Minigrids bring power to Africa’s remote areas using renewables

POWER grids that work at a fraction of the scale of a traditional utility have gained support from banks and developers as a way to bring power to the 620 million people across Africa that lack access to electricity.

From Kenya to Equatorial Guinea and Tanzania, companies including Italy’s biggest utility Enel and General Electric of the US are building minigrids that distribute power to villages instead of whole nations.

A plunge in the cost of renewables has opened a new source of power for minigrids. While these smaller electricity networks deliver only a trickle of electricity, they are showing a way to bring energy to the poorest areas without lifting pollution. Institutions including the African Development Bank (AfBD) are supporting them as a way to balance goals on economic growth and global warming, promising the industry will expand beyond a few pilot projects.

“If you go back 130 years in Europe, electrification started with a minigrid,” said Enel chief executive Francesco Starace.

“There was a rich man, his house, his factory and a small power plant. Eventually his workers got hooked up, and then transmission lines were laid. Slowly we got the system we have today. We don’t see any reason why Africa shouldn’t do the same,” Starace added.

Africa’s needs for power are immense. The continent has more than 620 million people who lack access to electricity, and consumption per capita is less than what’s needed to keep a 50 watt lightbulb going continuously, according to data from the International Energy Agency.

Minigrids are increasingly viable because rapidly falling costs for wind and solar mean developers have many more options than diesel generators for powering the systems. Minigrids are also cheaper and quicker to build than a traditional utility with a coal plant at the middle and high-voltage power lines radiating out to customers.

Enel is developing a minigrid in western Kenya for 100 villages. It will run on solar panels and wind turbines, with battery storage and diesel generators as back-up for nights and when there’s no breeze. Construction begins in three months.

General Electric along with Princeton Power Systems and MAECI Solar are working on a sun-powered mini- grid on the island of Annobon in Equatorial Guinea. The unit will have a capacity of 5 megawatts and will be operational by the end of next year. Its $56 million (R791m) cost was financed by the government of the oil-rich nation.

A Nairobi-based company called Powerhive is building a solar system in Kenya. It will have a capacity of 1MW to 2MW and is financed by US and EU investors.

In Tanzania, a partnership dubbed Jumeme Rural Power Supply is building a 5MW minigrid for 16 villages in the nation’s north-western region. Austrian renewables developer TerraProjects, Germany’s Inensus and St Augustine University of Tanzania are involved in the project. The European Commission and the Sustainable Energy Fund for Africa and private investors are underwriting the cost of 17m (R256m).

“A single-house solar panel system is great, but it just powers a lightbulb or two,” said Joao Duarte Cunha, the co-ordinator of the Sustainable Energy Fund for Africa. “A minigrid can power businesses and stimulate the local economy.”

The AfDB is supporting that project, part of an ambition to triple annual financing for projects aimed at combating global warming to $5 billion by 2020. It’s backing more renewables as costs plunge.

“The costs were the biggest challenge to building renewables in Africa, but this is no longer the case,” AfDB department of energy, environment and climate change director Alex Rugamba said. “There is a huge untapped potential in our continent. We have to mobilise private financing, create enabling environments on the policy front.”

The bank expects the project in Tanzania to create 500 more businesses in addition to the 2 600 in the area that will be supplied by the minigrid. The project would eventually expand to connect 500 000 people, said Leo Schiefermueller, the managing director of TerraProjects.

“We believe up to 120 million, about 20 percent of the people in non-electrified regions in Africa, could be connected to minigrids,” Schiefermueller said. – Bloomberg