Rafiki Power is a mini-grid company which provides access to clean and affordable energy and value-added-services (VAS) to people and businesses without access to the national grid. To date, Rafiki Power has successfully installed and is operating 8 mini-grids (solar PV & battery) in Tanzania, connecting more than 950 households and businesses and has developed a further 16,000 connections ready for implementation.
Sun-Connect News had a chance to interview Daniel Becker, Managing Director of E.ON Off Grid Solutions GmbH about the opportunities and challenges of Mini-Grids in Africa.
Questions
SC News: Mini-Grids are still in a niche market between governmental efforts to extend the standard grid and the fast-growing Pay-as-you-go sector. What are the reasons for this?
Daniel: Compared to stand alone systems Mini-Grids systems provide AC Power 24/7 with a flexible load which allows for larger productive use and on demand/flexible demand patterns. On the other hand, compared to the grid they are much cheaper and faster to deploy and can be seamlessly integrated at a later point. Having said this they are and will always be a niche solution albeit a quite large one, that is perfectly complementary to the alternatives, but only makes sense in dense rural villages with a minimum of 200 connections up to 50-100k. The reason they have not been adopted more widely is that they are quite complex and need political & regulatory support. Economically they only make sense if as many people as possible are connected in any given area to drive down initial capex per customer. This means a lot of quite low consumers are connected and is the case everywhere in the world with grids these need (cross) subsidies. Mini-grids are an essential solution to drive electrification at speed and at lower costs to local governments while fostering economic growth. To unleash this potential governments need to incorporate mini-grids as a permanent and temporarily (future grid integration) solution into their electrification plans and implement the necessary policies (tariffs, subsidies, concessions, permits) and simplify regulatory processes. To help governments understand we are founding members of the African Mini-Grid Developer Association (www.africamda.org) which helps governments and institutions to understand what is needed to make mini-grids work.
SC News: I guess the main challenge for mini-grids – beside policies – is the operational management. This includes the technical maintenance but also the management for customer service. How is Rafiki handling these challenges?
Daniel: While challenging in the beginning operational processes are manageable with constant iterations and improvement. Basically, two aspects are crucial for mini-grid operations.
First, technology is essential. The initial setup of assets needs to account for local circumstances (temperature, accessibility, geography) and needs to be designed to last and require minimal maintenance. Here we have constantly improved our designs to reach an Uptime of over 95%. Layouts need to be standardized to ease maintenance and repairs and everything needs to be clearly labelled and robustly installed. The asset needs to be integrated into the community to add security which we have done by always using community land, providing free utilities like shade and lighting and having a local kiosk owner take ownership of the shop in asset. If you manage to become part of the community asset management becomes significantly easier. Finally, a sophisticated asset monitoring system and remote control is essential to drive down costs. Knowing what is going on and being able to intervene from a distance is essential as travelling to site is prohibit expensive. Thus the system AMMP (www.ammp.io) we use allows us to proactively spot problems and schedule maintenance, remotely schedule load shedding (e.g. during rainy season) and dispatch personal before problems become severe.
Second, people are the secret ingredient. Well trained personal at different levels of expertise (and cost) are needed to make it work economically and efficiently. We use a layered approach. The Kiosk Operator does minor things e.g. panel cleaning. If things require more skill we use a local technician which we train during installations and contract (and pay) per job over mobile phones to, for example, exchange meters or check cables. If a problem is more complicated e.g. battery problems we send one of our technicians from the next hub to site. Only higher order problems (e.g. inverter tripping) are then escalated to our team in Germany to investigate, find a solution and ideally develop a solution and process with the local team so they can solve it on their own the next time around.
SC News: Is there a minimum / maximum size for the most successful operation of a mini-grid?
Daniel: Given the economics there needs to be at least 150-200 connections within a 1km radius. Bigger sites are better and theoretical size can be increased indefinitely (although we would then integrate other generation technologies).
SC News: Do you see a solution on how solar home systems, mini-grids and the national electricity grid can support each other in an integrated system?
Daniel: I do not just believe they can, they must. National grid is best for large cities, large factories and very densely populated areas. As soon as you go outside these areas they are simply not economical. In less densely populated areas a combination of mini-grids for villages/cities and stand alone systems for farms and people that live further apart are a much better solution. They cost less than 1000 USD per connection (incl. power production) compared to grid extension which costs 2000-3000USD per connection and are much faster deployed and much more flexible. Why should someone – with the technology available today – not use the mini-grid power in their home and workshop in the village, and a solar water pump on the field a mile away?
SC News: Let’s talk about finance: The pay-as-you-go sector in Africa raised over $750 million between 2012 and 2017. At the same time, the top five mini-grid developers in Africa have raised less than $100 million. Why investors are less enthusiastic about mini-grids?
Daniel: For the reasons stated above. Mini-grids are made to last (15-20years) and require a large upfront investment and thus have a payback period of around 6-8 years. Combine this with the lack of regulatory support and uncertainty and financing becomes difficult. To solve this issue governments need to give long-term commitment to developers to develop 20k+ connections in one go with tariff, permit and regulatory certainty. If this can be achieved, money will flow.
SC News: How will the upcoming blockchain technology influence the mini-grid sector?
Daniel: While blockchain is a genius breakthrough technology in my opinion, it will not solve the problems of the mini-grid sector. All technology needed to make them work is already here, what is lacking is smart regulatory commitment. Having said this, indirectly blockchain could make things easier if applied to permitting, identification, land rights etc.
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Facts and figures
Name of the company: E.ON Off Grid Solutions GmbH – Rafiki Power
Founded: July 2013
Headquarters based in: Düsseldorf, Germany / Arusha, Tanzania
Business activity:
Energy & Access Platform
- Offering reliable, clean power via Solar PV & Battery Mini-Grids
- Offering customer trainings
- Offering product sales (electricity consuming consumer goods and productive-use machines)
- Offering micro-finance services to customers
Countries/regions of activity: Tanzania, East Africa
Number of staff worldwide: 28 FTE
Webpage: www.rafikipower.com
Email contact: info@rafikipower.com
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