According to the International Energy Association, approximately 1.2 billion people currently live without access to electricity. That is a staggering figure! Imagine if 1 out of every 8 people you know didn’t have lights after dark or even on demand hot water. That means no netflix, no facebook and no definitely no tinder! In the 6.2 billion people who do have access to electricity, though , what about those who experience unreliable or prohibitively expensive energy?
Design research company Paper Giant recently came across such a case on a recent research project in Ainggyi village, in rural Myanmar.
Ainggyi has around 4500 inhabitants in almost 1000 households. A decade ago the wealthiest of the community banded together to build a diesel microgrid from which all households could connect as it was built. Energy users paid a monthly fee to the project financiers. The diesel grid ran for 4.5 hours in the evening which provided critical light and cell phone charging.
Around three months ago, though, an NGO visited Ainggyi and offered the villagers individual solar and battery systems, financed through a loan-hire scheme. Many opted in to the program and whilst there are supply issues during periods of low solar production, they have chosen to disconnect from the community microgrid. The wealthier families have individual generators to make up the supply gap and some just work around the limitations of the technology. With a high proportion of villagers disconnecting from the microgrid, those who have remained have to bear the higher cost. Some families can’t afford to pay for the loan-hire scheme for the solar systems, and now they can’t afford the monthly fee for the microgrid.
Now, I hear you. That’s really sad but what can I do, and why should I care? Well, what we have here is a wealth transfer from the poor to the rich. Those who can afford the solar systems or generators are paying less, whilst those who cannot are left holding the bill. This is not just happening in emerging economies, but in mature energy markets as well. Whilst your neighbour’s rooftop solar installation is saving them money on grid energy, you are left with a more expensive grid. As those who can install solar, do, those who cannot have to pay more for their energy. Over time, this could lead to ‘The Utility Death Spiral’ whereby taking yourself off-grid and generating all the energy you need on your property is the most economic option. This would need thousands of little generators to keep the lights on when the solar and batteries draw down.
Whilst I don’t think we’ll get to that point, this issue is real and present. Last year Reneweconomy wrote about a €100 billion loss for Europe’s major energy utilities. This has been driven by reduced demand from energy efficiency measures and distributed generation. The corollary to such massive financial losses is the need to charge more for the energy they sell!
So how can we avoid this? We need to start with the wealth transfer problem. If we can incentivise utilities to make using the grid a good economic decision then solar and battery owners will share their renewable energy with others. It may sound complex but an energy market where solar and battery owners could trade their excess energy with consumers in their community would increase cost competitiveness and keep prices down. By keeping utility companies engaged, the grid would become cheaper, more resilient, and more reliable. As an added bonus, rather than using energy generated from burning ancient petrified plants far off in the horizon, you would get to buy renewable energy which was generated locally.
With the mass of incumbent assets we have in mature energy markets, the villagers of Ainggyi will get affordable, clean, community energy long before you do.