By Andrew M. Herscowitz, Coordinator for Power Africa
We have been overlooking an alternative approach to achieving greater energy access.
People constantly talk about how energy access is going to be solved much in the same way that the mobile phone industry āleapfroggedā landlines in rural areas with distributed energy solutions that wonāt connect to the grid.
But theyāre still talking mostly about micro-grids, which require wires from the power generation source to the home. It drives me nuts when people compare energy access solutions to mobile phones because we canāt move electrons wirelessly in the same way that mobile phones leapfrogged landlines. Or maybe we can ā with batteries.
Recent estimates show that to achieve universal access to electricity by 2030, 40% of all installed capacity will have to come from mini-grids. Today, the total mini-grid investment in countries with low levels of electricity access in Africa and Asia totals $5 billion.Ā¹ Mini-grids also offer national utilities a means to pave the way for future grid expansion. By the time the main grid arrives, significant demand for electricity would already exist and customers would have greater ability to pay through the generation of productive uses made possible by mini grids.Ā²
Mini-grid costs are declining, while their ability to deliver higher quality service is improving. The costs per kWh hour are expected to continue to decline significantly.Ā³ Nevertheless, todayās mini-grids generally are still very expensive despite declining equipment costs. Power Africa and other donors are helping mini-grid businesses test and tweak their models with grants, technical assistance, and financing support, and, in some cases, are subsidising the development of new technologies and business models that offer some hope for mini-grids to be commercially viable.
But I think there may be a wireless solution that also is worth pursuing.
The solution involves electric motorcycles AND batteries. An ecosystem for electricity access in the not too distant future could be based on batteries, powered by a variety of resources from wind to hydro to solar PV. Solar panels would play a role, but they wouldnāt be the centrepiece of the ecosystem. And inexpensive electric motorcycles could serve as the distribution network necessary to move those batteries around.
The electric vehicle (EV), including the electric motorcycle industry, is poised to explode. According to the Rocky Mountain Institute (RMI), ālow-cost Li-ion batteries will contribute to a rapid scale-up of demand for smaller (e.g., two- and three-wheeled) EVs in fast-growing markets like India by 2023, as upfront capital costs drop below those for internal combustion engine vehicles.āā“ In addition, RMI estimates that ā[e]lectric two- and three-wheelers are expected to become competitive on a capital cost basis by 2023, and will account for over 80% of such passenger vehicles sold by 2030ā in India.āµ
Already in China, the streets of Beijing are becoming quieter as more and more people are cruising around on quiet electric motorcycles. If itās happening there, it will likely soon be happening everywhere. In the past four years alone, the number of electric vehicles on the road, including motorcycles, has increased by a staggering 450%.ā¶ The African market likely will be one of the next great business opportunities for electric vehicles, including motorcycles and three-wheelers. Recently Volkswagen announced that it will be piloting e-Golfs in Rwanda.
The solar home system (SHS) companies in Africa have realised that their customers were not leasing or buying solar panels for their electrons, but rather customers were leasing televisions and other appliances that solar panels could power. Solar panels were just the input ā the energy source for powering the appliances.
For this reason, the SHS industry drove innovation for super-efficient appliances that could squeeze a maximum amount of electrons out of each small solar panel on a rural home to power as many appliances as possible. Power Africa and its partners even ran global competitionsā· for super-efficient refrigerators and water pumps that could run on a relatively small amount of solar power.
Governments now are looking at what the utility of the future might look like. Many recommendations involve the utility driving demand for electricity by leasing or selling appliances to customers ā particularly productive use appliances that consume a lot of power so that the utility has more electricity to sell.
Appliances also are becoming more and more efficient, which means that people need to purchase less electricity to power the same appliances. Take the US, for example, where power consumption is actually declining due to efficiency gains ā even with a rapidly growing economy. In Africa, though, many people still do not have appliances, so we would see an initial uptick in electricity consumption.
The answer to electricity access for many in Africa very well might not be about the utility getting it right. The answer may be right before our eyes in the form of an electric motorcycle.
Imagine an electric motorcycle powered by five batteries, instead of one, that each weigh less than a gallon of milk and that can be removed and inserted within seconds, i.e., swappable batteries. A good quality li-ion battery pack currently weighs about 10ā15 kg per kWh. The typical size of an e-moto battery, at least in India, is about 2.5kWh, which would weigh 25ā40 kg ā quite heavy as one unit. A company called Gogoro in Taiwan already is using modular, swappable batteries with great success, and thereās already competition for the concept.
Now imagine driving home on your electric motorcycle and taking two batteries out of your motorcycle and putting them in a battery bank at home so that you can watch television, charge your mobile phone, and have light for a few hours.
The idea of having battery banks as power back-up is not a new one. When I lived in the Dominican Republic, almost every home in my neighbourhood had a bank of 10 lead-acid car batteries, strung together as an inverter, which would kick in for a few hours during the frequent power outages, to provide minimum power for a few appliances. When there was grid power, the batteries would recharge.
What is new, though, is that technology in this space is improving dramatically and costs of battery storage are plummeting, meaning that the option for a portable battery storage system to be the solution to universal rural energy access might actually be viable.
High-end battery solutions like Teslaās Power Wall now exist, but there remains a lot of opportunity for innovation and entrepreneurship in the massive technology space between Teslaās 5 kilowatt, lithium-ion Power Wall designed for upper-middle-income homes and my bank of 10 lead-acid batteries in the Dominican Republic.
An affordable, modular battery bank could have space for as many batteries as you want. Solar panels could charge the batteries. A micro-grid could charge the batteries. Or the grid could charge the batteries if youāre lucky enough to have grid access, even if itās unreliable. And, if you donāt have grid access or solar panels, you can drive your motorcycle to the nearest āgas stationā, which now would be more of a ābattery stationā and swap out as many as you want. Or, a motorcycle taxi driver, which are very popular in Africa, could deliver batteries to your home.
Cost will be an obvious issue, so this solution would not work for everyone. The cost of a battery swap arguably might have to be competitive with the cost of gasoline or diesel. The battery systems might not be competitive with a solar home system or a mini-grid on a cost basis either, but itās difficult to be sure until the business model is tested. And people would need to have some batteries remain at home during the day to meet daytime electricity demand in the household.
However, what we previously have thought of as micro-grids with wires connected to homes and businesses could become ābattery farmsā. Charging could take place on-site or it could take place outside of town where there is abundant space for solar charging or near mini-hydro plants along local rivers, with the batteries being transported to the ābattery stationsā in the communities for distribution. Or, just like you can walk to your nearest store or market to buy charcoal, milk, or airtime for your phone (or even to charge your phone), perhaps you could swap out a battery or even have them delivered to your home.
With a battery bank at home, depending on how creative companies can be in making them modular with different sized batteries, you could do all kinds of things. You could plug stationary items like lighting, sewing machines, and televisions into it, though even televisions can run on batteries and many portable tablets that weigh less than 1 kg can offer 8 hours of video viewing time. Or you could remove batteries of different sizes and use them to power wireless appliances ā water pumps and milling equipment on your farm; cordless drills, saws, and screwdrivers in your workshop; and nearly any other cordless, battery-operated appliance that now seems to be available in Home Depot.
Governments could stop struggling to determine how to run wires to homes in rural areas at around $2,300 per connection (the benchmark cost of traditional rural electrification calculated by McKinseyāø) or to figure out how much to subsidize the connection cost. Instead, governments could use that money to guarantee each household a minimum amount of electricity by distributing swappable batteries, a universal charging bank (so that people could add batteries with their own resources when available), and perhaps a few solar panels to charge the batteries. Local shops, in partnership with local microfinance banks, could finance appliances.
Iām not running off to start my own business quite yet. Another major issue, for example, is how to responsibly deal with large numbers of batteries that reached the end of their lifespan; new recycling infrastructure for take-back and repurposing would have to be developed. USAID and UKās DFID are helping jumpstart efforts around this in the SHS sector through the Solar E-Waste Challenge, but more is needed.ā¹
Another challenge is that one of the most significant costs of a battery is the packaging. According to the Rocky Mountain Institute: āBattery packaging costs represent around 19ā34% of the total pack price. Continual manufacturing improvements are expected to reduce packaging costs by 10 ā15%.ā
Weāll leave it to others to develop the business plans and new technology to make this idea work.
For example, many companies in the SHS industry realised that they were running multiple businesses in one ā selling electricity, providing financing; designing off-grid appliances; developing software for tracking electricity use and payments; and providing servicing for the equipment. Consequently, some of the wiser SHS companies started to specialise in just one or two of the business areas and have partnered with others who could more efficiently run the others.
Similarly, for this electric motorcycle and battery ecosystem for electricity access to work, many different, efficient businesses that will be interdependent on one another need to be developed ā but the result could be an entirely new economy that will create jobs, improve lifestyles, and lift millions out of poverty quickly.
I donāt know if it will work. One industry expert ran some back-of-the-envelope numbers on the concept and suggested that this type of solution might only work for a small portion of the market. Nevertheless, the model seems to make sense to me and to other experts in the space with whom Iāve floated this idea, especially given that there already are e-motos with modular, swappable batteries being deployed. We canāt predict the future, but we can help shape it by looking at existing solutions in new ways.
Usually I get some of my best ideas while doing site visits in developing countries. Iām slightly embarrassed to admit that in this case it took moving back to the US after spending six years in Africa, and becoming a frequent customer at Home Depot to work on projects around my home, to realise that perhaps weāve been missing an opportunity to tackle the energy access problem in a different way. Every time I came home from the store, I had a new cordless tool with me. And I couldnāt help but think about how useful these cordless tools could be in Africa. The model Iām proposing for wider consideration is a mere extension of the cordless tool model, with a few modifications.
Another aspect of this new ecosystem that I find appealing is that businesses could use the same expansive battery distribution network for gas tanks for cooking. What that would mean is that Africans in rural areas could stop chopping down trees for charcoal or using biomass for cooking and could live a modern energy lifestyle: electricity from batteries to power appliances and transportation, and LPG for boiling water and cooking.
I hope we can shift the conversation, and give the private sector an opportunity to see if this idea really can take off. Thatās Power Africaās model ā getting the private sector to take the lead in solving energy poverty, with a little help from the public sector.
Do you have your own vision for the future? We encourage you to share your ideas by writing to Ā PowerAfrica@usaid.gov