At Soweto’s Emaweni Primary School, a group of teachers and school administrators waited in the dark for the power to come on. Meanwhile, on the other side of the world in Boston, Massachusetts, the non-profit MIT Enterprise Forum of Cambridge was hosting an event that focused on new developments in clean energy distribution, looking at ways in which blockchain technology could help this sector. Lorien Gamaroff, CEO of Johannesburg- based start-up Bankymoon, was calling in via Skype from South Africa as part of a demonstration for Usizo, a crowdfunding platform designed to facilitate energy payments between donors and schools.
Back in Boston, leading the MIT demo, Grid Singularity CEO Ewald Hesse transmitted one bitcoin to the school’s new Usizo smart meter, sponsoring about three weeks’ worth of electricity. There, in Soweto (where it was the middle of the night), a group of school administrators, teachers and staff waited in the darkness for the transaction to be processed. Hesse’s payment went through the blockchain to the smart meter, which quickly calculated the tariff and loaded the required amount of electricity. And then the lights in the classroom came on. Cue applause on both sides of the Atlantic.
Gamaroff explained that in South Africa (as across most of Africa), end users have to pay for electricity upfront through approved vendors, in a system that can be prohibitively expensive, especially for those living in rural communities. ‘A prepaid payment system makes the energy a lot more expensive because those vendors need infrastructure, there are travelling costs, and it’s also very expensive to make those payments,’ he said. ‘If you’re in a remote area and your lights go out, there’s no way to make a payment, no easy or electronic way to do it.’ He argued that the situation could be remedied by using digital currency and an enabled smart meter.
‘You can now have a smart meter – a bitcoin blockchain-enabled meter – and foreign donors can send money directly to the meter without having to send it to an organisation that will take or re distribute the funds,’ he said.
This all happened in February 2016, relatively early in the cryptocurrency hype cycle. But for those who were watching carefully, the Emaweni Primary School demonstration was less a showcase for bitcoin and blockchain and more a glimpse into the future of electricity supply in Africa – one powered by smart meters and microgrids.
Of the many measures of sub-Saharan Africa’s relative poverty, few stand out more than this: about 60% of the region’s inhabitants – an estimated 640 million people, most of them in rural villages or on farms – do not have access to reliable electricity. According to the Africa Progress Panel, a group of experts led by former UN secretary general Kofi Annan, in nine African countries, fewer than one in five primary schools had lights. A study by the WHO, meanwhile, found that about a quarter of clinics and hospitals across 11 African countries have no power whatsoever, while many of the remainder rely on expensive and notoriously unreliable diesel generators. In West Africa, blackouts are so commonplace that they even have a name for it: ‘dumsor’, from the Asante word for ‘off and on’.
In East Africa, millions of people are getting by without the ‘on’ part of that equation. The World Bank announced last July that it had approved an International Development Association credit equivalent to US$150 million to help fund off-grid solar energy services in Kenya. The initiative – known as the ‘Off-grid Solar Access Project for Underserved Counties’ – intends to provide off-grid solar electricity services to about 1.3 million people in 277 000 households across 14 counties – 10 of which are located in Kenya’s north and north-east regions.
This came after Italian multinational renewable energy firm Enel Green Power announced in early 2016 that it had partnered with microgrid technology provider Powerhive to develop and operate solar-powered microgrids in rural Kenya. That US$12 million project will cover 100 Kenyan villages, representing what Enel described as ‘a concrete effort in the off-grid business by integrating investment, sustainability and innovation’. Many of those solar microgrids are being constructed in the western counties of Kisii and Nyamira, where they will provide reliable access to grid electricity to up to 90 000 Kenyans.
For many renewable energy firms, Africa’s power crisis is presenting a huge opportunity, as illustrated by Enel Green Power’s work in Kenya. ‘This country couples a low electrification rate, still in the range of 30%, with one of the highest mobile phone penetration rates of the region,’ says CEO Francesco Venturini. This, he adds, is ideal for implementing innovative solutions that are able to integrate the electrification of rural areas with generation from renewables and storage facilities as well as advanced billing systems.
German firm TFE Consulting has dubbed Kenya ‘the world’s microgrid lab’ for that precise reason.
In a report published in September 2017, TFE notes that just 20% of Kenyans have access to reliable grid power – a ‘stunningly low number’, given that 88% of the population are registered as mobile phone users. ‘The limitations of the current grid and the geographic dispersion of Kenya’s population make the universal supply of grid power a difficult and costly proposition,’ the report continues. ‘It is highly unlikely that the vibrant fishing islands in Lake Victoria or remote communities in Marsabit will be connected to the national grid anytime soon. In other cases, the user-borne cost of a last-mile connection to the national grid is prohibitively high. As a result, many still rely on kerosene or candles for lighting and occasionally pay to charge their mobile phone using a petrol generator run by a local entrepreneur.’
By TFE’s reckoning, Kenya’s market will grow from 65 to an estimated 2 000 to 3 000 microgrids by 2021, offering a massive US$1.5 billion market opportunity. Smart metering can help manage that power supply once it’s up and running.
Most microgrid systems have a built-in connection, which allows the provider to switch the power on or off remotely. This enables the provider to monitor and control usage, and allows the user to top up their power using mobile money. Kenyan solar energy company M-Kopa already uses this ‘pay-as-you-go’ system to electrify thousands of homes across the country. Smart metering – which allows for remote monitoring and mobile payment – makes it easier for power providers to scale up microgrid systems, which are often constrained by cost.
Smart meters also make security easier – both for microgrids and for national utilities. In South Africa, Eskom recently confirmed that it is increasingly using smart meters and data analytics to identify electricity thieves. This follows reports that, in the year to March 2017, theft accounted for 7.55% of its total energy losses.
In a media briefing, Madeline Kadzinga, marketing project manager of Eskom’s anti- electricity theft campaign, said that the utility loses about ZAR5.4 billion of revenue a year, while South Africa’s municipalities lose about ZAR15.2 billion, from illegal connections, meter tampering, illegal sales of pre-paid electricity, theft of infrastructure and non-payment.
Kadzinga said Eskom is expanding its use of smart meters beyond merely tracking consumption and compiling billing information. These uses include monitoring for damage or tampering, and switching off customers’ power remotely in the event of non-payment.
While this is significant for large grid suppliers such as Eskom, it is also vital to microgrid providers and investors. ‘The best potential sites and customers can be identified through data analytics and remote mapping,’ states TFE. ‘Power usage and payments are easily tracked using metering and control technologies. Tariffs can be adjusted in real time to optimise the use of installed assets and increase operator revenues. In general, technology makes “remoteness” less remote by bridging the informational, operational and psychological gap between the end customer, the microgrid developer and the investor.’
For Africa’s off-grid, unpowered population – whether on the shores of Lake Victoria or in a primary school in Soweto – that sense of remoteness is becoming less and less of a problem.