The Social Challenge

Access to Electricity; Sustainable Energy

The current cost of energy in Africa provides an extreme example of the poverty premium, a state in which the poorest of the poor are either reliant on fossil fuels for their energy needs or are paying up to 100 times more for their electricity than those with more resources. It is not economically feasible for national utilities to provide services to rural communities, and basic solar home systems are expensive.

Zero access to electricity in rural areas perpetuates the poverty cycle. Rural electrification is key to unlocking the potential in these communities and provides a canvas for innovative and creative ways to plug in ordinary people.

The Partnership

Standard Microgrid Zambia (SMZ)/Rural Electrification Authority — Zambia (REA) Solar Milling Pilot Project — Kampekete Village in Chongwe District in Lusaka

The Partners

  • Standard Microgrid (SMG)
  • Rural Electrification Authority — Zambia (REA)
  • Zambia Cooperative Federation (ZCF)

The Idea and the Action

ZCF has installed approximately 1,500 solar milling plants across Zambia. Each plant has a capacity to generate up to 15 kilowatts of electricity yet uses only half of the available power for grain milling — leaving a significant amount of energy unutilized in communities that do not have access to the national grid, either due to lack of infrastructure in those communities or unaffordability. In 2019, REA and ZCF signed a memorandum of understanding to make use of the generation source from the solar milling plants — 12 megawatts of readily available electricity across Zambia.

REA and ZCF partnered with Standard Microgrid Zambia (SMZ), the solar microgrid market leader in Zambia, to develop a community-managed, off-grid micro utility business model. Building off its demonstrated ability to design, permit, construct and operate microgrids in concert with local customs, languages and norms, SMZ designed and implemented a quick-to-install power system add-on that consists of solar chargers, an inverter and energy storage. SMZ’s creative approach to power one in which energy is treated like a service places the community in control by allowing individuals to design their own power subscriptions in accordance with the appliances they need, when they need them and how much they are willing to pay. It uses proprietary technology to monitor the systems remotely and manage demand, enabling it to deliver maximum benefit to the customers per kilowatt-hour of energy produced. Selling energy as a service allows SMZ to provide energy access to customers at a price that is substantially less than their current least-cost alternative.

Ownership of the system vests with the ZCF and, by implication, with the community. As such, an operating and service agreement was instituted, under which a nominal amount is paid to SMZ for operating and maintaining the retrofitted grid.

The Impact

After five months, the pilot project is operational and is hailed as Zambia’s first public-private partnership in the microgrid space. Under the project, approximately 71 households and a primary school have been electrified.

The first few watts of power that a person receives are hugely transformative, and the objective of the pilot project has been achieved and is easily replicable: unlocking the potential of milling plants to provide value-added electrification services to the community. These services will enable communities around the milling plants to engage in productive uses of electricity and allow them to generate income, which will in turn transform their living conditions.

The successful implementation of this project is now serving as a blueprint to REA to unlock and provide power to about 1,500 rural communities in Zambia and changing the lives of millions.

The Expert Insight

While developed economies like the United States grapple with the reworking of a century-old, centralized grid infrastructure to incorporate solar and wind, developing economies have an opportunity to design their electric grids with clean technologies in mind. By 2050, the population of Africa is projected to double.1 This growth will primarily happen in urban areas, which could see the addition of 500 million people. Building out national electric grids will be critical to support this growth, and the continent’s geography is prime for solar operation. Yet, according to the International Energy Agency (IEA), less than 10 gigawatts of solar photovoltaics had been installed by the end of 2019, which is only 1 percent of global installations.2      

IEA estimates that there are 600 million people living in rural areas currently without electricity.2 While grid expansion and densification can provide access to those areas close to urban centers, many more areas will be too costly to connect, providing a unique opportunity for localized solar investment. With the price of solar continuing to fall, rural areas in Africa are ripe for off-grid solar development.

Microgrids are a great option. Standard Microgrid offers a solution that provides the reliability of a national grid but at a lower cost and gives more control to the community. It is with this ownership and insight into consumption that users will look to conserve electricity. One thing that I also like about this project is that it’s a multi-industry solution, in which excess energy from the mill is used to provide energy to the surrounding community, thus avoiding the need for new production. This type of multi-industry collaboration can help to accelerate decarbonization of the economy even as energy needs rise.

Over time, as microgrids proliferate Africa, a network could be interconnected, providing new opportunities for energy trading and support to national grids.  But it will take significant investment not likely to be available from governments alone, not to mention the long lead times that often come with legislation.  Public-private partnerships not only amplify the investment needed to demonstrate and more quickly scale a new technology, but also bring together the technical and local expertise needed to ensure that it will work within existing regulatory frameworks.

The Darden School of Business’ Institute for Business in Society partners with Concordia and the U.S. Department of State Secretary’s Office of Global Partnerships to present the annual P3 Impact Award, which recognizes leading public-private partnerships that improve communities around the world. This year’s award will be presented at the Concordia Annual Summit the week of 20 September 2021. The five finalists will be highlighted on Darden Ideas to Action on Fridays leading up to the event.

This article was developed with the support of Darden’s Institute for Business in Society, at which Maggie Morse is director of programs, and Darden’s Batten Institute, at which Rebecca Duff is managing director, Business Innovation and Climate Change Initiative. Duff is co-author of The Decarbonization Imperative: Transforming the Global Economy by 2050.

 

  • 1. IEA, Africa Energy Outlook — 2019, World Energy Outlook Special Report, November 2019, https://www.iea.org/reports/africa-energy-outlook-2019.
  • 2. a. b. Ibid.
The P3 Impact Award
Recognizing leading public-private partnerships that improve communities around the world