Grid Scale, Microgrids, Microgrids, Solar

Clean Energy in the Developing World: Powerhive Hits on a Compelling Business Model

Entrepreneurial, social development-driven companies are teaming up with multilateral development agencies and governments to bring clean, affordable and reliable renewable electricity to places where it’s never been. Combining PV arrays, battery storage and smart metering systems with mobile telecommunications and payment applications, Powerhive has hit upon a business model that is driving uptake of solar-powered microgrids in rural Kenya.

Powerhive points out that an estimated 1.3 billion people worldwide lack access to electricity. Instead, they rely on fossil fuels, such as kerosene and coal, for lighting, cooking and to meet other basic energy needs. Not only does this result in harmful and costly environmental pollution, it doesn’t provide electricity in sufficient amounts or of a quality required for meaningful socioeconomic development.

“You’ve probably heard of dozens of solar companies selling solar power kits to people in rural areas all over Africa. We’re expanding electricity access too, currently in Kenya, but taking a radically different approach based on the idea that economic development depends on access to enough electricity to power productive activities, not merely lights and mobile phone chargers. Our solar microgrids provide 24/7 electricity, which powers small machinery and home appliances in rural Kenyan villages,” Powerhive co-founder and CEO Chris Hornor told REW during an interview. 

A Massive Off-grid Market Opportunity

Solar and renewable energy is now growing by leaps and bounds in both developed and developing countries around the world. Dramatic declines in cost, and improved performance and efficiency, is making the economics of solar energy increasingly attractive and competitive with conventional fossil-fuel energy sources, particularly in rural communities and island nations. Moreover, this doesn’t take into account the high and long-lasting health and environmental costs of fossil fuel use. 

In addition to PV and battery storage, Powerhive is leveraging the widespread availability of mobile telecommunications and the popularity of mobile payment systems in Kenya to provide clean, renewable electricity in sufficient quantities and quality to open up new avenues of socioeconomic development for rural residents.

Closing the loop on Powerhive’s microgrid platform are web-based energy analytics and management software, smart meters and high-performance lithium-ion (Li-ion) batteries, the cost of which has dropped sharply along with performance enhancements and increasing production in recent years.

“Our core product, a microgrid management platform, combines a range of technologies (including smart metering, data analytics, mobile money, a web-based management app) and applies them to deliver solar electricity in a way that’s never been done before,” Hornor elaborated. “By using this tech to automate many operations, we’re able to sell productive quantities of solar power that is affordable to a massive off-grid market in Africa.”

Challenges of Installing PV in Developing Markets

SunEdison recently announced it will purchase over 1,000 flow batteries from Imergy Power Systems, part and parcel of its plans to bring clean, renewable electricity to some 20 million people across rural India by 2020. Along with the vast market potential for renewable energy microgrids in India and other developing world markets comes a host of challenges, however.

Hornor’s mention of “dozens of solar companies selling solar power kits” in rural communities across Africa, as well as developed and other developing countries, highlights a pernicious and familiar one: dishonest PV installers selling shoddy products in village communities and leaving behind systems that don’t perform well and could well be unsafe. 

“That’s where proactive, persistent community engagement and local hiring and training play key roles,” Hornor related. “There’s a sort of a built-in protection in communities having vested interests in personals grids and local power. Vested community interest imbues  strong interest in villagers in protecting those assets.” In addition, Hornor noted that Powerhive has embedded remote asset tracking and monitoring capabilities into PV microgrid platform equipment.

Another oft-cited problem is the inability to pay for PV systems and renewable microgrids. Powerhive is addressing that by offering a pay-as-you-go payment model that takes advantage of the popularity of mobile payments via cell phones in Kenya. The penetration rate of mobile payment apps is around 80 percent, Hornor pointed out.

“What’s very much under-appreciated is how much people in rural Kenya and Africa are actually spending today on dirty fuel alternatives, and what the value proposition is to them with respect to renewable energy and better levels of service. Basically, a lot of money can be re-directed [towards clean, local renewable energy alternatives.]”

Capacity-building and Surmounting Obstacles

A third challenge of installing PV and renewable energy microgrids in Africa is a lack of human resource and technological capacity. Again, Powerhive is finding that this isn’t the case. Hornor noted that modern wireless telecoms infrastructure is up and running in Kenya and many other African nations. Mobile handsets and apps, such as m-payments, are wildly popular.

The build-out of wireless telecoms infrastructure in Kenya and other African nations and the partnerships it has struck with local partners has paved the way for Powerhive to install its PV-powered microgrids in the farthest remote reaches of the country. In large part, Powerhive’s Kenyan partners already have the type of engineering, procurement and construction skill that are required to deploy its PV microgrids. Where they don’t, Powerhive is able to provide training that brings them up to speed quickly, Hornor told us.

Political corruption poses another significant obstacle that often blunts or thwarts renewable energy business, and, more broadly speaking, socially and ecologically conscious economic development in Africa and other developing nations.

“Corruption, of course, is everywhere,” Hornor said. “But we follow strict FCPA (Foreign Corrupt Practices Act) guidelines.” The best way to avoid the issue, he added, is simply not participate “in anything that lies even remotely outside” FCPA guidelines.

Moreover, Hornor continued, “The fact is that people in power seek opportunities to deliver affordable, reliable electrical power to their constituents and their countries. That’s a very powerful tool for them politically. Yes, corruption can get crazy in places, but it’s important to stay the course. It may take longer, but in the end it’s a slippery slope, one that we avoid completely.”