GABA's Mini-Grids Panel on September 30th

Based on the positive feedback from previous GABA smart grids events, Dirk Michels from K&L Gates in San Francisco hosted another panel discussion about so-called mini-grids on September, 30th. Moderator Olaf Groth did not only challenge the speaker´s presentations and corresponding insights but also successfully involved the audience during the interactive Q&A session.

The panelists team consisted of Prof. Dr. Burkhard Koch (Managing Director, IQ International Consulting, Germany), Sameer Kalra (Strategic Director of SmartSynch) and Tony Seba (Author “Solar Trillions”) and provided multi-facetted perspectives to the question how the trends for mini-grids evolve on a global as well as on a local scale.

Based on Olaf´s introduction and guidance, due to the high complexity of the topic, the distinguished speakers elaborated facts, figures and thoughts along the following key dimensions:

1) How can the trends in mini-grids be analyzed across the spectrum of highly centralized markets such as China on the one hand versus decentralized market landscapes, e.g. the U.S.?

2) How do mini-grids play out in the various parts of the energy value chain, especially in power generation, distribution and consumption?

3) How do mini-grids play out differently in OECD-countries versus in emerging markets (BRIC)?

4) How can we check our assumptions about the future of mini-grids in times of increasing global uncertainties with respect to the confluence of the need for energy efficiency and electricity reliability, as well as both demand and supply of feasible innovation?

Overall energy trend: a new architecture is potentially emerging that shows parallels to technical “revolutions” in the 1980s (PCs) and 1990s (internet). Today´s energy sector shares similar characteristics as the 80s IT sector, i.e. few big players in markets, those will be more democratic and scalable in future.

Across the energy value chain of generation, transmission, usage and storage, various opportunities will evolve for new ventures to enter diverse market segments; households will likely participate actively in the upstream energy market.

Mini-grids comprise a combination of technologies: diesel, complemented by hydro and/or solar technology depending on geography. An increasing portion of renewable technologies in the grids positively correlates with a quest for independence of the volatility of oil prices.

Mini-grids solutions will to large degree depend on advances in electricity storage technologies: All speakers agree that different technologies are at different stages of maturity: disruptive technologies in energy storage are expected.

Lessons learned for successful implementation of mini-grids: the involvement of the community as well as the empowerment and education of local populations is a key success factor as those consumers and businesses depend on the grids’ security and reliability – these are the top concerns as well for utility players and transmission operators, who have to ensure stability, as electricity has physical properties that are different from bits and bites in the internet. Imbalances in grids can lead to large-scale physical damage.

Mini-grids have an especially attractive value proposition for developing countries where they offer a feasible and less expensive alternative to centralized grids that are already well established in OECD countries. This could lead to leapfrogging that might be comparable to what we’ve seen with mobile phones vs. fixed land lines internationally.

Investment opportunities: besides direct investments in mini-grids, there is a window of opportunity for microfinance projects associated with mini-grids, due to lack of alternatives. Many traditional investors shy away from the large CAPEX investments for renewables and/or smart and mini-grids solutions.

In summary, mini-grids may evolve as a viable and profitable solution in a number of important markets around the world. However, complex local legacy systems as well as differing infrastructure and geographic conditions require customized grid solutions and have to be carefully evaluated on a case-by-case base. Furthermore, the right timing and sequence of future investment opportunities is key to develop the mini-grids trend into a sustainable future alternative for energy generation and supply, depending on local and regional policies, demand conditions, user acceptances, etc.

Finally, I would like to thank again Olaf Groth for an excellent moderation and the panelists Prof. Dr. Burkhard Koch, Sameer Kalra and Tony Seba for their presentations and enriching discussion. The GABA Clean Tech community is looking forward to meeting again in near future!