Smart inverters and mini-grids: has the grid of the future arrived in Africa?

The mini-grid site in central Tanzania where PowerGen is testing new smart inverter technology to increase the grid’s capacity to match demand

In a small village in rural Tanzania, the final building block of the grid of the future may have arrived – the smart inverter. Just as smart phones transformed the way we generate, consume, and share data, smart inverters are transforming the way we generate, consume, and share energy. While countries like the USA retrofit their current electricity grid with decentralized energy storage and generation, Africa is on the brink of moving straight to the grid of the future: an interwoven mesh of generation and distribution providing smart, flexible, and reliable power.

In a farming village of nearly 2000 people in central Tanzania, two sets of solar panel arrays and battery banks are doing something remarkable. Despite being almost 500 meters apart, and without any human oversight or communication system, the two smart inverters are coordinating their behavior on a single mini-grid to supply reliable, 24/7 power to the village’s households and businesses.

The two smart inverters work together by monitoring and adjusting the mini-grid’s ‘heartbeat’ – the frequency of the grid. When the heartbeat – or frequency – of the mini-grid system is faster than its own, an inverter knows that the system has excess energy, and it can draw on the central system to charge its battery banks. If more customers start consuming energy and the frequency of the mini-grid system slows, each inverter knows it needs to share any excess energy with the system.

This kind of balancing act is carried out on every national grid around the world. It’s how the main grid delivers reliable and flexible power. However, it usually requires human oversight and additional communication systems, both too expensive for rural electrification in Africa.

With support from the Mini-Grid Innovation Lab (funded by The Rockefeller Foundation, FCDO, Shell Foundation, DOEN Foundation, and P4G), the mini-grid developer PowerGen is proving how smart inverters allow mini-grids to provide smart, flexible, and reliable power to households and businesses in rural Africa.

This is all very exciting for the technology world, but it means even more for people living off-grid in rural Africa.

The challenge of matching mini-grid capacity to demand

Let’s go back to the village in Tanzania where an entrepreneur is at work. It’s 9pm on a Wednesday night and a group of people can be seen shuffling into a tightly packed room, exchanging money for tickets at the door. A young man stands guard at the door, trying his best to quiet the excited chatter in the room. His name is Amisi. He runs a sports hall – a viewing center – with a TV set broadcasting sports matches. Tonight is Champions League night, a much anticipated football match, and there’s a packed crowd. Business has never been better.

But since then, Amisi hasn’t been exchanging so many tickets for money. Business has slowed, with Amisi not able to get even half of his customers on any given evening. The mini-grid providing him, and the rest of the community, with electricity no longer produces enough power to meet the community’s demand. For Amisi, this means sports matches get interrupted in the moments between the mini-grid running out of power and the back-up generator turning on. By the time the back-up generator comes on, viewers have often missed a turning point in the game. These days, Amisi’s customers prefer to use a battery-run radio to follow sports games to avoid missing key penalty calls or the winning goal.

The community’s electricity demand has grown larger than the mini-grid’s solar generating capacity. For nearly 19 consecutive months, people consumed more than the solar system could produce. The back-up diesel generator regularly comes online to provide additional power to meet the daily demand, but it’s too costly for the developer to continue running daily.

Electricity consumption at the site has been consistently higher than the grid’s solar generation for 18 of the 19 consecutive months leading up to January 2020

Matching energy consumption and generation is one of the greatest challenges of electrification. Oversize generation, and capital investments go underutilized. Undersize generation and potential revenue is lost.  Previous modelling conducted by the Lab shows that every 10% in sizing error reduces project Internal Rates of Return (IRR) by 0.6% – 0.8%.  This means, when oversized by 50%, a mini-grid with a 12.5% IRR when perfectly sized achieves an IRR of only 8.5-9.5%. This implication is one of the greatest risks for investors considering investment in mini-grids.

If we can better match consumption and generation, then we can better serve customers like Amisi. And if we can better serve customers like Amisi, we can increase communities’ safety, extend children’s time studying, and expand people’s abilities to generate new income.

Testing smart inverters as a possible solution

Smart inverters make this matching possible. Through the Modular Grids prototype, the Innovation Lab is supporting PowerGen to test Studer Innotec’s Xtender Inverter and will soon be supporting other developers to test ZOLA Electric’s INFINITY Integrated Power System.

Smart invertersallow mini-grids to flexibly add generating capacity as consumption grows. Grids can be built with capacity to meet only the initial demand. As demand grows, separate generating systems with smart inverters can be installed to share the load across all connected systems. This interconnectedness ensures excess energy is used instead of wasted, and energy is supplied to serve customers where there would otherwise be a deficit. Smart inverters can also extend the system’s reach to serve customers such as farmers operating irrigation pumps outside the typical 600-meter range of a low voltage distribution network. They do this by boosting the voltage at the outskirts of the existing distribution network. Smart inverters allow developers to combine the benefits of a decentralized system – greater reach, reduced upfront capital expenditure – with the advantages of aggregating loads and capacity that come with a centralized system.

Studer Innotec’s Xtender Inverter system at the PowerGen site in central Tanzania

Early results from the field suggest that smart inverters do in fact flexibly increase a grid’s capacity to match demand, without human oversight or expensive communication systems. In the first month after the inverter was installed, the mini-grid delivered electricity to the community with no interruptions in power, and with only minimal support from the generator. This has meant a packed sports hall again for Amisi and no more expensive diesel costs for PowerGen, even as the demand for energy increases in the community.

Building the grid of the future

When the main grid is extended to reach these rural communities, smart inverters will also allow mini-grids to interconnect with the main grid. Together, they will form a smart, flexible, and reliable grid of interconnected distributed generation, storage, and consumption. As Carbon Trust’s Jon Lane has said, “For the last five years I’ve believed that mini-grids can connect unelectrified citizens and businesses in Africa more quickly, more cheaply, and more sustainably than main grid connections can. Smart inverter technology takes this a stage further by connecting both options to ensure that we leave no one behind and provide the best possible service to all.”

If the centralized grid of the 20th century was the cable TV of electrification, then mini-grids and smart inverters are YouTube. Just as YouTube distributed the production and consumption of video content, mini-grids and smart inverters will distribute the production and consumption of energy. Africa is positioned to build the grid of the future, today, by providing power through an interwoven mesh of main grid connections, mini-grids, and solar home systems.


Authors

Ekemezie Uche

Eke Uche is an Associate at CrossBoundary.  Mr. Uche is based in the Nairobi office, where he leads prototype implementation and scale for the Mini-Grid Innovation Lab.  Prior to joining CrossBoundary, he worked as a Consultant in McKinsey & Company’s Lagos office, where he advised clients across different sectors, including energy & power, banking, and the public sector in Nigeria, Ghana, Zambia, South Africa, and the Middle East.  Mr. Uche holds a Master of Science degree from the London School of Economics and a Bachelor of Arts degree from St. John’s College in Annapolis, USA.


Erika Lovin

Erika Lovin is the Innovation Lab Lead at CrossBoundary, based in the Nairobi office.  Prior to CrossBoundary, Ms. Lovin worked at the Gates Foundation, where she supported the Nutrition team in redefining its strategy to achieve the greatest impact worldwide.  Since starting her career as a consultant in Accenture’s management consulting division, she has worked on both the investment side of development, with the DFC, and in on-the-ground operations, with GiveDirectly.  Ms. Lovin holds an MBA from the Wharton School and an MPA from the Harvard Kennedy School.  She completed her undergraduate degree in applied mathematics at Harvard College.


Gabriel Davies

Gabriel Davies is Head of Energy Access at CrossBoundary and based in the company’s Nairobi office.  Prior to CrossBoundary, Mr. Davies worked as an Associate at Augusta & Co, a London-based investment firm focused on renewable energy, where he worked in the investment banking team.  At Augusta & Co, Mr. Davies advised developers, utilities, and institutional investors on placing capital into over 2GW of renewable energy projects and businesses across Europe, and also originating and structuring corporate PPAs.  Previously, he worked for the UK’s Department of Energy and Climate Change, advising the Government on energy policy.  Mr. Davies has also worked for BP’s Alternative Energy division in London and Brazil.  He has written about the off-grid sector in Africa for the Financial Times’ ‘This is Africa’, the Brookings Institution, and Greentech Media.  Mr. Davies holds an MA in physics and philosophy from the University of Oxford.

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