Author: Peter Weston (Renewable World Trustee)
Feature Image (above): The Energy Hub at Rasira Beach
In September 2015, Peter Weston, Trustee of Renewable World, went to Kenya to visit RESOLVE, a pilot project for community-owned solar-powered microgrids funded by Comic Relief. These small, stand-alone solar power plants or “hubs” provide clean, affordable energy to six of the poorest fishing communities next to Lake Victoria. In this article, Peter explains why the hubs are important and which factors are likely to influence their long-term success.
Diana Atieno Odhiambo, the treasurer of the new community-owned solar microgrid in Ragwe Beach, is beaming. “Before, the fishermen had to sell or eat their fish on the day it was caught. Now, they can buy ice and keep it for the next day.” For most of us, this is not a big deal. We are used to keeping fish cool or frozen until we are ready to eat it. But, for Diana and the fishermen in her village, having solar power to produce ice is a big step forward because they waste less fish and can wait to sell it at higher prices.
Ragwe is one of six remote fishing communities* located on the shores of Lake Victoria in Kenya selected by Renewable World for RESOLVE, a pilot project for community-owned solar microgrids. Like most settlements in rural Kenya, these ones are dark at night and do not have access to the state-owned national power grid. I was fortunate to join the Renewable World Programme team on their last visit to the region in September 2015.
Diana told me the microgrid (or “energy hub” as it is known locally) is starting to improve lives. “We used to rely on kerosene lamps because we had no electricity. We now have solar lighting until 11PM and three shops can stay open late.” She herself lives too far away to be connected to the hub, but hopes that she will be connected one day. “That would make me very happy,” she says. “I would never use kerosene again. I would use the electricity to sell new things in my shop like ice-cooled soda and fresh Tilapia and Nile Perch.”
What is RESOLVE?
RESOLVE (which stands for ““Renewable Energy Solutions for the Lake Victoria Ecosystem”) was started three years ago. Backed by a £300K grant from Comic Relief, the project comprises six stand-alone, centralised solar photovoltaic systems, each linked by underground cable to up to 20 houses and businesses. All the hubs are now in operation, most of them installed in the last four months. They each have a capacity of 1.5 or 2.0 kW, with the option to scale-up later. That is roughly the same power rating as 130 low energy bulbs or 20 fridges. Power is generated during the day and stored in batteries for night use. The communities own the hubs and are responsible for operation and maintenance of the equipment and payment collection.
Benefits of the hubs
RESOLVE has two primary objectives: first, to improve the livelihoods of the communities concerned and second, to provide data and learning on how community-owned energy hubs can be sustainable. It also looks at what returns are achievable for different stakeholders.
Around 1650 people benefit from the new electricity services and the benefits come in different forms:
- Cutting the use of kerosene and diesel;
- Improving basic community services; and
- Providing opportunities for small businesses, both existing and new.
Let us take a closer look at each of these benefits:
Reducing kerosene use
The hubs are starting to reduce the use of harmful, expensive kerosene lamps and diesel generators, which are costly to operate and difficult to maintain. People are also less reliant on disposable batteries to power small appliances such as radios. According to the World Health Organisation, kerosene lamps kill 1.5 million people globally every year through inhalation of toxic fumes and accidents from spills and burns – roughly the same number of deaths as HIV AIDS and more than twice that of malaria. Kerosene costs account for up to 20% of a family’s monthly income, money which could be better spent on nutritional food, school fees or starting a new business.
Improving basic services
Lives are becoming a little easier thanks to the hubs. People have lighting in their homes and can charge their mobile phones locally rather than walking to the central kiosk. Students can do their homework and teachers can prepare their lessons during the hours of darkness. People have increased access to information and entertainment via radio. Outside lighting has improved security and reduced the number of robberies at night.
Supporting small businesses
The hubs are providing opportunities for small businesses to grow. Lighting allows shops to have longer opening hours. According to the UN Development Programme, household businesses with improved lighting can increase their income by up to 30% due to increased productivity at night. Businesses are now powering everything from electric razors and satellite TVs to welding equipment.
Encouraging new businesses
New businesses are being created around the hubs. These range from mobile phone charging to computing services and ice selling. There are plans to eventually use the solar power for water pumping for drip irrigation to grow cash crops such as tomatoes.
Renewable World are donating equipment such as computers and freezers to help launch new businesses. The first Information and Communication Technology centre officially opened at Ngore Beach while I was there. Run by a group of young men and women from the community, it offers internet access, photography, printing and photocopying services, and provides valuable free information on fish prices. Training and technical support is being provided in the first instance by one of Renewable World’s local partners. The plan is that those trained will then train others.
I had the chance to inspect the new freezers which allow people to sell ice. Ice is a valuable commodity in the lake region, which has hot and humid weather all year round. For some people, the ice just means they are able to have cold drinks. For the fishermen, it means much more because they can store their catch and they gain a stronger negotiating position with buyers acting for the large fish processing companies. Those with ice no longer have to sell their catch when buyers drop their prices at the end of the working day.
Lessons learnt so far
There is not sufficient data yet to categorically say what the most important factors for the long-term sustainability of the hubs are, but Renewable World’s model seems robust. Rooted in a holistic approach to sustainability, it has been designed to take into account the five pillars of technical, financial, environmental, socio-cultural and organisational sustainability. A technically functioning microgrid, for example, will only be sustainable if it is managed in a financially sustainable manner, is accepted and valued by the users, is governed by effective organisations, and supports rather than damages the local environment.
Renewable World are using RESOLVE to test, document and prove different criteria for the success of community-owned energy hubs. It is still early days, but a number of factors are emerging as being important:
- Understanding and getting the buy-in of the community;
- Assessing potential electricity demand;
- Developing a suitable organisational structure; and
- Finding good local partners.
Let us explore these ideas a little further:
For the design and planning, it is important to take time to understand the needs and priorities of the community and to make sure the project has broad community support. It took nearly two years of research and interviews with men, women and young people in 20 communities before the six sites for RESOLVE were selected. The research was done sensitively so as not to raise expectations and disappoint those communities not chosen for the pilot.
Demand for electricity
There needs to be a clear demand for electricity and a current lack of access to power. The RESOLVE sites are all located away from the national power grid and there is little prospect of the grid being extended to them in the near future. Three of the six sites are in Homa Bay County, which has an electrification rate of 3% compared to 23% for Kenya as a whole. The other three are in Migori County, which has a slightly higher electrification rate at 5%.
Thought needs to be put into the organisational structure which will manage and maintain the hubs. Some communities may be better suited to a legally empowered Community Based Organisation (CBO) model, while others may work better as a cooperative or using private ownership. A CBO structure has been adopted for RESOLVE. For each hub, a CBO has been registered, a formal election of executives has taken place, and a bank account has been set up. The hub executive reflects the diversity of the community (age, gender and so on).
It is important to have a strong mandate for the hub and a clear division of responsibilities between the hub and other community institutions, in order to avoid community tensions. In particular, it is important to keep the hub – and its executives – separate from the Beach Management Unit (BMU), which is responsible for managing the fisheries and bringing together all the stakeholders at the beach. If this does not happen, there is potential for the hub executive to act in the interests of themselves and the BMU rather than the community as a whole.
Time should be spent to find the right local partners and build strong, trustworthy, relationships with them based on clear roles and responsibilities. Renewable World work with three main partners, one for the solar equipment, one for community engagement and another for training:
- Access Energy (now renamed SteamaCo), a private Kenyan company, are responsible for purchasing and installing the solar equipment. They provide smart technology, which allows the CBOs to monitor the performance of the hubs remotely and to capture user payments via mobile money platforms. They also provide technical training in the use and maintenance of the hubs, mostly through locally certified engineers.
- Fascobi, a local NGO specialised in family support, are the community engagement partner. Their main responsibilities are setting up the CBOs and broader community relations.
- Osienala, a local NGO focused on capacity building and the environmental protection of Lake Victoria, manage the local training in governance, leadership, basic financial literacy and development of business plans.
The content and timetable for the training is constantly being monitored and improved. It is important to do the training in the right order. For example, training on governance and technical maintenance should ideally take place before the hubs come online, so everything is well managed from day one. There is also a case for doing financial literacy training early, so the hubs build up cash reserves to cover the cost of replacing the battery packs which typically need to be replaced every five years.
Renewable World chose their local partners well. I spent over a week in the company of Pastor Gilbert Angienda and Whinny Ogembo, both from Fascobi, and Peter Mireri from Osienala. All three of them come from the Lake Victoria region and really understand the local culture and traditions. I was struck by how much the communities trusted them. People stop and listen when Pastor Gilbert and Peter speak, and the women seem very comfortable sharing their problems with Whinny.
Renewable World have overall responsibility for mobilising all the stakeholders and ensuring the hubs are delivered on time in a sustainable way. While I was in Kenya, Renewable World held two all-day meetings, one just with the local partners, and another together with the executives of the hubs. The latter was the first time that most of the executives had met each other and could share their experiences. It was exciting to watch them present themselves and then break up into mixed community teams to discuss the challenges highlighted elsewhere in this paper. At the end of the meeting, the executives were given the contact details of the other attendees and encouraged to continue the dialogue.
For RESOLVE to be a long-term success and remain valued by the community, the hubs have to be technically reliable and well managed. That means they must be:
- Properly maintained;
- Correctly used;
- Priced at a point that consumers can afford; and
- Have an efficient payment and billing system.
Let us examine these points in a bit more detail:
Solar microgrids actually need less maintenance than many other renewable technologies. However, it is still necessary to clean the solar panels regularly and top up the batteries with distilled water. It is therefore important that the hubs have their own trained maintenance staff and technical experts on call as required.
Fair and efficient usage
Power from the hubs has to be used efficiently and fairly. Experience shows that demand for power is greater than supply in the early stages when the capacity of the hub is limited. Users need to be trained to buy low energy appliances and to adjust appliance settings to optimise consumption. They need to be encouraged to use energy intensive appliances such as welders and hair dryers during daylight when energy is produced, in order to avoid draining the batteries at night. One idea under consideration is to have different tariffs for day and night to encourage more efficient use.
In terms of fairness, given the limited capacity of the hubs, it is important that no individual monopolises use of the system at the expense of others. It is also important that the hub executive do not give preferential treatment to themselves or their friends. The solution to this problem lies partly in having the right governance structure described earlier and partly in remote monitoring. SteamaCo’s smart meters can see how much power is used by individuals and when.
Finding the right pricing point for consumers is not easy. RESOLVE is deliberately starting off with a fairly simple pricing system: a $10 connection fee and a $1.40/kWh tariff for usage. The tariff is attractive compared to the cost of kerosene (about $10/kWh) and the connection fee is small compared to that of the main electricity grid (about $150). One challenge which has not been resolved yet is the tendency of people to compare the tariff to the price of electricity on the national electricity grid (about $0.23/kWh) rather than the cost savings versus kerosene.
It is important to have a functioning and reliable billing system and it is good to test the system before it goes active. RESOLVE uses smart meters, which link the electricity supply equipment to prepayment services that go through M-Pesa, a mobile phone-based money transfer system. All payments are recorded and cashless, and made directly to the bank account of the hub, which reduces the potential – and perceived potential – for financial impropriety.
There is potential for the private sector to play a transformative role in the scale-up of solar microgrids. Different models are possible, for example a public/private partnership, with private participation in operation and maintenance, or simply a private concession. In February 2015, the Energy Regulatory Commission of Kenya (ERC) granted Powerhive, a microgrid solution provider in emerging markets, concessions to operate as Kenya’s first private utility company. They have since announced plans to construct 100 solar microgrids in the country which will serve 100,000 household and business customers.
Private investors need to make a return on their investment which reflects their risk/reward appetite. In my opinion, solar microgrids serving the poorest rural communities are unlikely to be commercially viable without a grant or government subsidy to cover a significant part of the upfront investment. The amount of the subsidy will depend on different factors, including the ability of people to pay for power.
Some investors may be concerned about the small size of the hubs, how to collect revenues from poor customers in remote places, and the lack of data on demand and payment patterns. There are potential solutions to all of these problems. The first is to aggregate multiple projects into a single portfolio, say 50 kW or above. This has the benefit of creating economies of scale in community mobilisation, installation and maintenance. The second is to use smart metering and pay-as-you-go technology. Finally, the data from the smart meters should help investors to make more reliable cashflow projections.
In this paper, I have examined how the hubs make a difference to the lives of six fishing communities in Kenya and some of the challenges that Renewable World are tackling to make the hubs a long-term success.
Pilot projects such as RESOLVE are what motivates me to be a trustee of Renewable World and I feel very privileged to have seen the hubs in operation and witnessed the communities coming together around them. The Renewable World team headed by Nick Virr (Global Programmes Manager) and Geoffrey Mburu (Programme Manager for East Africa) should feel very proud of what they have achieved.
Harnessing the power of the sun makes perfect sense in these communities. In countries like Kenya, where the expansion of centralised electricity generation and the national grid cannot keep up with economic growth, the potential of microgrids to electrify remote, off-grid settlements is enormous.
There is still much work to be done to prove RESOLVE is sustainable and scalable. However, if Renewable World succeeds and I believe their model is the right one, then Diana’s dream of selling ice-cooled fish and soda might come true one day.
*The other communities are Tabla and Luanda Rombo (which like Ragwe are in Homa Bay County), and Ngore, Got Kachola and Rasira (which are in in Migori County).
Alternatively please contact Nick Virr on firstname.lastname@example.org or Marie Hounslow on email@example.com.
About the author
Peter is an expert in power and renewables, with 20 years’ experience as an investor, lender and strategic adviser, much of it in developing countries. Since early 2015, he has been providing independent advice to energy investors focused on Sub Saharan Africa and South Asia. Peter is a non-executive director of Triodos Renewables, a community-oriented investor in small-sized renewable projects, and a visiting lecturer at ESCP Business School. He was previously global head of finance and investment for two power equipment suppliers: Siemens Wind Power and MAN. He led the European energy lending team at GE Capital and was an executive director at Westdeutsche Landesbank. Peter has a BA in Economics and Politics from the University of Warwick.