Navigant Research Blog

Village Nanogrids Fuel Mobile Networks

— April 1, 2014

There have been numerous efforts to electrify remote parts of the developing world.  Typically, these have come in the form of philanthropic ventures, with little to no expectation of a return on investment, using distributed energy systems that were often out of touch with the consumers’ energy needs, as well as their capacity to maintain the systems.  As a result, these efforts have been largely ineffective.  More recently, some for-profit companies (mostly mobile network operators) have found that a business case exists for investing in distributed energy for rural off-grid communities – by implementing systems that are much more in tune with customer needs and capabilities.  These systems usually take the form of nanogrids, which are described in the recent Navigant Research report, Nanogrids, and in my colleague Peter Asmus’ recent blog.

For mobile network operators (MNOs) in emerging markets, such as MTN, Vodacom, and Safaricom in Africa and Digicel in Latin America, the challenge is that there are millions of mobile customers without access to the electricity grid; approximately 259 million, according to a recent GSMA report.  For these customers, the cost of charging their phones can represent up to 50% of their total mobile expenditures (airtime plus charging costs), so their phones are only turned on when absolutely necessary, in order to conserve battery life.  Since MNOs make money when the phones are in use, it’s in their interest to make charging convenient and inexpensive enough that conserving battery life becomes an afterthought.  MNOs are quickly finding that distributed nanogrids, such as 10 watt solar home systems (SHS), are the cheapest, most effective way to maximize cell phone usage by existing customers, as well as to bring more customers online.  To stimulate the spread of these systems, MNOs are starting to form commercial partnerships with local vendors of portable solar products.

Friendly Local Utilities

In Uganda, MTN has partnered with Fenix International to provide MTN airtime vendors with a Fenix ReadySet solar-powered battery kit that charges phones and provides LED lighting for the vendor station, allowing them to stay open longer.  The ReadySet has turned MTN vendors into micro-utilities in their communities, creating additional revenue from phone charging and increased mobile money transactions, as well as savings for the vendor from using the LED light.  MTN is also repackaging the ReadySet as the ReadyPay Power System, which is now available to all its customers on a pay-as-you-go basis.  Similarly, Digicel Haiti partnered with Solengy in 2011 to install over 400 solar-powered street lamps and phone charging stations across Haiti.  Each station is operated by an airtime vendor that sets up shop below the LED street light and manages the phone charging service.  Other examples include Vodacom and Mobisol in Tanzania and Safaricom and M-KOPA in Kenya.

Forming the backbone of this transition are pay-as-you-go business models and mobile money, which I’ll explore in my next blog.

 

Filling Small Niches, Nanogrids Become Pervasive

— March 21, 2014

If you think the term microgrid is still a bit fuzzy, you’ll be even more puzzled when it comes to the term nanogrids.  While it’s safe to say that nanogrids are smaller than microgrids, there is a major disagreement as to whether nanogrids will scare the hell out of utilities or if they are actually already well-established and can flourish within the current regulatory environment.

The Navigant Research definition of a nanogrid is: A small electrical domain connected to the grid of no greater than 100 kilowatts and limited to a single building structure or primary load, or a network of off-grid loads not exceeding 5 kW, both categories representing devices capable of islanding and/or energy self-sufficiency through some level of intelligent distributed energy resource management or controls.” 

The basic concept behind the nanogrid is simple: small is beautiful.  Nanogrids are modular building blocks for energy services for current applications that range from emergency power for commercial building to the provision of basic electricity services for people living in extreme poverty.  Nanogrids typically serve a single building or a single load.  Because of their simplicity, the technology requirements for nanogrids are less complex (in most cases) than either microgrids or the utility-dominated smart grid.

Tiny Grids, Big Business

Ironically, nanogrids are big business.  While microgrids (as described in Navigant Research’s report, Microgridsexhibit exponential growth and share synergistic properties with many nanogrid segments, substantial deployments of nanogrids are already in place, as they actually face less technical and regulatory barriers than their microgrid counterparts.  For example, Navigant Research’s Nanogrids report finds that the market is already worth $37.7 billion today and it represents capacity almost 10 times larger than the projected size of the current microgrid market.

Lawrence Berkeley National Laboratory (LBNL) asserts that nanogrids never encompass any forms of distributed generation and never interact with the larger utility grid ‑ two criteria that Navigant Research takes issue with.  By that definition, every laptop, every car (even if powered by an internal combustion engine), and every universal serial bus (USB) drive is a nanogrid.

The business case for nanogrids echoes many of the same arguments used on behalf of microgrids.  These small, modular, and flexible distribution networks are the antithesis of the economies of scale that have guided energy resource planning over much of the past century.

Here to Stay

Nanogrids take the notion of a bottom-up energy paradigm to extreme heights.  Yet, one could argue they are less disruptive than microgrids in one very important way.  Since nanogrids are confined to single buildings or single loads, they avoid many of the regulatory challenges that stand in the way of power-sharing microgrids, such as prohibitions regarding non-utilities sending power over public rights-of-way.  In the developing world, nanogrids are often the only pathway to universal energy access, as dispersed residences often preclude networking.  One could also take a contrarian view.  For example, nanogrids foster a more radical shift to direct current (DC) power than microgrids, since their small scale can accommodate low-voltage networking.

Either way, nanogrids are already here to stay.  New forms of distribution networking are clearly on the rise, whether one wants to call such platforms a nanogrid, a microgrid, or something else.

 

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