Coming off the grid

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This year, we have watched in utter horror as hurricanes Harvey, Irma, Jose and Maria thrashed the Caribbean, the Gulf of Mexico and the southern United States. This hurricane season has had the highest number of storms since 2010 and the most accumulated cyclone energy since 2005. Damage from the hurricanes is now estimated to stand at US$186.7 billion!

But amid all of this destruction, flickers of hope emerge…

Late last week we learnt that Elon Musk, of Tesla, has been in conversation with the governor of Puerto Rico offering for Tesla to rebuild the island’s power grid with batteries and solar power. For Tesla, in addition to coming to the aid of an island in dire need of assistance, this provides a perfect platform to demonstrate its technological prowess.

The technology Tesla plans to use has already been deployed on a number of other smaller islands and according to Musk, there are no scalability issues. For example, the island of Ta’u in American Samoa is powered by a solar grid which can store enough electricity to power the entire island for three days without sun.

A Tesla-built Puerto Rico grid sounds like a brilliant option for the island and, with a promised 100 day turnaround, it couldn’t come quickly enough!

The rise of local renewable mini-grids or standalone grids has been a growing trend since 2016, spurred by falling solar technology costs, technological advances in battery storage capacity and the continued spread of innovative customer payment solutions. Standalone grids provide much-needed electrification to areas that are poorly accessible or that are far from established electric grid infrastructure. According to the IEA World Economic Outlook 2016, there are 1.185 billion people without access to electricity in the developing world, the majority of them in Africa. Mini-grids and standalone grids would be an energy efficient and affordable (from the consumer perspective) solution to this problem.

However, as with any disruptive technology, in order to scale up, it requires a regulatory regime that is fit for purpose and funding. Most regulatory regimes do not cater for the off-grid market and so it continues to operate in somewhat of a grey area. A more encompassing regulatory regime would pave the way for more market entrants. On the funding side, there have been some breakthroughs. Indeed, just yesterday M-Kopa Solar, a leader in the pay-as-you-go energy provision market, announced that it had secured commercial debt funding of US$80 million, proving that the off-grid electricity market can be financial viable. However, such announcements remain an exception, rather than the norm.

Perhaps Tesla’s involvement will spark a renewed interest in the off-grid market and will encourage greater investment…here’s hoping!

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