of batteries. Trojan Battery, headquartered in California, supplies high quality lead acid batteries in many developing countries and regions and has recently begun manufacturing lead acid batteries that are enhanced with carbon, for more challenging applications such as increase usage of its batteries in conjunction with solar panels in off-grid and microgrid-type applications. The advantage of lead acid is that it is a well-known and well understood technology around the world, in more applications where batteries are deployed.
‘As a region southern Africa has a great need for electricity and those companies that figure out the technologies that can be easily deployed here, could do extremely well,’ believes Somers.
KEEP IT SIMPLE
Large microgrid projects justify large upfront development costs, so they tend to be specific in their design for each project. But these are generally few and far between in number. The real sweet spot for microgrids in developing regions, such as southern Africa, is in the 50 kW to 100 kW, even up to 200 kW, range. ‘We focus on microgrids that can be highly replicable, up to 80% to get the best efficiencies and scale, and standardise them as much as we can so that they can be implemented as quickly as possible,’ explains Somers. ‘Loads can change overnight when someone plugs in a new cooker. We try to always have some degree of flexibility – depending on budget and the on-going needs of the end-user.’ For instance, alternating current (AC)-coupled systems are more scalable, but are also more expensive whereas more affordable DC-coupled systems tend to suffice for most cases.
Somers adds: ‘In some cases you could have a seven hour drive to a site and if you happen to forgot a critical component then that can end up costing a few hundred dollars. Not only must the implementation of the microgrid be efficient then the system must be straightforward and simple, when you are training and showing how the system is operated.’
While the actual construction of the microgrid can occur in under a month, it can take up to a year to prepare a project from initial concept, including recruitment and training of local workers to build the microgrid. If the project is non-profit based it can take time waiting for donor suppliers’ equipment to be ready for delivering to the project and coordinate these, as donations do not all come in at the same time. The larger, more standardised, projects can take six months to develop. Somers explains: ‘Everything requires lots of coordination, even getting stuff shipped is a huge challenge, such as offloading 3000 pounds of batteries from one truck onto another without a forklift truck and ensuring that the batteries are not tipped over. You need local agencies as well for crossing borders with imported goods. At certain border crossings, without all your ducks in a row and all the necessary paper work your driver could be waiting for a few weeks.’
Funding comes from various sources, but mainly NGOs at this stage. The microgrid market in Africa is still relatively new. Increasing numbers of projects all contribute to the sector becoming more ‘bankable’ for the commercial lenders. Traditional project financing in developing countries can come in many different forms and for large projects often includes participation by large multilateral institutions, country specific bilateral organisations, regional development banks, as well as retail/commercial banks. NGOs are playing a critical role right now in financing risk capital or providing grants to test this new technology so the industry can develop a sustainable economic model for the region.
Somers believes an important stage is being reached as the maintenance costs have probably become the highest portion of costs associated with microgrids while the costs of components themselves, solar panels especially, have now reduced so that in certain applications microgrids are affordable. ‘Where, for example, the cost of running a diesel generator is as much as $0.60 (EUR0.44)-$0.70/kWh, we can comfortably get in below that cost at $0.50/kWh. Even compared with grid electricity in some areas, especially where communities are further out from the electricity generation source, we are competitive. Obviously with each project we learn more about how to bring down our costs,’ he says.
THE ENERGY STORAGE SYSTEM SUPPLIER
Canada-headquartered Corvus Energy produces lithium ion battery storage systems, using cells supplied by Dow Kokum and supplies various applications, including transportation – land and water – as well as commercial stationary storage. In recent years the company began looking at opportunities for its technology in Africa’s commercial sector, where its system can earn a better return than running a diesel generator.
In early 2013 Corvus announced a joint venture partnership in Nigeria, with a local commercial enterprise and has since established a subsidiary, Corvus Energy Africa Limited (CEAL). The first customer for CEAL has been an operator of petrol stations, with about 500 branches in Nigeria, many of which are located in and around Lagos, a very large city with a population of over 20 million people.
To compensate for the poor grid network the customer has to run diesel generators. Using Corvus’ battery management system in one garage as a pilot the gas station chain is able to run the diesel generator set (gen-set) more efficiently for just a few hours a day, charging up the batteries and then switching off the gen-set for the remainder. The return on investment (ROI) is within three years and the systems are warrantied for 10 years. However, the gas station not only saves on diesel fuel consumption but is able to run its business for 24 hours rather than 18 hours in a day, becoming more productive in the process and bringing in more business. Anecdotally this gas station has quickly become acknowledged as always being open around the clock.
In April 2014 CEAL will begin to install its systems in 13 of the company’s largest gas stations, which should be completed sometime in mid-2014. The system design allows for solar integration too, which can further reduce diesel fuel consumption. Each gas station requires about 40 kWh of energy storage capacity. There are plans after this next rollout phase to continuing installing the systems at the rest of the gas stations.
Other projects in the pipeline include bidding for a contract to supply water treatment works which are run by the state government in Nigeria. CEAL has submitted proposals for larger systems this time, in the region of 1 MWh. The challenge for the operators of these water treatment plants is that they are given a fixed fuel budget for the onsite gen-sets the produce electricity to run the plants. But when the budget runs out the gen-sets are switched off so that plants no longer operate. Using Corvus Energy’s storage system would enable the diesel gen-set to be run optimally for a few hours a day to charge up the batteries, which provide electricity to operate the plants, allowing the diesel fuel and budget to go much further. ROI, again, could occur within three years.
LURE OF LAGOS
A more obvious target market is telecoms. But there are many markets and opportunities opening up in a country such as Nigeria, which has huge potential – with a population of over 165 million people, 25 million of which live in the city of Lagos and surrounding areas. The lack of good quality, round-the-clock electricity supply is one of the biggest barriers to economic growth. With electricity people can run lights, computers, refrigerators and other appliances on an energy source that is often taken for granted in the west. Eventually CEAL plans to establish manufacturing in Lagos. Currently the batteries and systems are assembled in Vancouver and shipped which requires long lead times and various import duties and taxes. The factory would assemble the systems based on components produced and verified in Vancouver. The factory will create local jobs too. The plan is to commence building the factory so it is operational by late 2014, or early 2015.
Lagos is also attracting other suppliers of advanced batteries. Encell Technology, based in the US, recently began shipping batteries based on its nickel iron technology for field trials in microgrids in Lagos, for providing power for banks, retail stores and fast-food restaurants. Encell is supplying the batteries to a microgrid developer headquartered in California’s Silicon Valley. The developer’s microgrid configurations are typically are 500 kW in size and use diesel generators, solar panels, batteries, three phase inverters and software.
Cities, their slums and peri-urban areas – the borderland between cities and rural areas – are attracting developers and installers of microgrids as they will eventually yield a substantial market for these systems. Lately SSS has been focusing efforts on introducing its SS20 system into peri-urban communities. ‘The microgrid energy concept has many advantages that have not been explored and with this in mind our goal is to focus on the off-grid areas first and then, using the advantages of this concept, move to grid areas,’ says Hodgson. Pilots in grid areas have produced promising results so far.
‘Needs of urban communities varies from those in rural areas, which tend to have a slower top-up principle. The urban model will top up to lights, TV and fridge very quickly and we see that internet and satellite TV will also be required by the urban market,’ he explains. The off-grid areas are normally poorer communities. Applying the DC concept creates a load reduction of up to 70%, and even in urban areas with grid connection the end-user/customer, will still see the benefit, according to Hodgson. The urban market also needs to be managed cautiously. ‘Due to density and unity in populations one must maintain clear line of implementation to avoid any negative reaction to the process,’ he cautions .
Sub-Saharan Africa represents a brave new world for energy storage businesses looking to expand into off-grid and microgrid markets, either working closely with local partner-customers or through joint ventures in order to deploy systems.