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Pitch

Deploy microgrids to the developing world using a franchise business model based on open source components to reduce cost.


Description

Summary

The challenge is to provide power based on renewable sources to some of the world’s poorest people. Many groups have recognized that a decentralized grid with small-scale generation close to the point of use makes more sense than trying to extend centralized grids. Communities that do not already have power are often small and remote. Distribution lines to reach them are expensive, subject to significant losses and vulnerable to power theft and terrorist disruption.

Microgrids based on PV, wind or pico-hydro sources solve these distribution problems, but have their own problems with cost and reliability. Many different deployment models are being explored. When systems are gifted without someone local to maintain them, they often fall into disrepair and disuse. Many companies have been formed to sell small PV systems to individual consumers but these systems are expensive relative to what the consumers can afford and force them into debt to purchase them. A business model that addresses these issues is the franchise model in which a local entrepreneur acquires training and standardized technology from a franchisor and sells the resulting power to the community. The franchisee is profit motivated to keep the system running and is better positioned to understand what the customers need and can afford.

How can the MIT community and alumni help make this model work globally?

1.     Reduce the cost of equipment such as inverters and management systems that are not already on the steep cost reduction curves that PV cells and batteries are by open sourcing the designs and software.

2.     Create training materials that enable people with limited educations to deploy and maintain small-scale power systems.

3.     Provide the seed capital and business expertise to launch the franchisors in various countries.

4.     Prototype the hardware and training in our own neighborhoods and businesses.


What actions do you propose?

Franchised Microgrids for the Developing World Based on Open Source Components

Needs

More than 18% of the earth’s population has no access to electricity[1]. For at least as many, access is sporadic and unreliable. Lack of reliable electric power contributes to keeping people trapped in a cycle of poverty.  Unfortunately, a significant fraction of the earth’s projected population increase over the next 50 years is likely to happen in populations that don’t currently have reliable electricity due to the confluent problems of poverty, lack of power and population growth, making the needs all the more urgent.

Studies have shown[2] that providing access to electricity has a direct economic benefit raising living standards when it arrives. This creates a virtuous cycle in which improved economics makes electricity more affordable and available which, in turn, further improves living standards. One of the benefits of electricity is that it helps students study at night improving education which creates another virtuous cycle in that education tends to reduce birth rates which reduces resource competition which improves economics and so on.

There is a strong correlation between people who don’t have access to electricity and poverty. This makes the challenge of providing electricity, and, in particular, electricity from renewable sources, more difficult. How does one supply potentially expensive technology to people subsisting on $1-$2 per capita per day? The sections that follow propose a franchise model to allow costs to be shared across a community, starting at a very low base and growing as the local economy benefits from the power.

To understand what technology is needed, it’s worth looking in more detail at the specific ways that electricity can be used in these communities. Local needs vary but many of the following needs are universal.  In the high tech world, we take access to electricity for granted and it can be hard to see the needs through the eyes of someone currently lacking electricity. In reviewing the following, it’s important to consider the time of day component of the need as that impacts the need for power storage such as batteries. The following are some of the most common applications in these communities:

Lighting – The world is dark half the time. To make productive use of the night people turn to artificial light, traditionally fossil fuels sources like kerosene lanterns and more recently, battery powered LED lighting. The “fuel” for both of these is expensive. Kerosene emits fumes which cause health problems. The most common batteries, alkaline, are expensive for this population. Rechargeable batteries are beginning to be used but a clear business model to pay for the batteries and pay for the power to charge them is unresolved.

Device Charging – Cell phones and similar devices have become ubiquitous even in some of poorest communities but they need to be charged regularly.  People need access to power as well as phone service.

Cooking – 38% of the world’s population lack access to clean cooking facilities and often cook their daily meal using methods that date back to the dawn of civilization: gathering sticks and cooking over an open fire[1][3].  Improved stoves[4] are making this more efficient and less unhealthful but people, usually women and children, still need to gather firewood every day detracting from more productive activities and exposing themselves to rape and violence. Growing populations mean people need to walk further to find fuel and in some cases contribute to deforestation. Using electricity would free up much time but simple hot plates are inefficient when every watt-hour is comparatively expensive. Low cost, efficient electric cookers have designed but not yet deployed[5].

Well Pumps and Irrigation – Access to potable water is an age-old but growing problem across world and a source of conflict. Traditional methods such as human or animal power are inefficient ways to convert solar power via the crop cycle and again waste time that could be used more productively.

Machinery – Powered machinery enables economic activity that cannot be done cost effectively using traditional or hand methods. A basic need and tool that we rarely consider is the grain mill. Surprisingly many people still mill their grain using traditional hand methods that are tedious and prone to yield losses. Access to a cheap electric grain mill would improve many lives, particularly women.

Transportation – Powered vehicles, if available at all to these communities, today use fossil fuels with the associated problems of pollution and CO2 emissions. As batteries get cheaper, it seems inevitable that people will switch to electric vehicles if the power can be made cost competitive to fossil fuels. Batteries in vehicles can be part of a microgrid solution.

Other Household Uses – Man, as they say, does not live by bread alone. Access to electricity enables entertainment, cooling and other household uses that make life better.

Current Approaches

The need to provide electricity to all citizens is well understood and is part of the development plans in all countries but is happening slowly in many parts of the developing world particularly in Africa and India. In still more areas, even when power is available, it is available sporadically for only part of the day and subject to frequent voltage drops that make it difficult to run a business or depend on electricity for household activities. At the same time, the 196 countries participating in COP 21 recognize the need to limit or reduce CO2 emissions. In many places these two needs are perceived as being in conflict. In most developing countries, current plans call for building more fossil-fueled power plants with a centralized grid expanding to reach un-served communities as resources permit[3][6]. Generation from renewable sources is part of their plans but is perceived as less cost efficient and so these countries are looking to the developed world to help pay for the perceived cost differences. If these current development plans succeed in delivering power to everyone but use fossil fuels, efforts to limit CO2 emissions seemed doomed.

Renewable plans typically depend on large, centralized facilities purchased or bid under contract from various emerging providers, effectively making them part of the central grid. From the point-of-view of the un-served communities, these plans often seem a distant hope spread by bureaucrats in the capital over which they have little influence and control. The reasons they have not received electricity already remain a challenge. Often these communities are small and remote and obstructed by difficult terrain. If and when the grid reaches them, they are at its limits and subject to resistance losses which drops the voltage. Along the way the lines pass through other communities that make the connection vulnerable. In many places in the developing world, power theft is a problem that drains the available power, raises costs for everyone and creates outages. Power poles and substations are also tempting targets for terrorists adding to the overall reliability problems.

Cost is a fundamental challenge to the poorest communities even when grid ties are available. Basic infrastructure that the developed world takes for granted such as poles, wiring, fuse boxes etc. can be cost prohibitive to many people. The temptation to steal using ad-hoc, dangerous wiring is great.

Alternatives are beginning to emerge. In many places around the world entrepreneurs have seized on the idea of a power kiosk in which grid or PV power is wired to a central location and customers carry their own batteries to the kiosk to receive their daily allocation of power[7][8]. The amount of power received is small but enough to power a few LED lights, charge a cell phone, run a radio or TV for a few hours.  Descriptions of these installations refer to companies formed to spread this model to their customers across an entire region or country.

Another model that is spreading widely is the sale of small-scale personal PV power systems sold directly to end users. Again, the amount of power provided is typically small. For the poorest customers, the cost of even very small systems is high and people have to borrow to finance the systems creating a debt obligation. Demand for these systems is high enough, however, that people are willing to go into debt to get them[9].

Many groups have recognized that the microgrid architecture potentially solves some of these problems. A microgrid is a small-scale grid generating its own power and managed locally. It may or may not be connected to the central grid but has the goal of providing power more reliably than the central grid connection, if available. Power sources can be renewable sources such as PV, wind, or pico-hydro[11] but can also include fossil-fueled generators when there’s no sun or the wind stops blowing. MIT’s own Tata Center for Technology and Design is prototyping such a system in a village in India. In some cases, NGOs have given such systems to villages. A key learning reported from these installations is that if there is no one committed to support the system in the local community, they can easily fall into disrepair and disuse[10][11].

The Franchise Alternative

The previous approaches all contain elements of a solution but have problems and limitations. Central grids plan to reach everyone eventually but at a potentially high cost in CO2 emissions and not in the time frame that people need. In many impoverished places there is an uncomfortable race between the expanding grid and an expanding population. The kiosk idea serves an immediate need and solves the cost issue for the poorest customers but doesn’t deliver enough power to push economic development. Similarly the small, dedicated systems deliver little power and can potentially trap people in a debt cycle. Microgrids provide local control and independence from an unreliable central source but need to be maintained by someone with the appropriate skills and motivation.

Old-fashioned capitalism can be a great motivator. Capitalism, of a sort, thrives in even the poorest communities as people make a living buying and selling goods. That spirit can be applied to the power problem if a complex technology can be simplified enough to be sold and maintained by people without an engineering degree, people who understand the needs of their community and, critically, their ability to pay. The franchise model works that way.  The franchisor packages the service in a way that’s easy to understand, provides training and equipment, but depends on the franchisee to hustle sales of the service in return for the bulk of the profits. In this case, the franchisor can be a company, an NGO or even a central power authority. The franchisee is someone from the community willing to learn and work hard in return for a profit.

The franchise model can leverage a standardized business plan to spread rapidly over a wide area. It makes good use of development funds because it’s a profit-making activity, at least for the franchisee. Once the initial startup costs are applied they can be returned and reused after the franchisee starts collecting customer payments. The service, in this case power generation, can start small and grow with the community. It’s a shared service so it doesn’t require a large expenditure from any one customer and with an attentive franchisee it’s easy to temporarily or permanently withhold the service if the customer is unable to pay. As a member of the community, the franchisee is well positioned to know when to offer credit and when to withhold it depending on local conditions. A key benefit of franchising a microgrid is that the bulk of the revenue stays in the local community rather than being siphoned off to some central authority.

The franchisee is well positioned to sell essential components needed for the customers to utilize the power: LED lighting sets and efficient electric cookers. The franchisee may need to train people on how to use these cost effectively and safely.

A key challenge to deploy the microgrid architecture widely in the developing world is to keep the costs down. Essential components like PV panels and batteries are already on a rapidly declining technology cost curve. Other parts of the system such as the inverters, controllers, management and billing tools are not on as steep a cost reduction curve. The MIT community can help by developing standardized versions of these components and making the designs freely available so that low overhead assemblers can produce them in high volumes and competitive prices. Standardized designs also facilitate the development of training materials to simplify the creation of regional franchisors to get the ball rolling.

Technology

The microgrid offered by the franchisee consists of modular power components scaled to match demand and managed by an application running on a cell phone or tablet. All of these components are available today but existing components typically lack the management and billing capabilities required by the microgrid franchisee. To minimize the cost of batteries and power sources, the franchisee needs to be able to manage the load, shutting down certain applications that can be deferred until more power is available. Local knowledge of the demands and customer expectations is key.

The basic building blocks include:

·      Power source: most commonly PV panels but possibly wind, pico-hydo or fossil fueled generators.

·      Inverter

·      Fixed Battery Pack

·      Distribution Panel

Other components that may be required for some installations include:

·      Portable batteries with Integrated Identity

·      Battery charging station

·      Accessories like efficient cookers

A minimal installation in poor community might consist of little more than a single PV panel, inverter and battery charging station similar to the kiosk model described previously. To avoid fixed wiring costs, customers carry their batteries to the charging station when sun power is available. Convenience and greater economic benefit occur if the franchise and its customers can afford a more robust power source, fixed battery pack and fixed wiring to one or more distribution panels. Unlike established practice in the developed world, costs can be minimized if the distribution panels can be shared provided that individual circuits can be monitored for consumption and certain circuits designated to shutdown when insufficient power is available.

In a larger installation, the franchise will hardwire multiple inverters and multiple distribution panels for redundancy and reliability. Adding a stand-by fossil-fuel generator improves system availability on cloudy days without adding too much cost and CO2 impact so long as its use is minimized. If and when a central grid tie becomes available this can be added to the system but the franchise still provides the service of ensuring power availability and reliability while handling the billing and resisting theft.

The franchise model assumes industry standard PV panels and battery packs are used with the franchisor assisting with component selection and system design in support of the franchisee. For other components, the franchise model would benefit from features not commonly available in existing products. These are typically command and control features that need not add much cost if the designs were widely available via open source. To manage the load and monitor the status of batteries and power sources, the system needs to connect the modules via WiFi or power line networking.

Scalable Island-Mode Inverters with Remote Access

The developed world typically uses grid-tie inverters that lack provisions for battery packs and standby generators. Microgrid inverters will normally use batteries and possibly standby generators. They still need a way to safely disconnect when linked to the microgrid for system maintenance. With a geographically small system a mechanical switch might suffice. As noted, network monitoring of the available power and demand is needed.

Distribution Panels with Overcurrent Protection and Remote Load Shedding

Basic electrical components like electrical panels, circuit breakers, wiring and outlet boxes are amortized over many years in the developed world and hence do not figure prominently in power cost analysis. But in a poor community new to electricity, the cost of a circuit breaker might be a month’s salary. Fuses are cheaper but more likely to be blown when people are not used to electricity. The developing world could really benefit from some innovative MIT thinking on ways to provide inexpensive circuit breakers and many lives could be saved from electrocution if the solution included ground fault interruption capabilities. As noted, the franchisee needs to be able to remotely shut down circuits to match the microgrid’s available power. When the panel is shared, the consumption of each circuit needs to be monitored for billing and load management.

Portable Batteries with Integrated Identity

Standard batteries don’t come with an integrated identity but when one is making a living distributing small amounts of power it’s useful to know who is consuming power from the charging station. Adding something like an RFID chip to the battery would add minimal cost but be very helpful in keeping track of usage.

Management and Billing Software as a Smartphone or Tablet App

The franchisee needs to monitor the status of the microgrid and potentially shut down loads when it power limits are reached. The franchisee also needs accounting functionality to keep track of consumption and payments by customer.

Battery Charging Station

When using portable batteries, a place to charge them is needed. This functionality might be bundled into the inverter but for practical reasons, it might be better in a separate box. It needs to keep of record of each battery that is attached and how much power was drawn. Conceivably the charger and billing could be integrated into the battery itself without adding too much cost so it could be plugged into any nearby distribution panel.

Call to Action

1.     Open Source Designs to Reduce Cost

2.     Create Training Materials

3.     Prototype the Technology and Training

4.     Provide the Seed Capital and Business Expertise

If the Raspberry Pi team could figure out how to make a computer for $5, we in the MIT community should be able to figure out how to make a low cost power system. MIT is in the business of educating. We ought to be able to explain how to hook up a small power grid safely. MIT people like to tinker. We can work the bugs of these systems. When I lived in East Campus in the 70’s it’s infrastructure sometimes seemed as archaic as the developing world. A dorm would be a great place to prototype a microgrid. We in the alumni community have the business acumen and the financial resources to get these franchises going. Let’s make it happen. Literally billions of people would benefit and we might just save the planet in the process.

References

[1] “Energy PovertyInternational Energy Agency. Web 25 Jan 2016.

[2] Khandker, S. et al. “Welfare Impacts of Rural Electrification: Evidence from VietnamWorld Bank. 1 Sept 2009. Web 25 Jan 2016.

[3]“Africa Energy Outlook: A Focus on Energy Prospects in Sub-Saharan Africa.” International Energy Agency.  10 Feb 2014 Web 25 Jan 2016.

[4] “Cooking in One Million Kitchens: Lessons Learned in Scaling a Clean Cookstove Business.” Envirofit International. Oct 2015. Web 25 Jan 2016.

[5] Schjær-Jacobsen,  J. “Energy efficient cooking - The EffiCookerDTU Civil Engineering Report R-215 (UK). December 2009 Web 25 Jan 2016.

[6] Mann, C. “Solar Eclipsed: Coal? or the Sun? The Power Source that India Chooses May Decide the Fate of the Entire PlanetWired.Com December 2015. Web 21 Jan 2016.

[7] Liew, R. “Empowering Rural Rwanda with Energy Kiosks.” A Global Village. 2012. Web 25 Jan 2016.

[8] Vaccaro, A et al. “Reliable Electric Power for Developing Countries.” IEEE Humanitarian Technology Challenge. Draft. 2010?          

[9] Bearak, M. “Electrifying India, With the Sun and Small Loans.” The New York Times 2 Jan 2016. Web. 21 Jan 2016.

[10] “Light Up the World: Project Implementation ManualLight Up the World. Sept 2011. Web 25 Jan 2016.

[11] Maher, P. and Smith, N. “PICO HYDRO FOR VILLAGE POWER: A Practical Manual for Schemes up to 5 kW in Hilly Areas.” 2nd Edition. Intermediate Technology Publications. May 2001. Web 25 Jan 2016.