Kitonyoni Solar Mini-grid and Integration of Thermal Energy Services

Binu Parthan from SEA writes on his recent visit to the Kitonyoni Solar Mini-Grid project, part of the University of Southampton’s efforts for the Energy for Development (E4D) project they lead.

The solar mini-grid at Kitonyoni near Machakos in Makueni County was financed by the UK government and commissioned in 2012 by the STEPs partner The Sustainable Energy Research Group at University of Southampton. The Kitonyoni Solar mini-grid is managed by Makueni County Solar Energy Co-op Society Ltd which is owned and managed by the community.

Management of the Solar Electric Cooperative and manager of the mini-grid business. Image: Sustainable Energy Associates

In July 2016, I travelled to Kitonyoni to visit the solar min-grid and meet with the community. While at Kitonyoni, I met with Joseph, Monicah, William and Shadrack from the management Makueni County Solar Energy Co-op Society Ltd and also with Stephen, the manager of the mini-grid and energy service business. With the community leaders and the manager of the mini-grid, I visited several businesses and households that were consuming electricity from the cooperative to understand the business model. The solar electric cooperative seems to be professionally managed and financially sustainable. They operate on a for-profit business basis and the financial accounts reveal that the operation is financially sustainable. The electricity cooperative uses a pre-paid card system for electricity sales and payments which seems to be working well. The electricity consumers are more conscious of energy use and payments and the cooperative is also happy with the upfront collections. The number of shops in the Kitonyoni market has significantly increased since the solar mini-grid was commissioned and the value of the land in the area has also almost tripled. However, the tariff charged by the solar electric cooperative is considerably higher than the public electricity utility but the community has been willing to pay a higher tariff due to better availability and reliability.

One of the new businesses established in the Kitonyoni market powered by the solar mini-grid. Image: Sustainable Energy Associates/span>

STEPs project team at University of Southampton had carried out a survey to examine the possibility of integrating thermal energy services into the existing electrical energy service business model. The results showed that 90% of the households in Kitonyoni use firewood for cooking which is available without cost to the community (Bahaj and Kanani, 2016). While the households spends over 5 hours to gather firewood, there is limited interest in switching to cleaner cooking options such as LPG which involve additional financial expenditure. The opportunity to integrate a solar thermal energy service along with the electricity service seems rather limited due to limited scope and demand for commercial fuels. The firewood is available freely in the area and LPG distribution networks are not available in the village.  Therefore currently, there does not seem to be a business case for introduction of an LPG franchise model and integrate the model into the solar electricity business. However some thoughts that I shared with the community were:

Since households and restaurants are cooking in separate rooms than their houses and as there is a preference for community schemes, will a community electric cooking scheme succeed? This may be relevant as on most days the battery bank of the solar mini-grid seems to be fully charged in the early afternoon and this could provide an opportunity for a central cluster of electric induction cookers which people can use to cook on a pay per use basis(similar to battery charging) to the cooperative.

It is possible that people may opt for efficient Cookstoves/Jikos if available on a hire-purchase/PAYG basis and reduce the amount of firewood to be collected resulting in time savings. An efficient Jiko will cost 45 $ which could be offered on a loan basis with daily/weekly/monthly payments to people by the cooperative for 6 months to 1 year tenure. These funds could be revolved over the time period to reach other members.

A differential tariff with a lower tier-tariff for the shops and establishments that use electricity during the day will likely improve the revenue model of the cooperative and can increase the utilisation levels. Such a tariff regime could allow the use of induction electric cookers at households during the day. Such a development could result in increasing sales and revenue and improving the business viability.

Cooking using firewood and a metallic stove in Kitonyoni. Image: Sustainable Energy Associates

Therefore the technology options for thermal energy and cooking in Kitonyoni is electric cooking or efficient Cookstoves with the possible business models of pay-per-use or hire-purchase respectively. A differential tariff with lower off-peak tariff could also allow electric cooking during the day time and improve the business model. These options are not entirely obvious and needs to be investigated and defined. This approach will certainly face stiff competition from free biomass availability and availability of free time for fire-wood collection.

Dr. Binu Parthan

SMEs and Clean Energy for Emerging Markets Event – London, UK

STEPs project partners attended an event, jointly run by the DECC, Knowledge Transfer Network, Loughborough University, the LCEDN and the UKCDS, entitled “SMEs and clean energy for emerging markets: challenges and opportunities”. This event was held on the 29th September 2014 at the Wellcome Trust, London, UK. This event sought to bring together representatives from the academic, government, non-government and private sectors, to discuss the current situation, opportunities and challenges to the growth of small and medium enterprise in the clean energy sector for developing economies. Several plenary sessions were held over the course of the day, and stalls were also present from a wide range of institutions, organisations and companies, including Xavier Lemaire and Daniel Kerr from UCL, presenting the STEPs project.

The day began with an establishing session on the global opportunities for SME development in emerging markets. Presenters from Knowledge Transfer Networks Ltd, SolarCentury and SolarAid highlighted a number of challenges facing clean energy provision in markets globally, particularly in developing economies. These ranged from the challenges of replacing aging infrastructure in developed economies, to those of reaching consumers in poverty in rural areas of developing countries. Consistently highlighted were the sobering figures accepted by the international community on energy access: with over 1 billion people still lacking electricity access, and 2.6 billion projected to lack clean thermal energy access by 2020, the presenters made clear the vast potential for SMEs to bridge the gap in energy services provision to emerging markets.

Following this was a session on innovation in energy services for emerging economies. The presenters, representing X-wind, Buffalo Grid and Renovagen, were all private-sector participants in the event, being entrepreneurs involved in SMEs for clean energy development. The presentations focused on the efforts of the companies to develop products and services for emerging markets. X-wind is a company producing resilient, vertical-axis wind turbines for community-scale deployment. Buffalo Grid produces pay-as-you-go solar-powered electricity and wireless internet base stations for deployment in off-grid communities. Renovagen is a new start-up producing fast-deploying PV micro-grids for off-grid communities, as well as in disaster relief and industrial applications, based on a novel flexible PV array. These organisations shared a number of features: all were looking to expand energy services access in developing economies, and they also all identified the need to tailor the product or service to the challenges of emerging market contexts. For example, resilience was a key feature of X-wind turbines, with low maintenance requirements improving reliability. The prevalence of mobile connectivity in the developing world, particularly Sub-Saharan Africa, was also incorporated into the Buffalo Grid product design, with mobile charging being identified as a key service to offer for increased take-up of the product. This point was also discussed in more detail in the fourth session.

Participants were encouraged to network over lunch and visit the presentation booths. The STEPs project booth received a good amount of interest from researchers and entrepreneurs interested in thermal energy access, and business models for energy access more broadly.

The third plenary session focused on financing and support for SMEs, and access to finance. Representatives from the Shell Foundation, UKTI and Enclude Capital Advisory presented on available and appropriate financing routes and the challenges to financial access in emerging markets, as well as the support available for SMEs from financial, governmental and non-governmental institutions. Appropriate finance for SMEs was a key point of the presentations. In the design of financing mechanisms for small and medium enterprise in developing countries, the type of financial assistance can have a significant effect on the impact of the financing on the company, particularly in transition points between sizes of companies. For example, donor funding is most useful to start-up companies that may not be able to afford market loans for growth, whereas commercial or governmental loans/financing schemes are more useful to more established organisations.

The fourth session sought to clarify the realities of energy services for emerging economies through presentations from a number of organisations and companies with experience in emerging market projects, ranging from humanitarian and aid-sector solar lighting organisations to distributed wind generation providers. Two themes were recurrent in the presentations: the necessity of assessing the nuances of the local and regional market in designing products and services for emerging markets, and the huge potential to be found in integrating products and services in a ‘smart’ fashion, most notably through the use of mobile technology. Mobile signal access has developed significantly faster than electricity access in many emerging markets, and with the immense success of the M-PESA and M-KOPA systems, integrating financial transactions into mobile systems has been proven to be a workable business model. The design of clean energy products is also key to their success in supplanting established traditional technologies in emerging markets. This can be as simple as reducing the height of a cookstove so that it can be used more easily, but can have a significant impact on market penetration.

The final session of the day focused on the impact that academic research and evidence can have in supporting the activities of SMEs working in emerging economies. Speakers from SolarAid, Oxford University’s Power and Energy Group and DFID engaged in discussions with the room on how academic research can assist in the design of business models and market research for SMEs, as well as in simulation, social and demographic analysis and other areas. The concept of innovation synergies with academic research was also highlighted, with the academic sector being able to assist in all stages of product and service development, from needs assessment to testing and evaluation of products, to effective deployment strategies and models.

– Daniel Kerr, UCl Energy Institute