The challenges of bringing microgrids to the more than 800 million people who lack electricity include costs, technology and financing, according to panelists at a Microgrid 2021 session on “New Strategies to Hasten Microgrid Adoption in Remote Regions.”
But one of the underlying keys to success is understanding the needs of the communities the microgrids will serve, a panel of experts said at the conference.
People are at the center of successful projects
A project’s long-term success centers on the interaction between a community and the technology, according to Gwen Holdmann, director of the Alaska Center for Energy at the University of Alaska.
“That’s really about aligning incentive structures with empowering local people to have a part of the project,” Holdmann said during the panel discussion. “One of our biggest lessons learned is that these projects, to some extent, need to be built organically from the ground up, and there really needs to be incentive structures built in.”
In helping communities across Alaska set up microgrids, Holdmann’s group has found it’s crucial that people believe they’re benefiting from the microgrids and are working with the developers and the utility to keep the systems operating.
Microgrid planners need to ask how their project fits into the local environment, according to Holdmann.
“It’s not just about the physical location, but it’s really about that underlying socioeconomic political structure, that utility structure that’s existing in that area,” Holdmann said.
Searching for productive uses of electricity
Sometimes it’s easy for microgrid developers to become overly focused on the technology that goes into a microgrid, leaving other key issues inadequately addressed, according to Oscar Aitchison, power systems engineer for Okra Solar, an Australian company that makes software to manage microgrids.
Okra Solar, which is helping set up microgrids in Cambodia, has found it’s important to find productive uses of electricity to increase income for people using a microgrid. Increasing a microgrid’s use can also make a project easier to finance.
However, there’s no silver bullet for increasing electric use that works in every scenario. “You really have to understand what’s going on, what’s going to work for that community,” Aitchison said.
Showing the commercial viability of microgrids
RMI, formerly Rocky Mountain Institute, is working to demonstrate the commercial viability of microgrids in Africa.
“It’s not just to supply reliable electricity to meet their basic needs, but also to support local economic growth that will lead to improving people’s livelihood,” said Zihe Meng, a senior associate with RMI’s Africa Energy program. “It’s the ultimate goal here.”
Meng described the potential that microgrids and minigrids can offer the owners of mills across Africa that process grains.
RMI has found that switching from a mill that uses a fossil-fueled generator to an electric mill can cut energy costs in half, doubling the miller’s profits, according to Meng.
“Once [the mill owners] were able to improve their profitability from the business, their willingness and ability to pay for the electricity generated by the minigrid will be improved too,” Meng said.
From a minigrid developer’s standpoint, additional loads from mills and other productive uses represent additional revenue that helps improve the financial viability of the system by spreading out some of the high fixed costs, Meng said.
Making the financing work in remote regions
Another challenge to the widespread adoption of microgrids in remote regions is that often the people who benefit from them are the least able to pay, according to Jesse Gerstin, director of sustainable business development at SimpliPhi Power, an energy storage company.
Working with Renewable Energy Innovators Cameroon, SimpliPhi Power has helped set up seven microgrids in the central African country and aims to install 760 within several years.
“It really does present this economic and financing challenge in terms of how to deliver a robust microgrid that ideally is operating at some kind of a profit, at least in terms of the long run, but doing it with customers who typically have some of the lowest abilities to pay,” Gerstin said.
It can be challenging to package small scale projects in a way that traditional forms of financing will be comfortable providing the capital at a scale that’s needed to really replicate microgrid projects many times over, according to Gerstin.
“We’re not yet hitting the sort of scale that I think we need,” he said.
Schneider Electric is trying to improve the outlook for microgrids in remote regions by making them scalable, according to Samantha Childress, solutions architect manager for the company.
In part, the trick is figuring out how to make microgrids using small enough building blocks that can be expanded as communities grow, said Childress, who helps United Solar Initiative, a nonprofit group supporting microgrid projects in Kenya.
“Preparing for that expandability on the front end of the design phase makes it much more appealing over the term to get access to capital that the market so desperately needs,” Childress said.
Tailoring microgrids to customer needs while also driving down costs by making them as large as possible is an ongoing struggle for microgrid developers, according to Will Heegaard, the session’s moderator and operations director for the Footprint Project, a nonprofit group that responds to disasters using clean energy resources.
“What’s the balance between scale to decrease the transaction cost of a project versus actually tailoring that project to the humans that are going to be using it and how to find that balance?” Heegaard asked.
Microgrid 2021 enters final day June 3
Join us June 3 for an announcement about the formation of a new microgrid advocacy organization during the final day of Microgrid 2021, a virtual conference that has attracted more than 4,000 registrants. The final day also will feature a look at “Microgrids that Foretell the Future,” and a panel discussion with thought leaders, “How Microgrids Will Change the Way We Make, Deliver and Use Energy.” Register here.