The lack of publicly available hybrid energy models for businesses and communities in Africa, such as hybrid mini-grids, is a barrier that must be overcome in order to overcome issues in electrification planning, regulation, life-cycle operation, finance, and funding for businesses and communities.
Despite its abundant energy resources, Africa has the lowest electrification rate in the world. Only 290 million people in the Sub-Saharan (SSA) region, which has a population of 915 million people, have access to modern energy services. Despite tremendous progress in recent years in providing energy access services, population expansion remains to be a significant limiting factor. With approximately 80% of people residing in the SSA, a lack of modern energy services in businesses and communities is a significant concern in the region.
Distributed generating resources (renewable or conventional), energy storage (batteries, loads, and energy control), bus bars, and distribution networks are all part of hybrid systems. They can take advantage of both dispatchable and non-dispatchable power. Solar PV, small or micro-hydro, wind, and biomass are examples of renewable energy technologies that have been used in hybrid systems. In the majority of these circumstances, they are combined with traditional diesel generators to improve system reliability and reduce costs.
Mini-grid development in Rwanda began years ago with the installation of solar PV/diesel hybrids in 50 distant health centres, which were funded by international development partners. The Rwanda Utility Regulatory Agency created a dedicated mini-grid regulatory framework in 2015, with particular rules for generation capacities below 50 kW being free from licensing requirements and generation capacities between 50 kW and 100 kW being qualified for streamlined licensing. For capacities up to 100 kW, privately owned and operated mini-grids require grant support ranging from 40% to 70%, as well as capital expenditure subsidies. If the main grid reaches the hamlet served by the mini-grid, the mini-grid operator can either sell or transfer the assets to the utility company, or sell the electricity at a predetermined rate as a small power plant. The country’s installed capacity was 112 kW, of which 61 kW solar PV mini-grids and 11 kW of hydro are operated by private entrepreneurs, while the remaining hydro of 40 kW is operated by the community, to be connected to the national grid shortly.
Rural electrification in Mozambique began with the widespread use of diesel generators to bring energy to isolated areas, as it did in many other developing countries. In 1997, the government established the Energy Fund (FUNAE), which is in charge of off-grid alternatives such as mini-grids for isolated locations. FUNAE has installed 69 diesel mini-grids run by local communities by 2015, albeit the majority of them were not operating due to a lack of maintenance funds. In addition, FUNAE assisted in the expansion of a huge number of decentralized independent solar PV systems around the country. By 2017, Mozambique had installed 12 mini-grids with a total capacity of approximately 3 MW, including 6 solar PV mini-grids ranging from 0.01 MW to 0.55 MW, 5 micro-hydropower projects implemented by FUNAE and GIZ, and one 1.5 MW biomass cogeneration plant developed and owned by a sugar factory (Maragra). In addition, by 2019, ten solar PV mini-grids with a combined capacity of about 0.3 MW had been constructed, bringing the total installed capacity to 3.3 MW. However, there is still a question of who will handle off-grid initiatives in the future. FUNAE currently owns and operates existing off-grid mini-grids, while lower capacity systems under 10 kW are managed by a local management committee in the communities.
Tanzania has been a regional leader in the implementation of mini-grids. As an incentive to decrease upfront costs, the country approved a mini-grid regulatory framework as well as exemptions from value-added tax (VAT) and import duty. Furthermore, the Energy and Water Utilities Regulatory Authority (EWURA) established a unique framework to encourage firms to participate in the construction of both off-grid and grid-connected mini-grids. The number of mini-grids increased as a result of this structure, and by 2020, the country had 129 mini-grids, 93 of which were isolated and the remaining 26 connected to the main grid. Micro/mini-hydropower accounts for the bulk of existing mini-grids due to abundant hydro resources, with solar contributing only 0.2 MW (13 projects). Businesses install mini-grids in Tanzania, while the Rural Electrification Agency (REA) provides technical assistance. With the help of donors and NGOs, faith-based organizations have erected some hydro mini-grids in community hospitals and schools. Many hybrid systems ranging from 1 to 10 kW have been deployed across the country.
Nigeria, like many other African countries, has just begun to construct mini-grid initiatives. The Nigerian Electricity Regulatory Commission enacted regulations with complete recommendations to enable mini-grids for grid-connected and off-grid systems, as well as to regulate rates for grids with distribution capacity more than 100 kW, in 2017. Mini-grid developers may apply for a permit for isolated mini-grids with generation capacity ranging from 100 kW to 1 MW, while registration with the Nigerian Electricity Regulatory Commission is sufficient for capacities under 100 kW. Currently, the country has 30 operating mini-grids with 1 MW of installed capacity, providing power to 6000 consumers (mainly based on solar PV-Battery, solar PVDiesel, and just one based on biogas). Nigeria’s rural electrification agency provides capital cost subsidies, which have aided the growth of mini-grids by facilitating access to funding and cutting costs. Some mini-grids operate on a hybrid ownership paradigm. Local communities provide the land and ensure the site’s security, while the federal government provides the cash.
With almost 200 diesel-based systems, Mali is one of the most successful countries in Sub-Saharan Africa in terms of implementing diesel mini-grids. The government of Mali established a rural electrification fund for mini-grid development in 2003 to encourage private sector participation in the hybridization of diesel mini-grids. The fund covers capital expenditures and supports pilot projects and feasibility studies. The Malian Agency for the Development of Domestic Energy and Rural Electrification supports hybridization with solar PV and batteries to offset power from diesel generators by offering financial support and abolishing VAT on imported and acquired renewable energy equipment. From zero in 2000 to over 160 in 2021, the number of operating mini-grids has increased dramatically. During this time, the developers connected solar PV to 30 diesel generators. In 2013, the two largest hybrid solar PV/diesel generators, each with 384 kW of solar PV and 675 kVA of diesel engine, were installed in Koro and Bankass. In Ou’el’ess’ ebougou village, a 216 kWp hybrid solar PV/diesel system was established in 2011, and it was expanded to 334 kWp in 2015.
Diesel generators were the predominant source of electricity in Kenya, as they were in other poor countries. NGOs, faith-based organizations, and scientific institutions later introduced micro/mini hydropower, solar PV, and wind to the country. Kenya’s government has launched a trial initiative to combine diesel and renewable energy systems. As a result, the country has 21 mini-grids in operation in 2014, with a total capacity of 19.16 MW, with the majority (18.1 MW) coming from fossil fuels and the rest from hybrid diesel/solar or diesel/wind. The country’s REA is in charge of developing the mini-grids. The Kenya Power and Lighting Company manages and maintains the systems, while NGOs assist with community-based mini-grids and the private sector employs a range of business models. To secure the viability of the mini-grids, the government struck an agreement with the Kenya Power and Lighting Company in which the government retains all income earned by the mini-grid while the government covers the losses, resulting in greater system viability.
To lure private participation, Senegal’s government, like Kenya’s, has formed an REA, or Senegalese Agency for Rural Electricity. Senegal has been putting hybrid mini-grids into place on a massive scale. The country features a hybrid utility-private ownership model for mini-grids. The government owns the mini-grids, which are managed and maintained by the private sector, with tax collection handled by a community leader. By 2025, the country’s REA would have developed 400 mini-grids with the support of international and development finance organizations.
Governments must incorporate components of HRES implementation into their electrification plans, such as technology selection and what occurs when the main grid arrives in the hamlet. Despite the success of mini-grids in Indonesia, there were no explicit laws or procedures in place for what happens when the main grid arrives in a community fed by mini-grids, resulting in the abandonment of several micro-hydropower projects. The successful implementation of these initiatives requires collaboration among energy sector stakeholders, the private sector, and local communities. A clear description of roles and duties among diverse stakeholders can successfully demonstrate this. In India, for example, the VEC has successfully implemented models in the states of West Bengal and Chhattisgarh. In contrast, numerous projects under the country’s Village Energy Security Program, which began in 2004, were abandoned by 2012 owing to failures.
Moreover, half of the 65 projects that were commissioned were not completed. The failure of the initiatives was primarily due to a lack of clear roles and duties among the stakeholders, which resulted in less-than-ideal community engagement. As a result, involving local people from the start of the project is critical to raising knowledge of HRES and ensuring its long-term viability and social acceptance. A successful example of the importance of having the local community involved from the establishment until the implementation stage of the project is observed in the 202 kW hybrid solar PV/diesel mini-grid Implemented in Tsumkwe (Namibia) in 2012, which is still operational.
Another noteworthy example is a 48 kW solar PV/battery system installed in Tanzania. The project has three community members involved (two operators and one administrator) who work full-time on the project’s operation and maintenance (O&M). The Electricity Committee was also founded to ensure a relationship between the project and the community. These examples can be used to assure the continuing operation and maintenance of mini-grids in other projects in underdeveloped countries.
Another good case is the 202 kW hybrid solar PV/diesel power plant in Tsumkwe (Namibia). An assessment of needs and demand, as well as technological solutions, were carried out in this situation, resulting in the provision of a 24-hour power supply. Furthermore, consumers pay for electricity in advance using prepaid meters. These features contribute to the system’s dependability and cost-effectiveness.
Energy Audit
However, many of the countries mentioned above have not efficiently been using energy. This is not unconnected to the failure to incorporate energy audits in their hybrid energy modelling. To determine the energy efficiency of a commercial facility or community, an energy audit is performed. Simply explained, energy efficiency refers to the use of less energy to accomplish the same task. Energy audits include the phases of planning, scrutinizing, efficiency and implementing the sustenance of energy capable to detect energy use and expenses as stated earlier. It develops strategies to minimize waste, increase efficiency, and optimize energy supply. Conducting a routine energy audit guarantees that you’re minimizing your carbon footprint and remaining energy efficient by implementing new energy-saving improvements on a regular basis. Identifying energy-saving opportunities; understanding energy usage and ways to use energy better; identifying safety concerns with electrical systems, wiring, and ventilation, thus making the community or business safer; increasing the resale value of the business or home; and determining how to reduce carbon monoxide production in the home or business are all benefits of an energy audit.
The audit will give consumers a comprehensive assessment of their electricity use and energy efficiency. The audit report can provide crucial information about a company’s or community’s energy usage and Energy Star rating. They can use this information to detect and solve any faults with energy usage in order to save money on electricity. Before installing a renewable energy system, it’s always a good idea to conduct an energy audit. Industrial energy audits have surged in popularity over the last few decades, as the drive to reduce ever-increasing energy costs and move toward a more sustainable future has made them increasingly crucial. Their significance is amplified by the fact that energy expenditures are a significant expense for industrial enterprises (energy expenditures account for roughly 20% of the average manufacturer’s expenses). An energy audit is used to discover energy efficiency issues as well as energy-saving potential in a home or company. Essentially, you can discover what is using more electricity than it should with a complete energy audit report. This will assist you in determining where improvements may be made that will not only save you money on electricity but also help you better combat climate change.
An energy audit is recommended to identify a facility’s energy use as well as the potential savings connected with that consumption. An energy audit, in general, delivers significant benefits in a variety of areas:
- It aids in the reduction of your facility’s energy costs.
- The competitiveness of your organization will improve when production expenses are reduced.
- It aids in the reduction of reliance on foreign energy sources.
- It aids in the reduction of pollutants and environmental damage.
- It has the potential to improve the security of your energy supply.
- It has the potential to lessen the use of natural resources.
- It has the potential to alleviate environmental damage caused by resource exploitation.
- It aids in the reduction of greenhouse gas emissions.
Policies and laws aimed specifically at mini-grids/hybrid power projects, dedicated community electrification agencies, access to financing mechanisms, and community organization, as shown in Fig. 1, have all influenced the successful deployment of hybrid energy models for businesses and communities in Africa with the inclusion of energy audit into the mini-grid/hybrid power model. There are four stages to these components as illustrated below:
The model shows a close interaction between government and other actors in the system such as the private sector, NGOs, financial providers, local communities, including project developers and implementers. The government is tasked with the responsibility of developing policies that will ensure the success of the project while other actors provide technical advice and funds for the project implementation. However, the importance of energy audit should not be overlooked in the project. Energy audits include the phases of planning, scrutinizing, efficiency and implementing the sustenance of energy capable to detect energy use and expenses. It develops strategies to minimize waste, increase efficiency, and optimize energy supply. Energy audit acknowledged by project implementers (Renewable Energy Agent, Innovators, Developers, Procurement/Equipment suppliers) indicates a key precondition for the successful implementation of the hybrid mini-grids aided by the provision of financial and technical support. The yellow circle indicates the result of the effort of the government, communities and other actors geared towards realizing hybrid energy models for businesses and communities in Africa while the blue box indicates the project at work.
OPPORTUNITIES: Developing nations that have included energy audits in their hybrid energy models for businesses and communities in Africa grid electrification plans have seen much better results than countries that have not included energy audits or feasible solutions in their hybrid mini-grid electrification plans. These opportunities include but are not limited to Off-grid and Micro-grid Systems, Economic Opportunities, Energy Security and Climate Change Mitigation.
Off-grid and Micro-grid Systems. One of the most intriguing aspects of hybrid energy models for businesses and communities in Africa is their ability to be used in rural and distant areas. Electrical energy supply is not able to reach a significant percentage of the world’s population due to environmental factors, accessibility, and coverage limitations of the existing on-grid network, leaving them isolated from the rest of the technologically advanced world and lacking essential facilities for growth and advancements. Hybrid energy models for businesses and communities in Africa can be used as a stand-alone power source in these locations, providing them with a platform and access to utilities and facilities that will help them grow and thrive. HRES in micro and mini-grids also has applications in the industrial and research and development sectors. Because such industries necessitate their own power supply network, which incorporates many energy sources. Hybrid energy models for businesses and communities in Africa could play a very important role due to the large amounts of power required to power the facilities and carry out processes.
Economic Opportunities. Nigeria, for example, spends an estimated $14 billion on petroleum-based energy generation. Exploring alternative energy and establishing systems like HRES for off-grid and mini-grid solutions to supplement the grid might save Nigerian households and companies $4.4 billion each year. Due to the huge demand for hybrid energy models for businesses and communities in Africa, this contributes significantly to the nation’s GDP and creates an exceptional market potential for enterprises to invest in it. This business opportunity in Nigerian off-grid power is worth $9.2 billion per year, according to Virgin Group founder Richard Branson. This demonstrates the enormous economic value to both the country and investors in hybrid energy models for businesses and communities in Africa.
Energy Security. Energy has evolved into one of the most critical pillars of any country’s economy, functionality, and stability. As a result, any threat to the nation’s energy supply is a threat to its economy, functionality, and stability. Energy security is essentially the redundancy and assurance of energy supply in the event of a failure or emergency. Hybrid energy models for businesses and communities in Africa can help to provide energy security by diversifying energy supply options and reducing reliance on traditional energy sources. This also minimizes any developing country’s reliance on developed countries for energy resources, which may vary owing to geopolitical factors. hybrid energy models for businesses and communities in Africa can be designed to supply several isolated grids across the nation to back up and support the main grid,
Mitigating Climate Change. HRES has a lot of potential in terms of mitigating climate change, as it is now one of the most powerful driving forces in the demand for RE technologies due to its pollution-free nature. Severe actions have been done to tackle climate change since the 2016 Paris Agreement. As a result, countries all around the world are becoming more interested in alternative energy. This has opened a big opportunity for hybrid energy models for businesses and communities in Africa to be employed as a more efficient alternative source of RE.
RISK
Technical and market risks are inherent in all large energy projects, but investing in African countries may bring extra issues, particularly political risks. Political stability, economic, cultural, and ecological hazards are all potential threats. There is a lack of a stable legal framework, as well as poor business and public governance, which includes corruption and bureaucratic procedures. Other efforts have been made to identify other types of political risks as important investment barriers, ranging from regulatory hurdles and uncertainty about future regulations to geopolitical concerns. Terrorist acts are harming investor efforts. There are also regulatory risks resulting directly from government acts, as well as security threats resulting from non-governmental organisations’ actions. In most Sub-Saharan African countries, bureaucracies have a significant impact on the investment climate. Due to inefficiency in the installation and implementation process, there is also a potential for energy waste. This is where the audit’s energy comes into play. The length of time it takes to do an energy audit is determined by the size of your home and the number of appliances and electronics. It will also be determined by the number of windows and doors in your home as well as the type of audit you want. A home energy audit typically takes three to four hours to perform. Unlike household energy audits, most businesses have registered professionals do their energy audits. As a result, a firm energy audit is similar to a household energy audit in terms of the process and areas examined. Energy audits are worthwhile undertakings. They evaluate your home or building’s energy efficiency so you know where to make improvements. Implementing your auditor’s recommendations can save you 5–30% on your energy bills.
Energy Project Africa (EPA)
Maximizing the opportunities attached to the hybrid energy models for businesses and communities in Africa and limiting the risks associated with its implementation, the Energy Project Africa (EPA) is well endowed with technological know-how and the process involved in persuading the government to create an enabling environment for the implementation of hybrid energy projects for businesses and communities. EPA engages in energy audit operation in mini and microgrids in African communities and its business environment. EPA is improving the efficiency of energy services delivered through a variety of technologies and business models, also including energy feasibility solutions. The EPA energy auditing system is 85 per cent efficient, with 85 per cent less manpower than standard solar power systems. Once operational, it runs in parallel with the existing mini-grids solar system. Businesses and African communities where mini-grids are provided benefit from energy auditing. Doing so saves 70 to 80 per cent on power wastage, locks in a fixed solar power price. At the core of the system is an energy-efficient monitor that aids the auditing of energy to avoid energy wastage and is performed to the full maximum capacity.
E.P.A. (Energy Projects Africa) through her Energy audits and feasibility solution, helps stakeholders make data-driven decisions in the clean energy space via real-time quantitative research and feasibility studies. If you need a partner with hands-on local expertise in the renewable energy space or any of our bespoke solutions/services, kindly mail hello@energy-projects.africa.
