Take a careful look at the snapshot below; it is a typical representation of the settlement pattern in most developing countries. According to the source of this image, the darker shades represent a population density of over 1000 people per square km, down to less than ten people per square km as we move to the lighter shades.
In most instances, the utility systems in these regions were designed to cater to the significantly populated areas. While the remote villages, rural areas are left without electricity facilities.
As these countries develop, there’s now been the need to bridge the gap and provide energy facilities to those less privileged regions. Hence, one of the significant reasons why developing countries adopt microgrid solutions to solve the problem of rural electrification.
Through this article, we’ll take a wholesome look at the major reasons for the rise of microgrids in developing countries. We’d also examine some notable successes of microgrid program in these countries. Let’s dive in.
Why Are Microgrids Gaining Prevalence In Developing Countries?
We started to explain at the introduction: one of the most underlying factors leading to the need for microgrids in most developing countries – population settlement pattern. The rural centres and villages are far from the central grid. If there’ll be an endeavour to extend the network to the remote locations, it’s going to capital intensive and time-consuming.
Microgrids are cost-effective. Instead of investing a massive amount of money on buying transmission and distribution equipment to expand the grid to the remote locations, investing in microgrids will provide electricity to these places at lower costs.
Therefore, developing countries have taken a more economical step in adopting microgrids to provide electricity to their remote centres.
Most microgrid solutions are renewable energy-based: This is another factor that makes the microgrid solution appealing to the developing countries. In a bid to comply with the Paris Agreement and other sustainable climate pacts, microgrid programs are primary channels through which these countries promote clean energy policies.
Some of them provide incentives and remove taxes and dues on renewable energy equipment as a way to keep up to their climate change policies.
Microgrids provide reliable electricity: a common characteristic of the central grid in developing countries is unstable supply. This is due to several factors like shortage of fuel source (for non-renewable), inefficient grid system, over-demand of energy, and even political factors.
These untackled challenges in the developing countries give room for industries, private companies, and communities to create their microgrid solutions, both renewable and non-renewable.
All these factors and many more have favoured the widespread of microgrids among the developing nations. Statistics by the International Energy Agency predicts that there’ll be a tremendous increase in the development of microgrids; by 2040, about 80 million people will have access to electricity through microgrids.
Talking about microgrid projects, according to a report given by Navigant Research, by the second quarter of 2019, there were already 4,475 microgrid projects all over the world. These microgrids sum up to a whopping 27GW of total installed capacity. How much have the developing countries participated in the boom?
Case Studies: Three Notable Microgrid Programs Among Developing Countries
Though Northern America and Asia-pacific regions account for the higher share of the world’s microgrid capacity. The sub-Saharan Africa regions and Southeast Asia are developing their microgrid capacity at an impressive pace. Here are some notable ones that we’d love to appraise.
Indonesia is a country with 34 provinces dispersed over 70,000 islands, with half the population living in the rural regions. Before now, only 66 per cent of Indonesia used to have access to electricity; now, over 88 per cent of Indonesia is electrified. Thanks to programs like Bright Indonesia and other electrifying initiatives, more houses in the remote areas of Indonesia enjoy a stable electricity supply.
The goal of Bright Indonesia is to provide 1GW of electricity to over 12,000 villages where electrification is needed the most by 2019.
With an emphasis on the sub-Saharan region of Africa, Beyond the Grid is an initiative of the United States Government to make 30,000 MW of new and clean electricity available to over 60 million African households in remote and rural regions by 2030. The program has 40 partners all over the world who have committed to invest over $1 billion in providing renewable microgrid solutions for sub-Sahara Africa.
According to the latest report, the program has birth 56 power projects, which are already generating 3,481MW of power connected to 14.8 million homes and businesses across sub-Saharan Africa.
Launched in 2015 by Rockefeller Foundation, the program aimed to provide renewable microgrid solutions to at least 25 million Indians spread across six states. The foundation invested $20 million to achieve this electrification goal in five years.
In the latest report, Smart Power India had over 160 microgrid solutions spread in four Indian states – Bihar, Uttar Pradesh, Odisha, and Rajasthan. The microgrids were over 80 per cent solar-powered, and their power capacity ranged from 10kW to 70kW. More than 70,000 people in remote areas of India now have access to sustainable electricity.
For millions of lives, the microgrid is more than just a cliche. It is the hope of a household of five, who live in mountainous terrains, where power lines do not reach, to have access to reliable electricity. Yet, there are still hurdles to cross through this mission of making electricity accessible to these regions.
Prospects, Challenges, and Recommendations.
According to a United Nations publication, factors like tariff design, tariff collection mechanisms, maintenance and contractor performance, theft management, demand growth, load limits, and local training and institutionalization still need to be addressed.
A couple of solution providers are already tackling some of these challenges. For instance, we see the PAYGO scheme used in Kenya that allows energy users to make their payment using mobile money solutions. In the light of today’s technology advancement, there are simpler and more efficient systems that we can adapt to cater for these challenges.
As an expert in smart grid solutions, we firmly believe that these local energy communities can be improved by optimizing the microgrids using machine learning and blockchain technologies. The blockchain technology guarantees fair and efficient governance, while smart algorithms provide techno-economic optimization for their participants by lowering their bills and valorizing their assets.
Read our elaborate white paper on Hive Manager – an efficient microgrid management solution.
Solar power leads the way as the most popular form of renewable energy in the European Market. With a 36% increase in installations from 2017 to 2018, the adoption of solar technology is on the rise. This trend can be attributed to the drive to meet the EU 2020 targets.
EU 2020 Renewable Energy Directive
In 2009, the EU states set targets to generate at least 20% of their energy from renewable energy by 2020. In this move, the EU defined various support schemes for member countries to cooperate in achieving their targets.
The Cooperation Mechanism is one of the EU 2020 support schemes. It employs three approaches to help members meet the Renewable Energy targets. These include;
- Joint Projects
- Joint Support Schemes
- Statistical Transfers
- The Joint Projects mechanism allows two or more EU countries to co-fund a renewable energy project. They can then share the power generated.
- The Joint Support Scheme mechanism involves the development of schemes such as a common feed-in-tariff. The programme would promote the production of renewables in two or more EU countries.
- Statistical Transfers were designed to level the playing field. Naturally, renewable energy resources are not equally distributed across Europe. As such, member states can buy shares of a renewable project from a resource-rich country. The energy shares are deducted from the producing country and added to the supporting country’s energy portfolio.
These cooperation mechanisms are deployed on a macro level. They involve major policymakers, national energy regulation, transmission companies and energy producers. The concept of working together to meet renewable energy targets has trickled down to the community level. Here, Energy Communities have been formed to help regular citizens to own a share of a solar energy project.
Regulatory Victory for Energy Communities
Following the Paris Agreement, the EU began reviewing its energy policy framework. This framework would facilitate Europe’s transition to low-carbon clean energy. Between 2016 and 2019, the EU developed and refined the Clean Energy for all Europeans Package.
The Clean Energy Package contains specific elements that promote the rights of energy consumers. The new regulations support the generation, storage and sale of energy by individuals. They are especially beneficial for the growth of energy communities in Europe.
What is A Solar Energy Community?
Energy communities are societies that come together and pool resources for the co-ownership of solar energy projects. They can be made up of individuals, small businesses, companies, municipalities and cooperatives, among others. They allow average people to own a share of a solar energy plant.
People mainly join energy communities to reduce their utility bills. They are also interested in participating in the renewable energy revolution. As individuals, most energy community members face several limitations to build solar projects. These include lack of capital, space and property.
Many participants of energy communities live in rental homes. As such, they cannot install home solar panels or benefit from the incentives of solar affords homeowners.
How Do Energy Communities Work?
Energy communities can be structured in various ways depending on the region’s regulatory landscape. In some cases, the community members live near the project site. These members can consume the energy generated directly, which is the typical setup in off-grid locations characterized by mini-grids.
However, in most parts of Europe and North America, an extensive grid network is already established. Here, energy communities can finance new grid-connected solar power plants. Members then earn net metering or solar credits, and they can use these credits to reduce their monthly utility bills based on the amount of electricity generated and the member’s share in the energy community.
Solar is attractive for energy communities because it is a low-cost solution that is scalable and readily available. The communities calculate their solar credits through a Virtual Net Metering (VNM) system. The VNM enables you to earn Net Metering Credits from a solar energy system that you didn’t connect to. As long as your grid provider buys the energy generated by the solar plant, you can earn Net Metering Credits.
Are Energy Communities Good For Solar Projects?
Energy communities create an avenue for new players to participate in the transition to clean energy. The European housing statistics indicate that approximately 42% of Europeans lived in apartment blocks in 2017. Meaning that, regardless of financial capacity, almost half the population don’t own roofs to install rooftop solar projects.
Through energy communities, people who were conventionally left out can now acquire solar energy assets. Here are various ways in which the energy communities can lead to higher solar sales.
Faster Transition to Clean Energy
Unlike the conventional solar home system format, energy communities support a more active uptake of solar energy. Energy communities connect multiple customers per project. While the power generated may not be for direct self-consumption, each member of the community has a share in it.
As you approach utility-scale, solar energy community projects have the advantage of quick adoption. These systems acquire land rights and social acceptance much faster than typical utility-scale solar projects. This pattern is because most of the decision-makers in the community have a stake in the project. The energy community members are usually well informed about the project, allowing the developers to focus on the implementation of the project rather than gaining social acceptance.
Overcomes Grid Limitations
In remote or rural settings, the national grid may not reach every potential customer. The cost of grid expansion is also high. Also, the challenges of upgrading weak networks for demand-side management can limit the connectivity of new projects.
Energy communities can employ smart mini-grids to connect consumers. This step avoids straining the existing grid system. The mini-grids can also connect and feed solar power to the grid directly. High-quality mini-grids with adequate net metering infrastructure reduce losses and maximize the revenue for grid-connected solar projects.
Improved Energy Storage Management
It is challenging to ensure the uninterrupted supply of electricity on the national grid. Energy communities can facilitate Community Energy Storage (CES) solutions. Collective energy storage solutions are easier to manage and maintain than in individual homes.
Energy storage is a vital component of solar energy systems, and they reduce the load and reliance on the grid at night while community solar plants with integrated energy storage provide well-balanced uninterrupted power supply options.
Cost-Effective Solar Solutions
Energy communities enable more people to overcome the investment barriers involved with solar energy projects. The high initial investment costs are among the most significant obstacles to the integration of solar projects.
Energy communities allow members to share the cost of developing a solar project. This action lowers the entry cost for each individual and makes the project more attractive.
Development of Smart Grid Technology Markets
The new EU energy policy encourages the development of decentralized energy generation. In the past, independent power producers were either small individual homes or utility-scale solar projects. Energy communities create a demand for innovative smart technologies in the solar energy space.
Energy communities need dynamic digitized solutions to monitor their solar power systems. These solutions are necessary for data analysis, system optimization and report generation for the energy community members. Advanced analytical solutions are also required for net-metered systems that generate solar credits for the community’s shareholders.
The deployment of energy communities creates an opportunity for unmatched growth of solar energy in Europe. Enabling people who live in flats to participate and co-own solar projects almost doubles the potential solar investors in the EU. Integration of energy communities can accelerate the efficient development of solar projects across Europe.
As a consequence of the foreseen significant increase in stochastic generation in the electrical grid, the need for flexibility and coordination at demand side is expected to rise. Decentralized energy markets are among the most promising solutions allowing to boost coordination between production and consumption, by allowing even small actors to capitalize on their flexibility. The main purpose of Hive Power is to develop a blockchain-based platform to support groups of prosumers that want to create their own energy market. The core element of this framework is the so-called Hive, i.e. an implementation of an energy market based on blockchain technology (see our white paper on hivepower.tech to have detailed informations about Hive Power platform).
This article describes Demo Hive, the first testbed developed by our team and presented during the Energy Startup Day 2017 in Zurich, Switzerland on November 30th 2017. Practically, the demo is a simple but also meaningful case of a hive; it is constituted by a producer and a consumer, the so-called workers. A third element is the QUEEN, whose aim is to manage the interaction between the workers and the external grid and to track the measurements related to the power consumed/produced by the workers. The producer, following named SOLAR, simulates a photovoltaic plant with a nominal power of 5 kWp. Instead the other worker (LOAD) generates data about a load consumption. Fig. 1 shows the demo testbed.
Fig1: The Demo Hive testbed
Essentially, the main hardware components of Demo Hive are:
- two SmartPIs, one for each worker. This device is constituted by an acquisition board for the electrical measurements (voltages and currents) connected to a Raspberry Pi 3. In Fig. 1 the two workers are the black boxes on the bottom.
- A Raspberry Pi 3 in order to provide the Queen functionalities.
- A 5G router to provide the Internet connectivity and a WLAN inside the testbed.
One of the most meaningful aim of Demo Hive is to tokenize the produced/consumed energy and to save the related information on a blockchain. For that reason an ERC20-compliant smart contract was deployed on the Ropsten network in order to create a demo token, called DHT, which has the following fixed value:
- 1 DHT = 1 cts = 0.01 CHF
The basic idea of Demo Hive is that LOAD owns a certain amount of DHTs and sends part of them to the producers (typically SOLAR, but also the external grid through QUEEN) to buy energy. In the following chapter this aspects will be exhaustively described.
A set of applications runs on the aforementioned devices to actuate the Demo Hive platform, a part of them developed by Hive Power. In this article only the main behavior of the demo testbed will be described, avoiding to explain all the code in details. The following image reports the software interactions inside the demo and outside with the Ropsten network.
As written in our whitepaper, periodically the real Hive platform will save data about the tokenized energy on a blockchain. This is quite unconvenient in a demo testbed because the period can be too long. For that reason the demo software considers virtual days with a duration of just 10 minutes. This means the SOLAR worker produces in 10 minutes the same energy really performed in 24 hours. Similarly the power measurements, in a real application performed off-chain and usually acquired every 15 minutes, in Demo Hive are measured every 5 seconds. As shown in Fig. 2, during the virtual day of 10 minutes the power measurements are saved by the workers in QUEEN (black arrows) in an InfluxDB database, a time-series oriented DBMS commonly used in monitoring applications. When the simulated day ends, the workers energies are calculated and tokenized in DHTs considering the following static tariffs.
- Buy on grid: 20 cts/kWh
- Sell on grid: 5 cts/kWh
- Buy in the Hive: 10 cts/kWh
- Sell in the Hive: 10 cts/kWh
Consider that LOAD/SOLAR worker can only buy/sell energy. Instead QUEEN, managing the interface with the grid, is allowed to perform both the operations. At the end of a simulated day a tokenization algorithm tries to maximize the hive autarky using the following rules (see also Fig. 2):
IF 𝑬_𝑳𝑶𝑨𝑫>𝑬_𝑺𝑶𝑳𝑨𝑹 : LOAD buys 𝑬_𝑺𝑶𝑳𝑨𝑹 from SOLAR (10 cts/kWh) and 𝑬_𝑳𝑶𝑨𝑫−𝑬_𝑺𝑶𝑳𝑨𝑹 from QUEEN (20 CHF/kWh)
ELSE IF 𝑬_𝑺𝑶𝑳𝑨𝑹>=𝑬_𝑳𝑶𝑨𝑫 : SOLAR sells 𝑬_𝑳𝑶𝑨𝑫 to LOAD (10 CHF/kWh) and 𝑬_𝑺𝑶𝑳𝑨𝑹−𝑬_𝑳𝑶𝑨𝑫 to QUEEN (5 CHF/kWh)
Practically the workers exchange all the available energy in the hive, exploiting the more convenient tariffs.
Thus, the energies are tokenized in DHTs and the related tokens (as written before, 1 DHT = 1 cts) sent by buyers (LOAD or QUEEN) to sellers (SOLAR or QUEEN) according to the aforementioned algorithm. In Fig. 2 these operations are represented by the red and light blue arrows. The DHTs transfers are then saved on the Ropsten blockchain. This can be performed because on each demo device a geth client maintains a node synchronized to the Ethereum testnet network. In order to minimize the required disk space, the geth instances run the Ethereum light client protocol. The Ropsten accounts of the components are reported below:
- LOAD: 0x888d0aafc4d7c95fcaff9264d4bc2c1829a575be
- SOLAR: 0x3b5b6bbF5A14259bdF499f526A51aE7bF21c7476
- QUEEN: 0x7ab0c357cf3ae3c36b7ee8d4a84722a96790a6bd
As explained above, the Demo Hive testbed simulates “virtual” days with a duration of 10 minutes. During a single day the produced/consumed power of the two workers is saved every 5 seconds. At the end of the day (i.e. 10 minutes) the related energies are calculated, tokenized and saved on Ropsten network. In order to have days with both the aforementioned cases of the autarky algorithm (i.e. solar production > load consumption and solar production < load consumption) the following power profiles are taken into account for the workers:
- SOLAR: two profiles are considered, the former (following named CLEAR) with a significant production, related to a day without clouds. Instead the latter (following named CLOUDY) has a poor production, simulating an overcast day. The sequence of the profiles in the simulated days is a continuous alternation, i.e. after a CLEAR day there is a CLOUDY one, and so on.
- LOAD: a unique typical profile is taken into account as baseline, then every day a noise is added to it. As a consequence, during the simulated days the resulting profiles are always similar, but never equal.
Fig. 3 shows an example of two simulated days. It is simple to note the difference between the CLEAR and CLOUDY cases.
The profiles shown in Fig. 3 were performed during the Energy Startup Day 2017. Considering the first profile (CLEAR), it is simple to understand how the SOLAR production exceed the LOAD consumption. As a consequence, all the energy needed by LOAD is locally bought in the hive from SOLAR producer at the convenient Hive tariff (i.e. 10 cts/kWh). On the other hand, the remaining amount of produced energy not bought by LOAD will be sold by SOLAR on the grid with a less convenient tariff (i.e. 5 cts/kWh). Acting as described, the local energy exchanging is maximized and, consequently, the two workers realize to save/profit money taking advantage of the Hive tariffs.
In the second case (CLOUDY profile), the production is not able to cover all the consumption. Thus, LOAD has to buy part of the needed energy from the grid paying 20 cts/kWh.
At the end of the simulated day the savings/profits data are then tokenized and the related DHTs distributed by the consumer (e.g. LOAD in a CLOUDY case) to the producers (e.g. SOLAR and QUEEN in a CLOUDY case) in order to pay the used energy. In the following list the energy profits/costs in DHTs are reported comparing the cases of Demo Hive against a business as usual (BAU) situation, where the hive market does not exist (i.e. only the grid tariffs, 20/5 cts/kWh to buy/sell energy, are available).
- Solar revenues:
12:00-12:10 (CLEAR): HIVE = 432 DHT BAU = 254 DHT HIVE-BAU = 178 DHT
12:10-12:20 (CLOUDY): HIVE = 135 DHT BAU = 68 DHT HIVE-BAU = 67 DH
- Load costs:
12:00-12:10 (CLEAR): HIVE = 356 DHT BAU = 713 DHT HIVE-BAU = -357 DHT
12:10-12:20 (CLOUDY): HIVE = 590 DHT BAU = 725 DHT HIVE-BAU = -123 DH
It is easy to note how the saved/earned money of LOAD/SOLAR is much higher during the CLEAR day, being the solar production able to cover all the energy needed inside the hive. The following list reports the precise amounts:
- LOAD saves 3.57 CHF during CLEAR days
- LOAD saves 1.23 CHF during CLOUDY days
- SOLAR earns 1.78 CHF during CLEAR days
- SOLAR earns 0.67 CHF during CLOUDY days
The following URLs report the Ropsten transactions details related to the simulated days.
- TX_CLEAR_1: 356 DHTs sent by LOAD to SOLAR
- TX_CLEAR_2: 76 DHTs sent by QUEEN to SOLAR
- TX_CLOUDY_1: 455 DHTs sent by LOAD to QUEEN
- TX_CLOUDY_2: 135 DHTs sent by LOAD to SOLAR
The Demo Hive testbed implements a very simple case of hive. It is a significant starting point for the development of the complete framework, but some improvements have to to be implemented. The following list reports the most meaningful features still to develop.
- Prototype of a “blockchain-ready” meter: SmartPi device is based on a Raspberry Pi 3 board, a great hardware platform for prototyping and initial tests but not projected to be easily integrated in an industrial product. In order to develop a blockchain meter, naturally necessary in our framework, the idea of Hive Power is to take into account more industrial-oriented hardware platforms and using them to substitute the SmartPi devices.
- Power profiles: Currently the workers profiles are quite similar during the “simulated days” of 10 minutes. Practically there is a precise alternation of clear and overcast days for the SOLAR production. Regarding the LOAD, every simulated day a noise is added to the same predefined profile. In order to have a more realistic situation, new profiles have to be considered (e.g. two different LOAD profiles, the former for workdays and the latter related to the weekend)
- State channels: in our demo testbed, the power measurements are now acquired every 5 seconds and the related data saved in an database running on QUEEN. In order to have a fully decentralized approach, our idea is to handle power data using State Channels technology avoiding to use a local database.
- More workers: To have a more realistic simulation of a Hive energy market, the number of workers should be increased.
- Prosumer/Storage worker: Currently being in Demo Hive only a consumer (LOAD) and a producer (SOLAR), it will be meaningful to introduce prosumer and storage workers in order to have a complete market. It is interesting to consider that with storage systems it would be possible to implement load-shifting algorithms to maximize the costs savings.
- Dynamic tariffs: In Demo Hive only static tariffs are taken into account for the energy buying/selling. Clearly, this is not a realistic situation and consequently a dynamic system of tariffs has to be implemented.
In the latter years the world faced an amazing adoption of renewable energy sources, mainly solar and wind. Initially, the rapid advancement of these technologies was driven by strong incentive programs, first in Europe and therefore in the rest of the world; in parallel, technical improvements and economies of scale of manufacturers, mainly Asian, have allowed a rapid decline of renewable electricity costs.
Today, in different parts of the world, renewable energies are already cheaper than fossil fuels, but there are several cases where their adoption can be stalled by uncertain self-consumption rates of the energy produced. In fact, with current tariffs scheme, a very important factor for calculating the financial return of a new photovoltaic plant is the percentage of self-consumption. This is due to the big difference between the prices of energy purchased and sold to the local network, so without a significant energy consumption during the sunny hours, the majority of the energy produced is injected to the grid. This asynchrony can make solar not convenient.
Example of mismatch between solar energy production and house’s demand
New energy exchange models
To change this scenario, new energy exchange models are needed, which should encourage users to a more rational use of energy at the local level, introducing a new simple and cheap billing scheme. The natural candidate to optimize decentralized energy exchange processes is the blockchain, a decentralized technology based on distributed databases, which allows users to sign contracts and make payments with negligible marginal cost, all with a high assurance of reliability and without a central body. Blockchain technology and new business models that stimulate the local energy exchange — for example between neighbours or business entities in the same district — can facilitate the diffusion of photovoltaic plants and optimize the distribution and use of batteries, that will have a prominent role in the coming years.
A number of start-ups and big utilities are moving towards this new scenario, some with proprietary systems that are a bit in contrast with the distributed market logic, others trying to create an open platform that can integrate components from third parties. These models need also to couple with different use cases, such as micro grids, self consumption communities, condominiums and low voltage district grids.
An automated and reliable future
Additional factors that will encourage the use of smart energy management technologies at local level are the physical constraints of the power grid. Copper cables connecting residential, commercial and industrial areas could face issues in the future, causing a new wave of renovation costs for the electric grids. To prevent this regrettable future, new market models should be designed to encourage the users to use (and store) energy helping the power grid to maintain voltage and frequency within safety range. All these mechanisms will be dominated by artificial intelligence algorithms, so no effort will be required to the user, these new smart tools will work in what many already call “machine economy”.
At Hive Power we are enabling the creation of energy sharing communities where all participants are guaranteed to benefit from the participation, reaching at the same time a technical and financial optimum for the whole community.
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