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© NRECA
Robin Kuranel, Consultant Mining & Agriculture, UNIDO ITPO
The private sector as a catalyser for rural electrification?
In their recently launched publications, the UNIDO Investment Technology Promotion Office Germany and ARE highlight the introduction of Decentralised Renewable Energies (DRE) in the agricultural and mining sector – coupled with community electrification. As access to energy plays a huge role for both sectors, there is vast potential for the implementation of DREs. Further, agricultural as well as mining activities are mostly located in remote areas, which is why there is a good opportunity to create synergies between private DRE deployment and rural electrification of communities. Highlighting several case studies from all over the world, the publications provide best practice examples from which the industries can learn.
How to ensure productive use of energy?
The implementation of DRE solutions in the agricultural sector has a great impact on the achievement of global food security as it improves productivity of agricultural activities. This also results in higher income of rural farmers. The case studies in the publication present several appliances for DREs such as irrigation, greenhouse farming, fish farming, cooling, water desalination, milling or drying. There are also further benefits beyond the agricultural sector: for example, access to drinking water, lightning, cell phone charging and many more.
The mining sector often builds the cornerstone of a society in rural areas, as it provides jobs and income for the communities. By sharing energy with nearby villages, mining companies can make a significant contribution to rural electrification while benefiting from investor attraction and an improved relationship the community around. The featured case studies illustrate the way for mining companies to do so.
About ITPO Germany
As part of a global network, ITPO Germany promotes sustainable technologies and investments towards developing countries. By connecting and consulting private businesses from developed and developing countries, ITPO Germany promotes sustainable solutions in more than nine priority sectors.
Want to get in touch with us? Contact us at itpo.germany@unido.org or join us at one of our upcoming activities this year to get a taste of what we are doing:
The story doesn’t end when the lights come on for the first time in rural communities. Connecting people to electric service is a powerful foundation for strengthening communities. It’s critical to also provide sufficient knowledge to help them generate more income, improve healthcare services, and access better education. With electricity, farmers can mechanise their mills, coffee growers can process their own harvest, and dairy farmers can chill their milk. Teaching these entrepreneurs the basic fundamentals of business management allows them to further increase their productive use of electricity, and benefit more people within their communities.
In December 2021, NRECA International trained 10 entrepreneurs to promote productive use of electricity in the KRECS (Kyegegwa Electricity Rural Cooperative Society, an electric co-op) service territory. This has created opportunities for business owners and farmers to shift their operations and use electrical machinery and appliances to increase productivity, reduce fuel consumption, and generate more income. The next step was to equip these rural business owners with the fundamentals of business management. This includes how to operate a business, track income, when to invest, how to apply for loans, and more – all key components of running a successful business. This is the foundation for growing a community’s economy and increasing the use of electricity, which will help power utilities like KRECS to also grow and improve their services.
Success Today
During the training workshop, 10 entrepreneurs were given hands-on instruction classroom style, to learn the basics of business management. The first four days were dedicated to productive use of electricity investment fundamentals and decision-making and two additional days were spent on-location at the participants’ place of business.
At the conclusion, participants successfully identified productive use opportunities and machinery or appliance solutions that can result in significant income generation in the community. This included understanding the costs involved in purchasing new equipment, and how to make smart investment decisions. Also critical to this step is these rural business owners – who are often short on capital – gained knowledge on how to evaluate PUE investments and apply for loans.
Tomorrow
KRECS is currently expanding electric service to the community of Katiirwe. It has about 4,000 people and the main source of income for the community is agriculture, specifically herding livestock. NRECA International recently finished constructing a new solar-powered mini-grid in the town. The first power connection will be made to a government-owned milk chiller, that is currently powered by a diesel generator. Muhangi Rubeen is a local milk supplier with a government permit to use this chiller as a milk collection point from the Katiirwe community. He buys milk from 40 dairy farmers who bring him a total of 3,000 litres of milk each morning. In the afternoon, he distributes the milk to buyers from processors and dairies who drive 200 km from Kampala. It currently costs about USD 1,000 a month to operate the chiller. When the solar-powered electricity is connected to this milk chiller, that monthly cost will go down to less than USD 800, which will benefit the community as revenue for KRECS rather than diesel fuel expenditures.
Plans are already churning – with an extra USD 200 per month in his bank account, Muhangi Rubeen has his sights on expanding his business to produce yogurt. His story is just beginning.
In many rural areas of Africa, Asia and South America, remote communities have amazing wealth. They own or control farmland, livestock, mineral resources, or precious stones. For most of these communities, however, their wealth does not translate into prosperity. To realise their true potential, these communities require access to reliable electricity and professional management expertise. Inclusive approaches developed by INENSUS can drive rural industrialisation and unleash the dormant potential of rural communities.
In addition to reliable power supply, job creation and access to sales markets are cornerstones for accelerating the socio-economic growth of these communities, who want to retain control over their natural resources. For the local processing industry, access to these resources and cost reductions realised through a decentralisation of their processing structures are important factors. Matching these two parties, rural communities and processing industry, can create a classic win-win situation.
For this purpose, INENSUS has developed the KeyMaker Model as a tool that calculates the economic potential of such cooperation and analyses which business models can be implemented in which villages. This enables infrastructure investors to cooperate with processing companies within the framework of an "off-grid C&I+" approach, by investing in off-grid solar battery systems and leaving their operation to the processing companies.
Software solutions such as INENSUS’ MicroPowerManager (an easy-to-install open-source software that can be used by any company that have professional financial management systems in place) greatly simplify the operation of mini-grids.
INENSUS has also recently developed a concept to overcome demand risk by using artificial intelligence and stochastic optimisation so that any mini-grid can generate reliable cash flows at low investment costs. The concept is based on using decentralised crypto miners that process cryptocurrency transactions with surplus electricity typically generated in mini-grids. This removes the last major obstacle to the use of solar in an off-grid C&I+ approach, namely the question of what to do with excess electricity.
Summarising the above, the services provided by INENSUS cover all process steps towards rural industrialisation:
Interested infrastructure investors or processing companies are welcome to contact INENSUS.
For more information, please visit www.inensus.com.
The lack of electricity in African remote rural areas is an obstacle to the economic development of the localities. The local community can only work during the day and are limited in the industrialisation of their means of production. Therefore, the economic activity is restricted to agriculture and small businesses. This also implies that the ability to pay for the local community is weak, which is a strong risk to manage while investing in those areas. This is why it is essential to develop and support the local economic development when selling electricity.
When developing a mini-grid, the real issue is to determine the amount of electrical demand needed. Electrical consumption data is scarce as the rural communities do not have access to energy yet. Therefore, it is very difficult for private investors to ensure a safe return on investment. Contributing to the industrialisation and productive use of the energy sold will help ensure that the developer is paid without putting more financial pressure on the households. The “pay-as-you-go” system is the first step to avoid putting pressure on the potential customer who only pays for what they consume. In addition, the economic development bought by energy access helps ensure a minimum income to pay for that service and increase electricity sales.
When developing a mini-grid, it is important to focus on the social and economic development of the population to create a virtuous circle in each locality. Firstly, working with local partners and creating jobs during the whole process of the mini-grid development and operation is essential for both the external private investors and the rural population. Secondly, it would be financially attractive for investors to organise trainings with local players, particularly women to help them develop their activity and start new businesses. These models contribute to the creation of a virtuous circle which permits the reduction of the financial risk for private investors but also contributes to the social and economic development of the rural population in Africa.
To conclude, these are the reasons why using clean and renewable energy for productive use and industrialisation within the rural parts of Africa will help create a virtuous economic circle. Firstly, it will weaken the financial risk for private entrepreneurs by ensuring a minimum income for the local population. Secondly, it will help the local population to develop and gain new perspectives. This is why it is important that private investors invest not only in the means of production but also in the economic development of the local community. GDS International is currently implementing this business model in Benin within 12 mini-grids.
Over the past few years, water has increasingly become part of the energy and mini-grid discussion, specifically regarding the incorporation of solar energy. It is no mystery that water extraction, treatment, supply and reuse require energy; however, with solar energy having become more economical, it stands to reason that water access and sustainability can be improved by incorporating solar, especially in highly irradiated regions.
We as Impact Water Solutions (IWS) have thus been working within this nexus and acting as project developer and independent water producer since 2019, developing end-to-end solutions for a variety of clients, in conjunction with solar developers and fully financed when applicable.
Recent completed projects included a solar powered desalination facility on the coast of South Africa, a hybrid solar-wind-battery powered desalination plant in Bethanie, Namibia and a solar-powered borehole scheme in Philipstown, South Africa, with further potential developments in the pipeline across East and Southern Africa, contributing to the socio-economic development of remote regions and communities. In addition, the incorporation of clean energy to extract, treat and supply water leads to sustainability and affordability, the two main drivers of the future of water. This drives inclusive growth and leads to many other socio-economic opportunities.
IWS’s latest development, a solar powered water mini-grid serving rural and remote communities in Djibouti, is also a prime example of this and replaces the inefficient and expensive water-trucking that is currently the norm. Such development may then lead to agribusiness development, creating additional revenues and improving livelihood in the long term.
Along with the above water-energy nexus, incorporating wastewater treatment and reuse in the water cycle (where applicable) and utilising as much solar as possible for the entire system will bring additional benefit when taken into account from the development and design phase. This will allow for a balance between electricity and water storage, making the best of both worlds.
Overall, the need for thinking differently within the water space has become crucial and with the recent launch of the Off-Grid Water Alliance (OGWA), this has become even more apparent. Through energy partnerships and alliances such as these, IWS seeks to play a defining role from our African base, providing on-the-ground development expertise and technological know-how.
For more information regarding any of the above or to explore partnering with us, do not hesitate to contact IWS at info@water-solutions.co.za.
With 19.1 million people without electricity and a rural electrification rate around 13.7% at the end of 2020, Madagascar aims to bring rural electrification to the next level by 2030 and has set an ambitious goal to electrify 25% of rural areas by 2023. Public-private partnerships will play a critical role in achieving this mission, especially when it comes to last-mile rural electrification projects. This is why the Agence de Développement de l’Electrification Rurale (ADER) and the Office de Régulation de l’Electricité (ORE), supported by GIZ, have created a more favourable legal and regulatory framework for DRE, establishing masterplans for each of the 23 regions in Madagascar, by involving the private sector directly in the delivery of sustainable electricity through calls for proposals and new financing mechanisms adapted to market needs.
Clean energy mini-grids offer particular promise to accelerate rural electrification, as the country has a big hydro and solar potential. In 2022, new calls for proposals, focusing on hydro- and solar energy, will be published to improve renewable electrification the following regions: Analanjirofo, Atsinanana, Atsimo Atsinanana, Vatovavy, Fitovinany, Itasy, Analamanga, Betsiboka, Amoron’I Mania, Vakinankaratra, and Ihorimbe. Also, a new call for proposal has just been launched by PERER III to recruit experts in GIS, engineering, as well as financial and legal aspects in mini grids to support the programme in its technical support to the Malagasy Government. More details below.
The Director General of the Ministry of Energy and Hydrocarbons (MEH), Mr. Sambatra Ramiandrasoa, confirmed the ambition of the Malagasy Government in the recently organised Forum for Rural Electrification in Madagascar (FERM) in October 2021 by declaring “Together, we will work hard to provide electricity to every rural, remote and landlocked area of the country. Several projects should be implemented to achieve such ambitions.”
ARE organised the FERM with the support of GIZ Madagascar, and the United Nations System in Madagascar (UNDP, UNIDO, UNCDF). It was also organised in collaboration with the Ministry of Energy and Hydrocarbons in Madagascar (MEH), the Rural Electrification Development Agency (ADER), the Office of Electricity Regulation (ORE) and the Economic Development Board of Madagascar (EDBM).
Key lessons learnt from the event discussions from an industry perspective included: the need to further showcase and improve the attractiveness of the Malagasy market to international investors, to improve the application of the regulatory framework in practice, as well as to provide additional support for existing and new domestic renewable enterprises to champion renewable electrification efforts in the country.
As a follow-up to the FERM and to turbocharge industry efforts in the Malagasy DRE market, ARE, supported by GIZ Madagascar, will organise a virtual private sector roundtable discussion in March 2022.
For more information and data on the renewable energy sector in Madagascar visit www.energie.mg.
For more information about GIZ Madagascar’s work on rural electrification visit www.giz.de/en/worldwide/23973.html
For more information about the call for proposal - 81281294-Appui au développement de l'Electrification Rurale à Madagascar (Deadline : 15 March at 12h00) :
To join ARE, to access recordings of the forum or if you are interested in receiving the presentations from FERM, contact Inès van Oldeneel, Market & Business Development Officer, ARE: i.vanoldeneel@ruralelec.org.
Renewable energy is a key source to energise sectors like agriculture and farming, which enable socioeconomic development while ensuring food security in sub-Saharan Africa. As it is safe, clean and relatively cheaper, it presents a versatile solution to the energy demands of these sectors that are currently either unmet or covered by fossil fuels. Companies and project developers who want to engage in the productive use segment and provide the much-needed solutions, however, often face multiple challenges.
With the aim of supporting productive use developers to overcome these challenges, the European programme GET.invest - a long-standing partner of ARE - supported by the European Union, Germany, Sweden, the Netherland and Austria, offers a range of services. Through the GET.invest Finance Catalyst, the programme helps projects and businesses of all sizes and maturity stages and with various business models become bankable and links them to finance opportunities. Furthermore, assistance is given in the areas of investment strategy, business case structuring, financial modelling, and more.
Another service line is the GET.invest Finance Readiness Support that specifically targets early-stage, locally owned and managed clean energy companies and provides them with technical assistance around business development and capacity building, preparing them to access finance and grow. What such support for productive use solutions can look like, can be seen with a project in Sudan that aims to provide the power necessary to irrigate one of the largest centre-pivot irrigated alfalfa farms in the country. Here, the GET.invest Finance Catalyst advisors worked with the developers on their business case proposal and financial structuring, so as to meet international project finance principles, and thus helped to establish contact and initiate interest from several leading international development financiers.
In another case, GET.invest assisted a company providing affordable solar-powered lights for fishing and irrigation systems for smallholder farming in Uganda and Tanzania. Here, the advisors supported their business plan, project documentation, finance strategy and financial structuring, resulting in over €2m funding.
In addition to these advisory services, GET.invest also offers a comprehensive funding database as well as renewable energy market information.
Are you working towards improving access to clean energy for the productive use sector in Africa, the Caribbean or the Pacific, and need support in any of the areas mentioned above?
Learn more about the GET.invest services and how to access them here.
The French Agency for Ecological Transition (ADEME) and ARE have entered into a partnership to promote and provide market intelligence on productive use of energy, as well as advance renewable and reliable electricity for essential services in Benin, Cameroon and Madagascar.
Targeting these countries, the partners will carry out the following activities:
Currently, the rate of access to electricity in rural areas is 6.6% in Benin, 24% in Cameroon and about 5% in Madagascar. However, all three countries have significant local renewable energy sources. Benin has a high rate of sunshine all year round and can favour the production of electricity via solar energy. Cameroon has a huge potential for hydroelectricity thanks to its five watersheds, to which a significant potential in biomass and solar can be added as well. Madagascar also has a strong potential for solar, biomass and hydropower.
The three activities that ARE aims to carry out with the support of ADEME are in line with the approach of promoting reliable, sustainable, modern and affordable renewable energies while taking into account the specificities of each country.
An MoU has been signed between the Congolese Association for Renewable and Decentralised Energy (ACERD) and ARE. The MoU sets out the shared goals of the two organisations to address the existing obstacles which hinder the optimal use of the various renewable energies for electrification and the potential for energy efficiency in the Democratic Republic of the Congo (DRC). Both organisations agreed to promote social and economic development by increasing the share of renewable energies in the energy mix in Central Africa and particularly the DRC.
The associations will work together on a number of activities, including joint advocacy for renewable energy policies in DRC to create a conducive market environment for DRE actors, accompanying and contributing to the government’s efforts to achieve renewable energy targets as well as targeted business development and market intelligence support for DRE companies.
In this regard, the associations aim to develop the capacity of renewable energy stakeholders in the DRC to create local jobs and enhance the capacity of the sector to attract adequate financing for renewable energy projects and businesses. This will, for example, be achieved by spearheading “DRE Investment Academies” or similar trainings for Congolese and international DRE developers and other stakeholders, with the aim of raising additional fundraising and technical support.
Finally, the MoU states that the partners will offer support through business development services for renewable energy actors working in DRC, to address electrification, energy security and climate change challenges, as well as conduct applied research to foster the market for renewable energy technologies.
ARE and Power Africa have entered a new partnership to collaborate on the objectives of Power Africa to add 30,000 MW of installed generation capacity and 60 million new home and business connections in Sub-Saharan Africa, as well as ARE’s recently launched Energy Compact pledging to enable the private sector to deliver sustainable electricity services to at least 500 million additional people, catalyse the creation of at least 5 million green jobs, and avoid at least 1 billion tonnes of CO2e emissions by 2030.
In this regard, ARE and Power Africa will collaborate to facilitate networking opportunities, capacity building, market intelligence, development of knowledge products and guidelines and/or technical assistance to increase the adoption of DRE in Sub-Saharan Africa. This in turn will enable clean, reliable and affordable electricity generation for households, essential services and businesses, as well as help unlock the necessary financial resources for the DRE market to expand.
WFES is the leading international event accelerating sustainability and the global transition to clean energy. The summit which was held in Abu Dhabi on 17-19 January 2022 brought together leaders, innovators and global thinkers to share ideas that are creating the blueprints for a sustainable future.
It was a pleasure to build partnerships and connect with ARE Members.
The webinar, moderated by ARE on 27 January 2022, brought forth several observations and trends with respect to use of remote management in distributed power systems and how to improve asset performance.
Panellists included ARE Members Asantys Systems and Green Climate Ventures.
ARE Board Member Alexis Rehbinder (GDS Solaire) moderated the Advanced Training Course (ATC) virtual training on access to energy organised by ARE Member RES4Africa Foundation on 2 February 2022. ARE Members ByKe - ETT Limited, Schneider Electric and Zuhura Solutions also presented.
The ATC training programme focuses on key technical, regulatory, financial, and sustainability issues for renewable energy.
At the occasion of the 7th EU-Africa Business Forum (EABF) on 14-18 February 2022, ARE organised a virtual session focusing on creating jobs and empowering women and youth via renewable electrification in Africa and partook in a high-level panel. Furthermore, ARE contributed to a business declaration with African and European renewable energy businesses calling for a platform to further coordinate and enhance joint efforts between the public and private sectors.
The high-level panel “Energy for Industry and Productive Use: from Large to Small Enterprises” on 16 February 2022, featuring ARE, the European Commission, the African Union, the African Development Bank, RES4Africa Foundation, Siemens Energy, and SEforALL discussed the lessons learnt and the prospects for Africa to boost sustainable energy and energy efficiency technologies.
Lastly, ARE together with representatives from the European Commission, ARE and RES4Africa Foundation participated in the launch of Team Europe One Stop Shop for Green Energy Investments, powered by the GET.invest.
ARE Members 60hertz Energy, New Sun Road, Schneider Electric and SparkMeter spoke at the event, featuring North American microgrid players. ARE itself gave a presentation on the opportunity for North American companies to engage in emerging markets.
The 2nd edition of the international exhibition on renewable energies in Cameroon will be held within the framework of PROMOTE 2022.
Building on the strong cooperation with ADEME and NREAs and with the ambition to develop more country-level activities in target markets and expand in Cameroon and West Africa, ARE will have a delegation to this activity.
It is with great pleasure that ARE invites you to participate in the first-ever webinar under its new ‘Innovation for Electrification’ (I4E) showcase series!
The 60-minute webinar will feature presentations from ARE Members and gives participants the chance to:
DRE solutions linked to livelihoods is an important step in maximising the benefits of energy access for socio-economic development. Renewables offer the opportunity to translate investments in electricity connections and kilowatt-hours into higher incomes for communities and enterprises, local jobs, greater adaptive capacity and overall well-being.
Achieving this transformative change requires greater efforts than simply deploying decentralised systems. It requires investing in an ‘ecosystem’ that positions the diversity of people’s livelihoods at the centre of energy access efforts and delivers tailored energy solutions, the financing, capacity and skills, market access and policy support to realise the full benefits of energy access.
This brief jointly developed by IRENA and SELCO Foundation discusses how energy access programmes and initiatives are tackling the various ecosystem components to sustain and strengthen existing livelihood activities or facilitate new ones.
EnDev’s ecosystem approach to productive uses of renewable energy (PURE) acknowledges the importance of multi-disciplinary and cross-sectoral coordination, as well as an understanding of end-user insights. The study involved using the ‘value chain/market systems’ framework to understand the dynamics in the Kenyan PURE space. Value chain analysis emphasises a systems perspective, the role of governance and relationships, targeting leverage points to address obstacles, and empowering the private sector. The broader market systems lens acknowledges that the PURE value chains operate within a complex context of parallel and intersecting value chains, sociocultural forces and more.
This report mapped the vibrant network of 100 companies and broader PURE ecosystem actors in Kenya. These companies are supplying 40+ types of solar appliances to customers across the socioeconomic spectrum – and could do so even more effectively and sustainably with strategic support from government, investors and the development community.
Little is known about how off-grid appliance and productive use equipment perform in real-life environments and how users interact with and perceive these products. This is particularly true and especially important in newly-developing appliance markets (e.g., remote areas with low-income or first-time users), where there may be little history of appliance usage and limited understanding of how laboratory test results may predict energy performance in the field.
Successful field testing not only provides information about product performance and user experience, but also why products perform the way they do, as well as their impacts on user's life or livelihood.
But field testing is a fairly complex process given the logistical, environmental, and budget constraints. This guide is intended to inform practitioners seeking advice on designing and implementing field testing projects for appliances and productive use equipment used in off-grid and weak-grid contexts.
Please note that views expressed in the Co-Editorial, the In Focus section and the Special Feature of the newsletter, are those of the contributors and do not necessarily reflect ARE’s opinion.
