Nearly a quarter of the 1.1 billion without access to reliable electricity are located in India, which is critical to its development and which requires creative solutions. While the growth of centralized power generation and delivery is expanding there, so too is onsite rooftop solar energy with localized microgrids.
India’s government is crafting a plan to build such decentralized power and delivery mechanisms over the next five years — a $2.5 billion effort. While the focus there is on extending access to those rural areas without electricity, it could also be used in its industrial and manufacturing sectors.
India is an example of how microgrid technologies could be applied in the world’s growth regions. To have universal electrification by 2030, microgrid expansion would need to double, notes the Microgrid Investment Accelerator, which was founded by Microsoft and Facebook, along with Allotrope Partners. And that requires reduced barriers to entry to entice risk takers.
“Microgrid (and solar home system) solutions powered by renewables provide electricity to nearly 90 million people,” says the Microgrid Investment Calculator. “To achieve universal electricity access by 2030, the current pace of expansion will have to double. It is estimated that off-grid solutions will supply 50%-60% of the additional generation needed to achieve universal electricity access by 2030.”
About 95% of those without electricity are in sub-Saharan Africa or Asia and 80% of those are in rural areas. General Electric and Italy’s Enel are active in Africa while Schneider Electric and Chili’s Engie are investing in Southeast Asia.
Unlocking Capital
The good news is that the microgrid technology market is growing by 20% a year, says Bloomberg New Energy Finance. It totaled $6.8 billion globally as of 2017, adds the Advanced Energy Economy; the Pacific island nations announced 15 different projects in the last year. Even better, the costs of both renewables and energy storage technologies — two assets central to microgrids — are falling.
The bad news is that CrossBoundary told the Clean Energy Finance Forum that the payback for microgrid systems takes 10 years, which requires developers to charge more per kilowatt-hour. That is because developed nations have dense urban areas that consume much power while developing countries have sparse populations that use much less, meaning that companies must charge more.
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