Shining a light on Utilities 2.0
We step outside our usual box for a conversation with 2023 Ashden Award winner Power for All.
For readers interested in a longer version of our conversation with Carolina Ines Pan, we’ve uploaded it to our new Green Edge Conversations channel here.
When, a few days ago, we were offered the opportunity to talk with one of the winners of the 2023 Global South Ashden Awards, we jumped at the chance. We’d already had the privilege earlier this year of talking to one the UK award nominees – Black Mountains College – and we were keen to find out more about one of those recognised for its work in the wider world. So, we jumped on to a transatlantic Zoom with Carolina Ines Pan, Director of Research at Power for All, to hear about the Utilities 2.0 Uganda Twaake project, winner of the 2023 Ashden Award for Integrated Energy Africa.
Twaake translates to ‘let’s light’ and the idea behind it is simple: start with a town or village that isn’t electrified, set up a solar minigrid and get everyone connected, then when they’re all up and running and proving to be commercially viable customers, transfer them over to the main grid and move the solar assets on to the next town. It’s a fast, clean way to get people out of energy poverty, and in a country like Uganda with 80% of its electricity capacity coming from hydropower, it all makes eminent sense to start clean and keep it that way.
Image: UN
In Uganda, as with much of sub-Saharan Africa, there’s certainly a strong need. While, globally, the share of electricity in overall energy consumption is around 20% - with leader Norway being close to 50% - electricity represents only around 2% of Uganda’s total energy consumption. Uganda has a population of close to 50 million and that will grow; along with countries like Ethiopia, Kenya and especially Nigeria, two-thirds of global population growth between now and 2050 will come from sub-Saharan Africa, according to sources like National Geographic. And while the country has set an ambitious development agenda, which includes universal energy access by 2030, the Ugandan agricultural sector still employs over 80% of the workforce, mostly in subsistence farming, with only a little over 40% of its population having access to electricity.
This puts it plum in Power for All’s sweet spot. Established in 2015 and now a top-rated nonprofit, Carolina starts by telling us that Power for All’s aim is to accelerate the end of energy poverty with decentralised renewable energy (DRE). DRE is the key here and Power for All currently has a network of over 300 partners, consisting of social entrepreneurs, policymakers, utilities, local changemakers and others, to speed its adoption. In Power for All’s worldview, though, DRE is not the only show in town and, as it points out in its 2022 annual report, ‘Evidence suggests that DRE can deliver universal energy access in a fraction of the time and cost of conventional approaches [but] neither centralised nor decentralised energy is purpose-built to end energy poverty at scale alone’.
Its solution is to bring the mini grid and main grid players together in what it calls Utilities 2.0. Carolina describes it for us:
“[Around 2018] we had this idea of getting everybody together and using the strengths of both the decentralised solar mini grid players and the centralised utility companies, and combining these to come up with the best possible solution. It's a novel approach because they normally compete, but we thought they could be complementary.
“The utilities have a lot of advantages: their infrastructure, they are the incumbents, they have scale advantages. They can get long term debt at low cost and that's a major advantage. They already have a large customer base that allows them to do cross-subsidisation and all those sorts of things.
“On the other hand, the mini grid developers are modular, they’re mostly private-led, they’re agile, they’re innovators, and they take customer-centric approaches”.
Carolina goes on to explain that one thing Power for All had observed was, long lead times aside, when utilities extend their grids into new places, they don’t work with their new customers to show them how to connect and start using the great new service. Or even what they can now use – she says, “If they don’t have anything to plug in, they can’t consume”.
After a frustrating delay due to Covid, when the Twaake pilot project finally got underway in 2021 to electrify the village of Kiwumu in Uganda, the project partners came as a package that would not only install the solar mini grid and get Kiwumu’s businesses and homes connected, but also to do the needful in terms building acceptance and demand for the electricity it provided. The partners included solar off-grid specialists Equatorial Power, integrated renewables engineering firm East African Power, and Umeme, Uganda’s privately-held (at the time) main grid operator, which played a key role with policy, codes, modeling, and implementation before and through the switch. Significantly, the partnership also included EnerGrow, a Ugandan tech startup that describes itself as ‘growing sustainable, productive, rural electricity demand in Africa, through an innovative mix of productive asset financing, training and digital ID based technology’.
Carolina describes how the team worked together: “The mini grid developer explained to the people what they have, how to connect, and then we worked to increase consumption. That's when the appliance finance company comes in. EnerGrow was deploying different assets: chest freezers, TV's, blenders. We were targeting mostly businesses like bars and restaurants, because we wanted these assets to be used in a productive way. Restaurants didn't have a freezer and they started buying these and so consumption started going up quickly.
“We asked them whether they wanted fridges or freezers. Most of them preferred freezers”.
The strategy obviously seems to have worked. Carolina describes a counterfactual study they carried out, comparing the uptake of electricity demand in Kiwumu against two other villages close by, similar in socioeconomic profiles but with connections to the main grid going back 10 years. The findings were that the Twaake approach compared to the ‘business-as-usual’ link up had accelerated the pace of access by five years. So much so, that by the time of removing the solar assets earlier this year and bringing in the main grid, 98% of the village was connected, half of the businesses owned appliances and some of the villagers were asking for the mini grid to stay.
Plus, there are social benefits. Carolina again:
“It's much safer to walk down the street at night because of the streetlights, and the businesses can operate for longer hours for two reasons, because they have lights and because they can get customers in at later times without fear.
“And for me, one of the nicest results was that they opened a movie theatre and were attracting people from nearby villages. It used to happen that when people wanted to go out, they would go somewhere else, somewhere electrified. Now they can go to a bar with music and they’re receiving other people in their town, and they feel proud about that”.
So, a successful pilot, and one which earned Power for All the Ashden Award. But what next? How does this roll out, first across Uganda and then across the rest of the sub-Saharan (and other) countries that have the need, resources and political will to get it done?
The next natural step, says Carolina, is replication: “We're talking about a country where 50% of the people are unelectrified. So, you don't just go ahead and electrify the remaining 50% of the people. It's too expensive. Obviously, we need big money for this and it's not going to come from government because most of these governments are resource-constrained. So obviously we need a big funder”.
True. The estimated cost to electrify the whole of Uganda through the business-as-usual approach runs to something like 20% of Uganda’s GDP. And, while the Rockefeller Foundation stumped up the readies for the Twaake pilot, for replication and rollout we’re looking into World Bank territory, at a time when, it has to be said, the international funding landscape for clean energy doesn’t look too good.
Image: UN
Plus, for rollout to other countries, there’s a new cost-benefit analysis to be done each time. Before the Twaake project even broke ground, Power for All put a big financial model together, based on Uganda’s electricity tariff and with data provided by Umeme. And, while the costs for the pilot came in at something like 25% less than a business-as-usual link up – and would no doubt be even lower for a scaled rollout – payback for the project partners based, partly at least, on electricity sold during the mini grid operating period must be sensitive to differences in tariffs from country to country.
But, for Power for All at least, there’s a strong motivation to keep pushing the integrated energy approach embodied in Utilities 2.0. Carolina says, “There are still three-quarters of a billion people in the world without energy access. Around 600 million are these in sub-Saharan Africa, and then the majority of these people are in rural areas. This has been a constant reality for years. And in a continent with high population growth there are more people in the dark every year.
“And the business-as-usual grid extension approach has failed miserably in sub-Saharan Africa”.
We can see how an integrated energy approach, with decentralised energy being used as a fast runner ahead of the lumbering giant of the centralised grid, could work to accelerate the end of energy poverty – and perhaps even real poverty – across the world. We congratulate Power for All on its successful Utilities 2.0 Twaake pilot in Uganda, together with the Ashden Award and, hopefully, the accelerated funding traction that will bring.
But, as we talked with Carolina Ines Pan, a couple of thoughts struck us. First, it was fascinating to listen to the efforts the Twaake project made to generate demand for electricity up to the point where it became worthwhile for Big Grid to step in, deploy its big capital assets and take the pre-built reward. It was like that in the UK once, of course, but well before most of we Baby Boomers, Gen Xers, Millennials and Zers were even thought of. And, as we step towards the next generation (Generation Zero-ers?) at a time when countries like Uganda are building demand, the UK is trying to reduce its own - or at least is talking about it, perhaps a little half-heartedly.
UK domestic electricity consumption, 1960s to present. Image: TGE from data HM Gov.
Nonetheless, UK electricity consumption has dropped off somewhat since its peak in the noughties. Our chart shows UK domestic consumption (in TWh) against population (in millions): it will be fascinating to see how an equivalent chart for Uganda might look in fifty or sixty years time.
The other thing that struck us is this. At a time when – as we reported in our post a few weeks ago – there’s a real concern around eWaste in the UK from discarded consumer electronics and appliances, surely there has to be an opportunity for a repair-centred value chain, run by grown-ups that aren’t just seeking make a quick buck from discarded tat, that will benefit the new appliance owners in countries like Uganda.
Perhaps it’s happening already. Maybe someone could let us know.
Our thanks to Carolina Ines Pan and Power for All for talking to The Green Edge. Green Edge opinions given in this post are our own and not necessarily those of Power for All.