1 00:00:00,080 --> 00:00:03,280 Speaker 1: Today on switched On, I speak with Takea, Haro Kawahara 2 00:00:03,440 --> 00:00:06,080 Speaker 1: and ulm Ezekiel, who were part of the team that 3 00:00:06,160 --> 00:00:10,440 Speaker 1: wrote State of the Global Minigrids Market Report. This report 4 00:00:10,600 --> 00:00:13,960 Speaker 1: is a minigrids partnership report and it was published by Bloomberg, 5 00:00:14,040 --> 00:00:16,439 Speaker 1: n e F and Sustainable Energy for All. The aim 6 00:00:16,480 --> 00:00:18,959 Speaker 1: of the report was to raise awareness around minigrids and 7 00:00:19,040 --> 00:00:22,120 Speaker 1: to mobilize investments in the minigrids sector, as well as 8 00:00:22,160 --> 00:00:24,919 Speaker 1: to serve as a benchmark to measure progress. In the 9 00:00:24,960 --> 00:00:29,200 Speaker 1: process of writing the report, they interviewed sixty eight organizations 10 00:00:29,280 --> 00:00:32,840 Speaker 1: and they also included six detailed case studies. The case 11 00:00:32,840 --> 00:00:39,159 Speaker 1: studies were for Uganda, Tanzania, Nigeria, India, the Philippines and Indonesia. 12 00:00:39,479 --> 00:00:42,000 Speaker 1: You can see the full report and the data under 13 00:00:42,040 --> 00:00:45,920 Speaker 1: the publication section at SE for All dot org. That's 14 00:00:46,159 --> 00:00:49,400 Speaker 1: s E F O R A L L dot org 15 00:00:49,720 --> 00:00:52,919 Speaker 1: and there you will find State of the Global Minigrids 16 00:00:53,000 --> 00:00:57,320 Speaker 1: Market Report. Additionally, it can be found at b NF 17 00:00:57,400 --> 00:01:00,920 Speaker 1: GO on the Bloomberg terminal and at benof dot com 18 00:01:01,040 --> 00:01:03,959 Speaker 1: or on b ANF mobile app. Quick reminder, b an 19 00:01:03,960 --> 00:01:07,080 Speaker 1: EF does not provide investment or strategy advice and you 20 00:01:07,120 --> 00:01:09,560 Speaker 1: can hear our full disclaimer at the end of the show. 21 00:01:09,959 --> 00:01:12,680 Speaker 1: I am Dana Perkins and you're listening to Switch It 22 00:01:12,760 --> 00:01:15,680 Speaker 1: on the b N e F podcast. Now let's hear 23 00:01:15,840 --> 00:01:28,400 Speaker 1: from Tak and Ulama about mini grids. Hi, Tak, nice 24 00:01:28,400 --> 00:01:31,600 Speaker 1: to see you as a see you know we'll actually 25 00:01:31,640 --> 00:01:33,319 Speaker 1: hear you. I guess we we can't even see each 26 00:01:33,360 --> 00:01:35,800 Speaker 1: other now, but nice to hear you. And Ulam, nice 27 00:01:35,840 --> 00:01:37,360 Speaker 1: to have you on the show as well. Nice to 28 00:01:37,360 --> 00:01:39,319 Speaker 1: be on the show. So we are going to be 29 00:01:39,360 --> 00:01:43,200 Speaker 1: talking today about global mini grids in the state of 30 00:01:43,200 --> 00:01:46,199 Speaker 1: the minigrid market. So let's start at the very beginning talk. 31 00:01:46,480 --> 00:01:49,080 Speaker 1: What is a mini grid so many grey is like 32 00:01:49,640 --> 00:01:54,320 Speaker 1: small independent PAS system can be either isolated computerly from 33 00:01:54,320 --> 00:01:56,520 Speaker 1: the main grid or it can be connected to the 34 00:01:56,560 --> 00:01:58,960 Speaker 1: grid to make it the more context it is a 35 00:01:59,000 --> 00:02:02,440 Speaker 1: group of intaco have to distributed energy resource its with 36 00:02:02,640 --> 00:02:07,960 Speaker 1: load or with loads within clearly defined electrical boundaries. And 37 00:02:08,000 --> 00:02:11,840 Speaker 1: then these distributor energy resources can be very different kind 38 00:02:11,880 --> 00:02:17,919 Speaker 1: of technologies are typically the modern minigrates, combined solar energy 39 00:02:17,960 --> 00:02:22,320 Speaker 1: storage and diseel generators, but they all work as a 40 00:02:22,320 --> 00:02:26,399 Speaker 1: single entity and typically in the emerging markets, this minigrids 41 00:02:26,480 --> 00:02:29,480 Speaker 1: is used for energy access in the remote areas where 42 00:02:29,840 --> 00:02:33,360 Speaker 1: there's completely off gride. However, it is also can be 43 00:02:33,919 --> 00:02:37,040 Speaker 1: connected to the main gride. So for example, when the 44 00:02:37,040 --> 00:02:41,080 Speaker 1: main grid system has some troubles m the milgrid control 45 00:02:41,120 --> 00:02:45,040 Speaker 1: system can give order to the mitigrate to disconnect from 46 00:02:45,040 --> 00:02:48,080 Speaker 1: the main grid and the minigrate can continue to operate 47 00:02:48,600 --> 00:02:52,160 Speaker 1: and supply extacity to the customers. So sometimes it connects 48 00:02:52,160 --> 00:02:54,919 Speaker 1: into the main grid, sometimes it doesn't, but it could 49 00:02:54,960 --> 00:02:58,440 Speaker 1: in theory operate completely autonomously. That's kind of the differentiator 50 00:02:58,560 --> 00:03:04,440 Speaker 1: from my understanding. You mentioned solar storage and diesel generation. 51 00:03:04,760 --> 00:03:07,040 Speaker 1: Tell me a little bit quickly about the storage element. 52 00:03:07,120 --> 00:03:09,160 Speaker 1: So what are we talking about with storage? Is it 53 00:03:09,440 --> 00:03:11,800 Speaker 1: the lithium my own batteries that were familiar with in 54 00:03:11,960 --> 00:03:14,480 Speaker 1: cars or is it a different type of battery technology 55 00:03:14,520 --> 00:03:16,800 Speaker 1: that we're calling upon. Yeah, that's a good question. So 56 00:03:16,880 --> 00:03:20,080 Speaker 1: it really depends on markets. But typically in imagine market, 57 00:03:20,360 --> 00:03:23,960 Speaker 1: which is our main focusting this research, is let us 58 00:03:24,000 --> 00:03:27,680 Speaker 1: in batteries because the biggest reason is because still cheap 59 00:03:27,720 --> 00:03:31,320 Speaker 1: and then available in many of the African countries or 60 00:03:31,400 --> 00:03:35,840 Speaker 1: imagine Asian countries. However, if you look at the high 61 00:03:35,880 --> 00:03:39,440 Speaker 1: income countries. It's such as the US waste Adia the 62 00:03:39,520 --> 00:03:43,040 Speaker 1: reason why own botteries are taking more share, and then 63 00:03:43,600 --> 00:03:47,120 Speaker 1: we can see gradual uptake of Riffin wine botteries in 64 00:03:47,160 --> 00:03:51,000 Speaker 1: emerging markets to be integrated into the minigrate as well. 65 00:03:51,360 --> 00:03:55,480 Speaker 1: So those who listened to this show switched on usually 66 00:03:55,520 --> 00:03:58,000 Speaker 1: focuses on a research report that we did. Now this 67 00:03:58,000 --> 00:04:00,680 Speaker 1: this is a really big one. So it's a long, 68 00:04:00,840 --> 00:04:03,520 Speaker 1: in depth global research report. Tell us a little bit 69 00:04:03,560 --> 00:04:07,000 Speaker 1: more about what our mini grid research for this report 70 00:04:07,080 --> 00:04:11,360 Speaker 1: was focused on. So the main focus is very comprehensive 71 00:04:11,920 --> 00:04:15,440 Speaker 1: topics to be covered about mini grids, but the essential 72 00:04:15,440 --> 00:04:18,359 Speaker 1: purpose is to understand what's the latest status of the 73 00:04:18,360 --> 00:04:24,640 Speaker 1: minigrids for energy access in emagine markets, particularly in South 74 00:04:24,680 --> 00:04:28,960 Speaker 1: South Africa, Asia and island nations. And then the reason 75 00:04:28,960 --> 00:04:32,520 Speaker 1: why I said comprehensive is because, um, there's a lot 76 00:04:32,560 --> 00:04:36,320 Speaker 1: of information and a clear understanding of what is happening, 77 00:04:36,760 --> 00:04:39,520 Speaker 1: not only just in terms of market strends, but also 78 00:04:39,600 --> 00:04:44,679 Speaker 1: the business models, financing policy reguations and impacts and also technologies, 79 00:04:44,920 --> 00:04:48,920 Speaker 1: and I we need to cover those areas in the research. 80 00:04:49,839 --> 00:04:53,440 Speaker 1: Um Hence I said it's comprehensive. Now I know that 81 00:04:53,520 --> 00:04:56,760 Speaker 1: this piece of research from our standpoint, you know, we 82 00:04:56,760 --> 00:04:59,000 Speaker 1: we tend to be very engaged with the research that 83 00:04:59,040 --> 00:05:01,039 Speaker 1: we do. And I don't think I've spoken to anybody 84 00:05:01,040 --> 00:05:03,120 Speaker 1: who works at be Enough who isn't excited about the 85 00:05:03,120 --> 00:05:06,479 Speaker 1: projects they get they end up doing. However, I think 86 00:05:06,520 --> 00:05:08,679 Speaker 1: every now and then we get something that we feel 87 00:05:08,720 --> 00:05:11,040 Speaker 1: like it's truly meaningful. And I think doing a project 88 00:05:11,120 --> 00:05:14,839 Speaker 1: with sustainable energy for all is for us, you know, 89 00:05:14,960 --> 00:05:16,800 Speaker 1: great honor, and I think this is where I kind 90 00:05:16,800 --> 00:05:18,760 Speaker 1: of want to take it with, you know, when you 91 00:05:18,760 --> 00:05:21,200 Speaker 1: guys were given the opportunity to work from this, and 92 00:05:21,240 --> 00:05:23,479 Speaker 1: maybe we'll pivot to you just because we haven't heard 93 00:05:23,480 --> 00:05:25,479 Speaker 1: from you yet on the show today. You know, what 94 00:05:25,640 --> 00:05:30,400 Speaker 1: about this project did you personally find really engaging? And 95 00:05:30,720 --> 00:05:32,560 Speaker 1: you know, maybe why were you excited to work on 96 00:05:32,560 --> 00:05:35,480 Speaker 1: this project? So I originate from the south of Nigeria 97 00:05:36,560 --> 00:05:40,720 Speaker 1: River State to be specific, that's also known as the 98 00:05:40,760 --> 00:05:44,400 Speaker 1: Self Self or in the Niger Delta region, and when 99 00:05:44,440 --> 00:05:49,760 Speaker 1: traveling back home, I see energy poverty every day and 100 00:05:49,800 --> 00:05:52,880 Speaker 1: the lack of stable, stable power seriously affects people's lives, 101 00:05:53,160 --> 00:05:57,240 Speaker 1: and where the grid is available, consumers experience frequent power 102 00:05:57,279 --> 00:06:01,400 Speaker 1: cuts ranging from as much as four to fifteen hours 103 00:06:01,440 --> 00:06:03,599 Speaker 1: per day. And I think about it, that's four to 104 00:06:03,680 --> 00:06:08,160 Speaker 1: fifteen hours of no light at random points during the day. Right, 105 00:06:08,160 --> 00:06:10,400 Speaker 1: it's hard to get anything done by that. I mean 106 00:06:10,760 --> 00:06:14,280 Speaker 1: almost everyone relies on their own gasoline or diesel generator 107 00:06:14,680 --> 00:06:18,320 Speaker 1: if they can afford that of course, Um that's how 108 00:06:18,360 --> 00:06:22,840 Speaker 1: bad the grid is. I mean almost every household has 109 00:06:22,880 --> 00:06:26,679 Speaker 1: a switch outside their door where you can basically switch 110 00:06:27,200 --> 00:06:31,600 Speaker 1: between grid power, so main grid power or your own generator. 111 00:06:32,120 --> 00:06:34,400 Speaker 1: And that concept is actually unthinkable in the West if 112 00:06:34,400 --> 00:06:37,600 Speaker 1: you think about it. So to put things into context 113 00:06:37,720 --> 00:06:42,919 Speaker 1: in alone, actually Nigeria spent a whopping sixteen billion dollars 114 00:06:42,960 --> 00:06:47,680 Speaker 1: to power these privately owned generators, and honestly, I really 115 00:06:47,680 --> 00:06:52,120 Speaker 1: think mini grids or distributed distributed energy systems in general, 116 00:06:52,760 --> 00:06:57,919 Speaker 1: for example rooftop TV, will solve this problem and provide 117 00:06:57,960 --> 00:07:01,880 Speaker 1: localized regions with stable power instead of the country relying 118 00:07:01,960 --> 00:07:06,720 Speaker 1: on one massive, unreliable national grid. And what is it 119 00:07:06,760 --> 00:07:10,960 Speaker 1: that makes the national grid so unreliable and needing this 120 00:07:11,040 --> 00:07:15,480 Speaker 1: distributed source so important? Nigeria has struggled with the grid 121 00:07:16,080 --> 00:07:18,400 Speaker 1: for a long time. Nigeria has a population of some 122 00:07:19,320 --> 00:07:24,400 Speaker 1: two million people and in total, the install capacity is 123 00:07:24,520 --> 00:07:27,960 Speaker 1: probably just over thirteen gigawatts of power, and of that 124 00:07:28,080 --> 00:07:32,400 Speaker 1: thirteen gigawatts, they probably generate on average less than four 125 00:07:32,440 --> 00:07:35,680 Speaker 1: gig gigga watts per year as an average generation. I mean, 126 00:07:35,720 --> 00:07:39,320 Speaker 1: the grid is outdated, there's not enough capacity to go around, 127 00:07:40,000 --> 00:07:42,440 Speaker 1: and of course there's a lot of political issues as well. 128 00:07:42,480 --> 00:07:46,080 Speaker 1: So I would say they're the basic problems, which is 129 00:07:46,120 --> 00:07:49,160 Speaker 1: basically what's caused people to go to their own private generation. 130 00:07:49,600 --> 00:07:51,640 Speaker 1: And from the population standpoint, this is one of the 131 00:07:51,640 --> 00:07:54,480 Speaker 1: fastest growing countries in the world, so in you know, 132 00:07:54,520 --> 00:07:57,400 Speaker 1: in reality, this is an important problem to fix pretty 133 00:07:57,440 --> 00:08:00,920 Speaker 1: quickly because their demand is only to be higher. So 134 00:08:01,000 --> 00:08:03,560 Speaker 1: from mini grid standpoint, we've established that we definitely think 135 00:08:03,560 --> 00:08:06,320 Speaker 1: it's critically important um and that there's an advantage here 136 00:08:06,360 --> 00:08:10,880 Speaker 1: because really these diesel generators are serving almost like a 137 00:08:10,920 --> 00:08:14,560 Speaker 1: mini grid for individual homes. So my question is what 138 00:08:14,720 --> 00:08:18,600 Speaker 1: is the role of diesel generation in the storage and 139 00:08:18,640 --> 00:08:21,320 Speaker 1: mini grid market, because you guys mentioned at the beginning, 140 00:08:21,320 --> 00:08:23,600 Speaker 1: and I believe that was Utak, you said that diesel 141 00:08:23,640 --> 00:08:26,600 Speaker 1: generation still does have a role to play in the 142 00:08:26,600 --> 00:08:30,120 Speaker 1: mini grid market. So conventionally that mini grads are not 143 00:08:30,240 --> 00:08:34,760 Speaker 1: really new, but conventionally that many rural communities rely on 144 00:08:34,760 --> 00:08:37,760 Speaker 1: only diesel minigrades or sometimes hygder mitigrate depending on the 145 00:08:37,760 --> 00:08:41,720 Speaker 1: resources are available. But that there a program now is 146 00:08:41,960 --> 00:08:45,440 Speaker 1: I mean if you if you have to partise, if 147 00:08:45,480 --> 00:08:48,920 Speaker 1: you want to run These are two narrators to provide existcy. 148 00:08:49,000 --> 00:08:53,760 Speaker 1: It's expensive and also it's environmentally harmful and then also 149 00:08:54,200 --> 00:08:57,680 Speaker 1: for good for health of neither. In the last ten years, 150 00:08:58,280 --> 00:09:02,640 Speaker 1: technology has become more cheaper, especially solar and battery storage, 151 00:09:02,640 --> 00:09:06,880 Speaker 1: and also technologies such as control system to integrate and 152 00:09:06,920 --> 00:09:10,680 Speaker 1: operate distribute to enery resources as a sample entity has 153 00:09:10,760 --> 00:09:16,720 Speaker 1: become available, so many countries or developers have paid attention 154 00:09:16,800 --> 00:09:23,400 Speaker 1: to switching. Um those diesel integrates to solar hybrid integrates 155 00:09:23,880 --> 00:09:27,079 Speaker 1: as it's cheaper in terms of cost of excity and 156 00:09:27,200 --> 00:09:32,040 Speaker 1: then it's rest harmful environmentally UM. But diesel still makes 157 00:09:31,480 --> 00:09:35,680 Speaker 1: the important rule because if you install just solar together 158 00:09:35,720 --> 00:09:38,720 Speaker 1: with energy stories only, the system can be much bigger 159 00:09:38,760 --> 00:09:41,760 Speaker 1: and then becomes expensive in terms of capics the initial 160 00:09:41,880 --> 00:09:45,160 Speaker 1: costs because the minigrates still need to supply sciity to 161 00:09:45,760 --> 00:09:49,120 Speaker 1: customers during the night when sun is not shining, so 162 00:09:49,160 --> 00:09:53,240 Speaker 1: that diesel generator still preates the role to provide exacity 163 00:09:53,679 --> 00:09:57,000 Speaker 1: even part of the twenty four hours. But if you 164 00:09:57,120 --> 00:10:01,000 Speaker 1: combine with the sort of hybrid systems, you could potentially 165 00:10:01,120 --> 00:10:05,120 Speaker 1: reduced round hours of Diger generations. Hence the course of 166 00:10:05,160 --> 00:10:08,880 Speaker 1: exacity and also the course of diesel fuel would be reduced. 167 00:10:10,040 --> 00:10:12,720 Speaker 1: So the diesel generation was almost being replaced by the 168 00:10:12,720 --> 00:10:15,640 Speaker 1: storage rather than by the soular so to speak. If 169 00:10:15,679 --> 00:10:18,320 Speaker 1: if we're thinking about it from a transition standpoint, so 170 00:10:18,400 --> 00:10:21,520 Speaker 1: regarding many grids in emerging markets, so may you had 171 00:10:21,520 --> 00:10:24,199 Speaker 1: pointed out that you know, having a diesel generator is 172 00:10:24,200 --> 00:10:26,600 Speaker 1: almost unheard of, and I must say, you know, we've 173 00:10:26,640 --> 00:10:28,680 Speaker 1: got one in my house in California, but that's only 174 00:10:28,720 --> 00:10:31,880 Speaker 1: for when you know, you have a massive earthquake and 175 00:10:31,920 --> 00:10:34,080 Speaker 1: the power goes out, which I will say some of 176 00:10:34,120 --> 00:10:36,559 Speaker 1: that has to do with well also when I was 177 00:10:36,600 --> 00:10:38,719 Speaker 1: a kid and we had rolling blackouts due to end ron, 178 00:10:38,840 --> 00:10:40,920 Speaker 1: so that that was a totally different story and we've 179 00:10:40,920 --> 00:10:44,080 Speaker 1: moved far far beyond That's your right, Consistent power is 180 00:10:44,120 --> 00:10:46,240 Speaker 1: something that we're used to and diesel generators aren't going 181 00:10:46,320 --> 00:10:50,280 Speaker 1: to start popping up. So these mini grids, this flexibility, 182 00:10:50,320 --> 00:10:53,800 Speaker 1: this ability to you know, generate locally, store locally and 183 00:10:54,120 --> 00:10:57,400 Speaker 1: also not lose as much energy, and the transmission distribution 184 00:10:57,480 --> 00:11:01,040 Speaker 1: process has some benefits. Do you these many grids and 185 00:11:01,040 --> 00:11:06,400 Speaker 1: micro grids having the applicability in emerging economies only or 186 00:11:06,440 --> 00:11:08,880 Speaker 1: do you see them in other parts of the world. So, 187 00:11:08,960 --> 00:11:12,960 Speaker 1: for example in California where I grew up. So what 188 00:11:13,120 --> 00:11:16,480 Speaker 1: I'd say, I mean, my focus clearly has been looking 189 00:11:16,520 --> 00:11:19,600 Speaker 1: at Sub Saharan Africa. Personally, I would say it's for 190 00:11:19,800 --> 00:11:24,640 Speaker 1: emerging markets where the grid has been unreliable, possibly for 191 00:11:24,640 --> 00:11:27,520 Speaker 1: the past ten or so years, or even twenty or years, 192 00:11:27,720 --> 00:11:32,160 Speaker 1: for example in Nigeria. Having spoken to many of the 193 00:11:32,200 --> 00:11:36,840 Speaker 1: stakeholders in the industry, be that developers or financiers, all 194 00:11:36,880 --> 00:11:40,199 Speaker 1: of them seem to be really clear that they don't 195 00:11:40,200 --> 00:11:42,679 Speaker 1: see the grid getting much better in the next five years. 196 00:11:42,840 --> 00:11:46,160 Speaker 1: And that's similar for for many of the Subsuan African countries. 197 00:11:46,640 --> 00:11:48,800 Speaker 1: So when we talk about emerging markets, I will say 198 00:11:48,840 --> 00:11:53,839 Speaker 1: that many grids can potentially be the future of providing 199 00:11:53,920 --> 00:11:57,679 Speaker 1: stable power in these emerging markets. Now, the reason why 200 00:11:57,679 --> 00:12:00,720 Speaker 1: I say that is because I'll give you one good example. Actually, 201 00:12:00,760 --> 00:12:04,920 Speaker 1: So at one point I visited a mini grid in 202 00:12:05,080 --> 00:12:08,120 Speaker 1: again in the south of Nigeria, next to port Ourcots. 203 00:12:08,200 --> 00:12:10,199 Speaker 1: To be specific, it wasn't a very big one. It 204 00:12:10,240 --> 00:12:14,680 Speaker 1: was probably around Killer Whatsoso. However, what you find is 205 00:12:14,760 --> 00:12:18,040 Speaker 1: that the guys it was a fully off grid location. 206 00:12:18,400 --> 00:12:21,880 Speaker 1: But one interesting thing there was that the community take 207 00:12:21,960 --> 00:12:24,920 Speaker 1: ownership of the power in a way, they provide security 208 00:12:25,000 --> 00:12:28,120 Speaker 1: because when they get grid power, they can't control if 209 00:12:28,120 --> 00:12:30,280 Speaker 1: it works or not. However, if you have the minigrid 210 00:12:30,320 --> 00:12:33,920 Speaker 1: on site and everybody has their own, community kind of 211 00:12:33,960 --> 00:12:36,080 Speaker 1: clock closes that gap. So I would say that that 212 00:12:36,160 --> 00:12:40,439 Speaker 1: example sort of showed me that once you see stable 213 00:12:40,480 --> 00:12:44,160 Speaker 1: power and you can operate your business or do the 214 00:12:44,200 --> 00:12:46,240 Speaker 1: standard things that you need to do, you would want 215 00:12:46,280 --> 00:12:48,319 Speaker 1: to see more of those systems go up. So to 216 00:12:48,640 --> 00:12:51,720 Speaker 1: summarize this, I'll see that clusters of minigrids can solve 217 00:12:51,760 --> 00:12:55,640 Speaker 1: all the localized problems. If the grid improves in ten years, fine, 218 00:12:56,040 --> 00:12:58,439 Speaker 1: but in the next five years, I don't see that happening, 219 00:12:58,480 --> 00:13:01,040 Speaker 1: and I think that minigrids by the way forward in 220 00:13:01,080 --> 00:13:03,720 Speaker 1: these emergent markets. Let's talk a little bit more about 221 00:13:03,720 --> 00:13:06,720 Speaker 1: the financing, because you quickly touched upon that. You know, 222 00:13:06,840 --> 00:13:11,000 Speaker 1: the demand is there for people who want access to electricity, 223 00:13:11,240 --> 00:13:14,920 Speaker 1: the need for them to have reliable, consistent you know, no, 224 00:13:15,080 --> 00:13:17,760 Speaker 1: no fifteen hour blackouts is definitely there as well. But 225 00:13:18,040 --> 00:13:20,840 Speaker 1: from a financing standpoint, who are building these projects and 226 00:13:20,960 --> 00:13:23,959 Speaker 1: kind of what are there big economic gains or they 227 00:13:24,040 --> 00:13:27,120 Speaker 1: largely organizations like the World Bank and the i m 228 00:13:27,200 --> 00:13:29,200 Speaker 1: F that are going in and doing the projects for 229 00:13:29,360 --> 00:13:31,920 Speaker 1: you know, another purpose as well. During the report we 230 00:13:31,960 --> 00:13:34,240 Speaker 1: looked at so we had fourteen funders in the minigrid 231 00:13:34,280 --> 00:13:37,960 Speaker 1: Funders group and essentially they approved a total of say 232 00:13:38,000 --> 00:13:43,920 Speaker 1: two billion dollars by the end of February. However, only 233 00:13:45,679 --> 00:13:48,560 Speaker 1: had actually been dispersed into the mini grid sector. Let 234 00:13:48,640 --> 00:13:50,920 Speaker 1: that sink in thirteen percent, which the low number of 235 00:13:51,120 --> 00:13:53,560 Speaker 1: two billion dollars, right, and most of those funds were 236 00:13:53,600 --> 00:13:57,000 Speaker 1: directed to African countries. Now, while the picture on the 237 00:13:57,040 --> 00:14:00,000 Speaker 1: ground is likely to be better than the data suggest, 238 00:14:00,559 --> 00:14:02,920 Speaker 1: it's clear that there can be significant delays and getting 239 00:14:02,960 --> 00:14:08,400 Speaker 1: funding and therefore in projects basically moving forward. Right. So 240 00:14:08,440 --> 00:14:10,360 Speaker 1: that's on the finance inside. And then I mean there 241 00:14:10,400 --> 00:14:13,679 Speaker 1: are some possible reasons behind why that there's such a 242 00:14:13,679 --> 00:14:17,280 Speaker 1: low disbursement rate. Again, I repeat that thirteen of two 243 00:14:17,280 --> 00:14:22,360 Speaker 1: billion dollars and for example, one complex and lengthy procurement 244 00:14:22,360 --> 00:14:27,160 Speaker 1: processes in governments to the minigrid market is not mature enough, 245 00:14:27,680 --> 00:14:30,760 Speaker 1: meaning there's a lack of potential funded fund receivers I 246 00:14:31,040 --> 00:14:35,280 Speaker 1: developers in the market. And three policy reform to make 247 00:14:35,320 --> 00:14:38,920 Speaker 1: the minigrid market to be I say, more friendly with 248 00:14:39,000 --> 00:14:43,480 Speaker 1: project development and funding timelines. Just don't think, I guess 249 00:14:43,880 --> 00:14:47,480 Speaker 1: the policy. So policy is probably critically important to get 250 00:14:47,480 --> 00:14:49,120 Speaker 1: this off the ground. As you point out, So which 251 00:14:49,160 --> 00:14:51,520 Speaker 1: countries are kind of doing the best at adopting this, 252 00:14:52,360 --> 00:14:55,680 Speaker 1: I'd say Nigeria. Now it's not because I did this 253 00:14:55,760 --> 00:14:58,400 Speaker 1: case studies, So just going to say, you're really happy 254 00:14:59,400 --> 00:15:04,160 Speaker 1: this is the one you know, Just just clear. Look, 255 00:15:04,360 --> 00:15:09,800 Speaker 1: I worked on the financing section, the economic section, and 256 00:15:09,840 --> 00:15:12,640 Speaker 1: the Nigeria case study. But when you ask me that question, 257 00:15:12,720 --> 00:15:16,640 Speaker 1: which countries doing the best this is actually industry would 258 00:15:16,760 --> 00:15:19,000 Speaker 1: agree with me. It will be Nigeria. It's I would say, 259 00:15:19,000 --> 00:15:22,360 Speaker 1: it's a country that has made the minigrid market conditions 260 00:15:22,440 --> 00:15:26,520 Speaker 1: friendlier towards product development and investment, more sold than others. 261 00:15:26,920 --> 00:15:30,800 Speaker 1: And basically in twenty seventeen, the Nigerian government introduced a 262 00:15:30,960 --> 00:15:36,760 Speaker 1: robust MINIGOD regulation which includes clear grid arrival rules. So 263 00:15:36,840 --> 00:15:40,760 Speaker 1: it sets up three options for mini good developers for 264 00:15:40,880 --> 00:15:43,880 Speaker 1: when the main grid reaches their mini grid asset, because 265 00:15:43,920 --> 00:15:48,000 Speaker 1: one problem developers have always had is okay, you say 266 00:15:48,040 --> 00:15:49,760 Speaker 1: that the grid may not improve in five years, but 267 00:15:49,840 --> 00:15:54,400 Speaker 1: what aboutally improving ten years? Right then you've got to say, okay, Therefore, 268 00:15:54,480 --> 00:15:58,080 Speaker 1: if I invest money into a minigrid, what's going to 269 00:15:58,160 --> 00:16:02,280 Speaker 1: happen when the I don't know the distribution company, the 270 00:16:02,360 --> 00:16:06,000 Speaker 1: national distribution company decides to extend my grid to my 271 00:16:06,080 --> 00:16:10,480 Speaker 1: local community. And then I would say that the minigrid 272 00:16:10,520 --> 00:16:14,440 Speaker 1: regulation Nigeria covers this because one, they provide a clear 273 00:16:14,480 --> 00:16:17,920 Speaker 1: compensation schedule, so they say you get twelve months of 274 00:16:17,960 --> 00:16:24,320 Speaker 1: revenue plus appreciated asset value should the national grid take over. Two, 275 00:16:24,600 --> 00:16:28,000 Speaker 1: developers can export their mini grid electricity to the grid, 276 00:16:28,200 --> 00:16:32,240 Speaker 1: their minigrid gets recognized as the main grid system. And 277 00:16:32,480 --> 00:16:35,720 Speaker 1: three operating the minigrid in parallel to the main grid. 278 00:16:35,840 --> 00:16:38,920 Speaker 1: There's another option. So another point why I say in 279 00:16:38,960 --> 00:16:42,800 Speaker 1: Nigeria is the government has developed the largest results based 280 00:16:42,840 --> 00:16:48,240 Speaker 1: finance in mechanism under what's called the Nigeria Electrification Project 281 00:16:48,320 --> 00:16:51,320 Speaker 1: also known as the NET or n EP. Now, the 282 00:16:51,400 --> 00:16:55,600 Speaker 1: total amount of the budget to support solar minigrids under 283 00:16:55,640 --> 00:16:59,640 Speaker 1: This program is two hundred and twenty million dollars which 284 00:16:59,640 --> 00:17:03,480 Speaker 1: comes from the World Bank and the African Development Bank. Now, 285 00:17:03,520 --> 00:17:06,600 Speaker 1: results based financing is very interesting and as I said, 286 00:17:07,000 --> 00:17:09,520 Speaker 1: we feel like it's the future. Results based financing is 287 00:17:09,560 --> 00:17:14,280 Speaker 1: where the host government agrees to pay a per connection 288 00:17:14,400 --> 00:17:19,280 Speaker 1: grant developers once they can prove a minigrid is operational 289 00:17:19,800 --> 00:17:24,880 Speaker 1: and provides reliable power to end users. So, in summary, 290 00:17:24,920 --> 00:17:27,600 Speaker 1: I would say results of based financing is an excellent 291 00:17:27,720 --> 00:17:31,359 Speaker 1: way of ensuring developers complete their end of the deal 292 00:17:31,960 --> 00:17:35,399 Speaker 1: before they get the grant from the government and again 293 00:17:35,480 --> 00:17:37,800 Speaker 1: keeping all parties happy, right because the end user gets 294 00:17:37,840 --> 00:17:41,119 Speaker 1: stable power. But that's taking on an awful lot of 295 00:17:41,200 --> 00:17:43,800 Speaker 1: risk on the part of the person building the project 296 00:17:43,880 --> 00:17:46,080 Speaker 1: to begin with. How easy is it for them to 297 00:17:46,119 --> 00:17:48,320 Speaker 1: get ahold of the financing at the end, and how 298 00:17:48,359 --> 00:17:50,040 Speaker 1: are they able to get the loans to start the 299 00:17:50,040 --> 00:17:52,280 Speaker 1: project to begin with. This is where we think results 300 00:17:52,280 --> 00:17:56,679 Speaker 1: based financing essentially closes the viability gap. So if you 301 00:17:56,720 --> 00:18:01,200 Speaker 1: can get a guarantee from the government that you are 302 00:18:01,240 --> 00:18:05,840 Speaker 1: going to be paid x amount of like x percentage 303 00:18:05,840 --> 00:18:08,760 Speaker 1: of your capex, say six months after what once your 304 00:18:08,760 --> 00:18:11,080 Speaker 1: projects go online, and you can prove that the operational 305 00:18:11,320 --> 00:18:13,479 Speaker 1: It's great, right, because then you can go to the lenders, 306 00:18:13,520 --> 00:18:17,080 Speaker 1: the commercial banks, which actually we have spoken to quite 307 00:18:17,119 --> 00:18:20,239 Speaker 1: a few commercial lenders that said they really feel that 308 00:18:20,760 --> 00:18:24,280 Speaker 1: results based financing will close this viability gap. So once 309 00:18:24,400 --> 00:18:28,760 Speaker 1: the results based financier sees that actually you have this 310 00:18:29,680 --> 00:18:34,960 Speaker 1: agreement from the government two to basically cover your capex 311 00:18:35,480 --> 00:18:38,040 Speaker 1: or to cover a portion of your capex once you've 312 00:18:38,320 --> 00:18:41,400 Speaker 1: completed the project. So it is a grant cash. You're 313 00:18:41,440 --> 00:18:43,320 Speaker 1: not going to have to pay this money back, remember that, 314 00:18:43,760 --> 00:18:46,880 Speaker 1: So it's different finances, it's a grant. What really makes 315 00:18:46,920 --> 00:18:50,879 Speaker 1: sense here is that the commercial financier will say, okay, 316 00:18:51,000 --> 00:18:54,480 Speaker 1: since you've got this guarantee from the government, we can 317 00:18:54,520 --> 00:18:58,560 Speaker 1: therefore lend you the money for you to carry out construction. 318 00:18:59,000 --> 00:19:02,120 Speaker 1: So once construction complete, you know you're gonna you're going 319 00:19:02,160 --> 00:19:05,200 Speaker 1: to be paid within six months, right the I don't 320 00:19:05,240 --> 00:19:11,160 Speaker 1: know whatever percentage could potentially depending on what the agreement 321 00:19:11,280 --> 00:19:13,440 Speaker 1: is with the government, you will be paid for each 322 00:19:13,440 --> 00:19:17,080 Speaker 1: of those connections and you can therefore pay back the lender. Right. 323 00:19:17,520 --> 00:19:22,040 Speaker 1: So it just makes the viability of the project far 324 00:19:22,160 --> 00:19:26,840 Speaker 1: more promising with results based financing, and it gives some 325 00:19:26,880 --> 00:19:31,159 Speaker 1: sort of guarantee the commercial lenders too, So this is 326 00:19:31,160 --> 00:19:33,040 Speaker 1: a bit of a path forward that other countries can 327 00:19:33,080 --> 00:19:37,160 Speaker 1: definitely learn from you mentioned previously. And and maybe let's 328 00:19:37,160 --> 00:19:40,359 Speaker 1: pivot over back to you tak Uh. We're saying that, 329 00:19:40,480 --> 00:19:42,920 Speaker 1: you know, Nigeria that a lot of people are saying 330 00:19:42,960 --> 00:19:46,080 Speaker 1: that over the next five years, they're not anticipating that 331 00:19:46,160 --> 00:19:49,360 Speaker 1: the state grid is actually going to expand. I don't 332 00:19:49,359 --> 00:19:51,160 Speaker 1: know if that's the right way to phrase it, but 333 00:19:51,560 --> 00:19:54,040 Speaker 1: this minigrid market is a really good place to look. 334 00:19:54,080 --> 00:19:56,840 Speaker 1: So let's look further beyond the next five years. How 335 00:19:56,880 --> 00:19:59,199 Speaker 1: about the next ten years. What do you see the 336 00:19:59,240 --> 00:20:02,439 Speaker 1: outlook for mini grids in the next ten years, not 337 00:20:02,560 --> 00:20:05,600 Speaker 1: just in Nigeria, but globally the island nations as well 338 00:20:05,640 --> 00:20:07,399 Speaker 1: and the other places that you also looked at in 339 00:20:07,400 --> 00:20:09,680 Speaker 1: this report. I think the globally, I think the more 340 00:20:09,720 --> 00:20:14,480 Speaker 1: governments we expect that the more governments are realizing that 341 00:20:14,840 --> 00:20:18,400 Speaker 1: distributed energy technology is including many grides and the soul 342 00:20:18,400 --> 00:20:21,679 Speaker 1: of home system for the PRAMO roles for en as 343 00:20:21,720 --> 00:20:25,359 Speaker 1: the access purpose, because I mean, the one issue in 344 00:20:25,400 --> 00:20:29,480 Speaker 1: this sector is a roup of governments conventionally thought that 345 00:20:29,680 --> 00:20:33,760 Speaker 1: great extension is the best way to supply exacity and 346 00:20:33,840 --> 00:20:36,320 Speaker 1: a reliable way. However, there are two problems. One it's 347 00:20:36,520 --> 00:20:41,480 Speaker 1: it's very expensive in terms of building such infrastructure and 348 00:20:41,520 --> 00:20:45,359 Speaker 1: also secondly in terms of the cost parer ecstacy on 349 00:20:45,480 --> 00:20:50,000 Speaker 1: ky to about the our basis, it's difficult for rural 350 00:20:50,000 --> 00:20:54,200 Speaker 1: customers to pay for the extacy because this high cost 351 00:20:54,480 --> 00:20:59,000 Speaker 1: compared to other distribute energy resources such as minigrations or 352 00:20:59,040 --> 00:21:01,800 Speaker 1: consist What are we talking about in terms of costs, 353 00:21:01,840 --> 00:21:04,399 Speaker 1: like how much more expensive is it? Yeah? We have 354 00:21:04,480 --> 00:21:09,320 Speaker 1: it actually, so give me immediate collarlesses and in calgated 355 00:21:10,040 --> 00:21:13,800 Speaker 1: cost of excity for different technology configurations. If you use 356 00:21:13,840 --> 00:21:16,520 Speaker 1: a soul or hybrid mini grads um, the cost of 357 00:21:16,560 --> 00:21:20,040 Speaker 1: excity in a hey to about our basis can be 358 00:21:20,040 --> 00:21:25,119 Speaker 1: between fifty cents and one dollar party about hour. But 359 00:21:25,680 --> 00:21:30,439 Speaker 1: if you used let's say just diesel generates in the 360 00:21:30,480 --> 00:21:33,080 Speaker 1: same scenario, it could be more than it could be 361 00:21:33,119 --> 00:21:38,119 Speaker 1: more than double dot simply because the community uses a 362 00:21:38,160 --> 00:21:41,960 Speaker 1: lot of diesel fuels, which is costly. Do we foresee 363 00:21:42,119 --> 00:21:48,560 Speaker 1: a situation where mini grids cost competitive compared to um diesel, 364 00:21:48,600 --> 00:21:51,600 Speaker 1: I think is what you're saying correct exactly? So do 365 00:21:51,680 --> 00:21:54,200 Speaker 1: we foresee a situation where many grids which are cost 366 00:21:54,200 --> 00:21:57,399 Speaker 1: competitive compared to diesel, but not really when compared to 367 00:21:57,440 --> 00:22:02,480 Speaker 1: some of these you know, well developed, established large infrastructure 368 00:22:02,480 --> 00:22:05,800 Speaker 1: grids like the one i'm recording this podcast on now. Um, 369 00:22:06,080 --> 00:22:10,840 Speaker 1: do we foresee a situation where they become price competitive 370 00:22:10,960 --> 00:22:13,679 Speaker 1: close to parity or is it always just going to 371 00:22:13,760 --> 00:22:17,159 Speaker 1: be more expensive given the level of complexity. So I 372 00:22:17,160 --> 00:22:19,920 Speaker 1: think that the economics of the many grids of microL 373 00:22:19,960 --> 00:22:24,199 Speaker 1: it's quite complex, um depending on where it is. So 374 00:22:24,240 --> 00:22:28,119 Speaker 1: if I talk about imaging markets, it's definitely cheaper in 375 00:22:28,240 --> 00:22:31,920 Speaker 1: terms of cost party or our basis, but the program 376 00:22:32,040 --> 00:22:36,399 Speaker 1: is still it's course, is expensive from the customers prospective. 377 00:22:36,520 --> 00:22:39,720 Speaker 1: That's why public funding is always very important to make 378 00:22:39,800 --> 00:22:42,520 Speaker 1: projects possible. But in the context of the country is 379 00:22:42,560 --> 00:22:47,000 Speaker 1: such as the US Austra area, it's a different story there. 380 00:22:47,160 --> 00:22:52,679 Speaker 1: It's not only just cost comparison between many grids or 381 00:22:52,720 --> 00:22:56,360 Speaker 1: micro grids and the great exist. It's also about the 382 00:22:56,440 --> 00:23:00,560 Speaker 1: value you get from reliability of texicity. One of the 383 00:23:00,600 --> 00:23:03,720 Speaker 1: big reasons why some developers are installing micro grids or 384 00:23:03,760 --> 00:23:07,760 Speaker 1: minigrades in the US is resiliency improvement, because there are 385 00:23:07,800 --> 00:23:11,240 Speaker 1: in some state there is a potential risk of greater 386 00:23:11,280 --> 00:23:16,000 Speaker 1: nexiscity is cut down due to the hurricanes or sometimes wildfires. 387 00:23:16,840 --> 00:23:20,080 Speaker 1: So combination with those of different reasons resiliency in the 388 00:23:20,200 --> 00:23:24,760 Speaker 1: cost some deripairs, some customers decide to install s to 389 00:23:24,840 --> 00:23:27,720 Speaker 1: micro grids. SOAK, you've you've taken a look into the 390 00:23:27,760 --> 00:23:31,280 Speaker 1: future for us, What is your view on the next 391 00:23:31,359 --> 00:23:35,000 Speaker 1: ten years for many grids micro grids? So what I'd 392 00:23:35,040 --> 00:23:38,000 Speaker 1: say is to scale the mini grid market. It is 393 00:23:38,040 --> 00:23:41,520 Speaker 1: important to have these two things right. So one, it's 394 00:23:41,520 --> 00:23:44,960 Speaker 1: important to have subsidies as many good projects do have 395 00:23:45,000 --> 00:23:48,920 Speaker 1: a high risk, as take mentioned earlier, and results based 396 00:23:48,960 --> 00:23:53,480 Speaker 1: financing is the favorable subsidy as it's straightforward, as we 397 00:23:53,480 --> 00:23:58,080 Speaker 1: also explained, and again as it also ensures that the 398 00:23:58,160 --> 00:24:00,960 Speaker 1: work gets done right. You don't want to give that 399 00:24:01,080 --> 00:24:03,200 Speaker 1: grants and then all of a sudden nothing's getting done. 400 00:24:03,440 --> 00:24:07,760 Speaker 1: Number two now, being able to get project financing. This 401 00:24:07,920 --> 00:24:10,360 Speaker 1: this is something we haven't touched on yet actually, so 402 00:24:11,080 --> 00:24:14,439 Speaker 1: being able to get project financing for a portfolio of 403 00:24:14,720 --> 00:24:18,960 Speaker 1: minigrid projects as opposed to a single project, because a 404 00:24:19,000 --> 00:24:22,479 Speaker 1: single project is too small to attract project financing. So 405 00:24:23,320 --> 00:24:26,400 Speaker 1: we think that the future business model will be I'm 406 00:24:26,440 --> 00:24:29,920 Speaker 1: a developer. I owned say ten or twenty or even 407 00:24:29,960 --> 00:24:34,199 Speaker 1: fifty or potentially a hundred minigrids under an SPV a 408 00:24:34,200 --> 00:24:38,399 Speaker 1: special purpose vehicle, and each of those minigrids have a 409 00:24:38,400 --> 00:24:42,159 Speaker 1: predictable revenue stream. What is project financing. Project financing is 410 00:24:42,200 --> 00:24:46,959 Speaker 1: being able to lend on predictable future cash flows. So 411 00:24:47,000 --> 00:24:50,720 Speaker 1: if I can predict the revenue of each of those, 412 00:24:50,760 --> 00:24:54,879 Speaker 1: say fifty projects minigrids, I can then go to a 413 00:24:54,880 --> 00:24:59,520 Speaker 1: commercial financier and he can lend me money based on 414 00:24:59,720 --> 00:25:02,120 Speaker 1: that future Nash law. So we think that you need 415 00:25:02,200 --> 00:25:05,720 Speaker 1: to have results based financing on each of those assets 416 00:25:06,000 --> 00:25:09,439 Speaker 1: as well as project financing to be able to scale 417 00:25:09,520 --> 00:25:13,480 Speaker 1: the sector upright, because if you think about utility scale 418 00:25:13,520 --> 00:25:16,439 Speaker 1: projects are usually finance with project financing because you can 419 00:25:16,480 --> 00:25:18,399 Speaker 1: just carry out bigger deals. But no one's going to 420 00:25:18,840 --> 00:25:22,040 Speaker 1: do project financing on say a fifty killer what project 421 00:25:22,280 --> 00:25:25,720 Speaker 1: You're looking at megawatts plus projects to get project financing. 422 00:25:25,920 --> 00:25:27,639 Speaker 1: And the other thing is there has to be an 423 00:25:27,640 --> 00:25:32,199 Speaker 1: availability of public funding. That's very important to attract commercial investors. 424 00:25:32,520 --> 00:25:37,399 Speaker 1: And finally back to the Nigeria point. If Nigeria's performance 425 00:25:37,400 --> 00:25:40,840 Speaker 1: based grants work, which the World Bank and African Development 426 00:25:40,840 --> 00:25:44,800 Speaker 1: Bank are implemented now, there could be more results based 427 00:25:44,840 --> 00:25:48,240 Speaker 1: financing programs in the next ten years based on what's 428 00:25:48,240 --> 00:25:50,760 Speaker 1: happened in Nigeria now. So Nigeria in the way is leading, 429 00:25:51,000 --> 00:25:53,120 Speaker 1: so you see a pretty bright future. It's just there's 430 00:25:53,160 --> 00:25:55,680 Speaker 1: a lot of criteria that need to be met. Maybe 431 00:25:55,680 --> 00:25:57,800 Speaker 1: take some notes. If you're listening and you're thinking about 432 00:25:57,800 --> 00:25:59,960 Speaker 1: doing these sorts of projects, We've we've got some things 433 00:26:00,000 --> 00:26:03,000 Speaker 1: that can help you out. So when launching into this report, 434 00:26:03,040 --> 00:26:06,359 Speaker 1: I think people always when they start to reachsearch research something, 435 00:26:06,359 --> 00:26:08,479 Speaker 1: they have a few assumptions and let's maybe you know, 436 00:26:08,720 --> 00:26:11,600 Speaker 1: play a little bit of fact tennis. Here was there 437 00:26:11,720 --> 00:26:15,320 Speaker 1: one factor finding each of you guys had to close 438 00:26:15,359 --> 00:26:19,120 Speaker 1: us out today that you found particularly interesting when doing 439 00:26:19,119 --> 00:26:21,399 Speaker 1: this project, I found it. Why interesting thing is the 440 00:26:22,480 --> 00:26:28,120 Speaker 1: large measure energy companies, all your measures and trading houses 441 00:26:28,160 --> 00:26:30,919 Speaker 1: are participating in this mini greak market as a financials 442 00:26:31,359 --> 00:26:37,359 Speaker 1: So for example, Shell Total they both invest in some 443 00:26:37,600 --> 00:26:40,600 Speaker 1: very experienced minigree differ bads who are different playing projects 444 00:26:40,600 --> 00:26:44,159 Speaker 1: in Africa, and also the Japanese trading houses such as 445 00:26:44,280 --> 00:26:48,720 Speaker 1: needs Be. She recently told to they all they all 446 00:26:49,320 --> 00:26:52,520 Speaker 1: invest in Mani gree different pls as well. So of 447 00:26:52,560 --> 00:26:57,120 Speaker 1: course still financial as well is very important to support 448 00:26:57,160 --> 00:27:01,439 Speaker 1: many grades. But with the very very real public funding, 449 00:27:01,520 --> 00:27:05,919 Speaker 1: we have seen more big private corporate are participating in 450 00:27:06,119 --> 00:27:10,040 Speaker 1: this sector, which is very a positive news, and I 451 00:27:10,240 --> 00:27:14,080 Speaker 1: pulled and to push that sector forward. Okay, how about you? 452 00:27:14,640 --> 00:27:17,400 Speaker 1: So for me, it was basically one I mentioned earlier. 453 00:27:17,480 --> 00:27:20,720 Speaker 1: It was the fact that from the Minigrid Funders Group 454 00:27:20,800 --> 00:27:26,160 Speaker 1: a total of two billion dollars were dispersed as of February, 455 00:27:26,359 --> 00:27:30,720 Speaker 1: but the fact that only of that funding had actually 456 00:27:30,800 --> 00:27:35,119 Speaker 1: been were committed, but only were dispersed. So that's a 457 00:27:35,200 --> 00:27:37,639 Speaker 1: really low number and a lot needs to be I mean, 458 00:27:37,640 --> 00:27:40,720 Speaker 1: it could be the data again, but that needs to improve, 459 00:27:40,960 --> 00:27:43,080 Speaker 1: should I say, or to put it in another way, 460 00:27:43,119 --> 00:27:45,600 Speaker 1: there's money to be spent. There is definitely money to 461 00:27:45,600 --> 00:27:49,520 Speaker 1: be spent. And the other point I had was that 462 00:27:49,760 --> 00:27:54,760 Speaker 1: the fact that it's really obvious that solo solo hybrid minigrids, 463 00:27:55,119 --> 00:27:57,440 Speaker 1: based on the like the c O numbers that Attacking 464 00:27:57,560 --> 00:28:01,439 Speaker 1: quoted earlier, it's just cheaper to solar rather than just 465 00:28:01,520 --> 00:28:03,720 Speaker 1: having the diesel generator and having that run in twenty 466 00:28:03,720 --> 00:28:07,080 Speaker 1: four hours a day or whatever. It's just cheaper and 467 00:28:07,480 --> 00:28:11,400 Speaker 1: the final point is that I found it really interesting 468 00:28:11,560 --> 00:28:14,920 Speaker 1: how results based financing and I keep pushing this point 469 00:28:14,960 --> 00:28:19,760 Speaker 1: because honestly, the financier is really the commercial funders. Financiers 470 00:28:19,960 --> 00:28:21,720 Speaker 1: really want to make it clear that they need to 471 00:28:21,760 --> 00:28:25,600 Speaker 1: see this. Results based financing is just like magic in 472 00:28:25,600 --> 00:28:28,720 Speaker 1: a way because it just solves many problems. It solves 473 00:28:28,720 --> 00:28:33,000 Speaker 1: the problem of people being awarded a contract and potentially 474 00:28:33,160 --> 00:28:35,800 Speaker 1: taking the money by not doing the work, where results 475 00:28:35,800 --> 00:28:39,160 Speaker 1: based financing doesn't allow for that. It basically says that, look, 476 00:28:39,600 --> 00:28:41,880 Speaker 1: I'm going to guarantee you this. I'm a host government, 477 00:28:42,400 --> 00:28:46,680 Speaker 1: I've got sovereign guarantees they or whatever. I will give 478 00:28:46,720 --> 00:28:48,720 Speaker 1: you this money, but you need to prove that your 479 00:28:48,760 --> 00:28:52,040 Speaker 1: system is providing stable power. So it's really powerful because 480 00:28:52,080 --> 00:28:55,320 Speaker 1: one issue that you found in Sub Saharan African countries 481 00:28:55,400 --> 00:28:58,440 Speaker 1: is that you may get someone awarded a contract. It 482 00:28:58,480 --> 00:29:00,600 Speaker 1: could be to build a bridge, but then some of 483 00:29:00,600 --> 00:29:03,840 Speaker 1: that contract money doesn't get the funds don't always get 484 00:29:03,920 --> 00:29:07,320 Speaker 1: used appropriately, and results based financing fixes this. It makes 485 00:29:07,360 --> 00:29:10,800 Speaker 1: developers work hard, gives the end user something to be 486 00:29:12,160 --> 00:29:15,240 Speaker 1: happy about, and then it gives the government some guarantee 487 00:29:15,280 --> 00:29:17,240 Speaker 1: that these guys I'm giving the money to is going 488 00:29:17,280 --> 00:29:20,080 Speaker 1: to be used. So we've talked a lot about like 489 00:29:20,120 --> 00:29:23,000 Speaker 1: the opportunities and solutions as we see them, and I 490 00:29:23,040 --> 00:29:25,760 Speaker 1: think that's it's always very constructive to think about how 491 00:29:25,800 --> 00:29:28,560 Speaker 1: we're going to get things done. But let's acknowledge some 492 00:29:28,600 --> 00:29:31,120 Speaker 1: of the challenges that exist. So take you know, you 493 00:29:31,240 --> 00:29:33,920 Speaker 1: have a few I think that immediately come to mind 494 00:29:34,320 --> 00:29:36,000 Speaker 1: when we were prepping for this. So what are some 495 00:29:36,080 --> 00:29:38,440 Speaker 1: of the biggest barriers that you see? I think that 496 00:29:38,520 --> 00:29:41,520 Speaker 1: this is a common challenge for the migrant sucer. So 497 00:29:42,520 --> 00:29:45,680 Speaker 1: we already we already talked that UM technology is already 498 00:29:45,680 --> 00:29:51,800 Speaker 1: available the coastal Solar about their stories got cheaper. However, UM. 499 00:29:51,840 --> 00:29:56,400 Speaker 1: The reason why many public organizations such as development, development 500 00:29:57,080 --> 00:30:02,040 Speaker 1: financing institutions and don't agencies are involved are because of 501 00:30:02,080 --> 00:30:06,360 Speaker 1: the challenge. So the first challenge is there's a lack 502 00:30:06,440 --> 00:30:10,720 Speaker 1: of regulation that protect cast throws of the migrants. Some 503 00:30:10,800 --> 00:30:15,600 Speaker 1: people stay that as create cleer lows of the main 504 00:30:15,680 --> 00:30:20,160 Speaker 1: grate arrival on many grades, which means that if the 505 00:30:20,280 --> 00:30:22,560 Speaker 1: main grid, which is the main grade, what would happen 506 00:30:22,640 --> 00:30:27,040 Speaker 1: to the assets? So the developers always concerned that if 507 00:30:27,080 --> 00:30:31,040 Speaker 1: there's no cle creer rule, the mity grate assets cannot 508 00:30:31,040 --> 00:30:36,120 Speaker 1: be compensated by the state owned utilities, or they mean 509 00:30:36,400 --> 00:30:42,040 Speaker 1: they may have the lower accessy tariffs from the state utility. Unfortunately, 510 00:30:42,120 --> 00:30:46,480 Speaker 1: at the moment um there's just more than ten countries 511 00:30:46,520 --> 00:30:50,760 Speaker 1: we have studied have such creal rules, including a Nigeria. 512 00:30:51,040 --> 00:30:57,120 Speaker 1: The second reason is customers. So the dominant customers for 513 00:30:57,280 --> 00:31:01,760 Speaker 1: the milling grids are rural household who typically dely on 514 00:31:01,800 --> 00:31:06,520 Speaker 1: our culture and then income is typically limited or sometimes 515 00:31:06,600 --> 00:31:11,360 Speaker 1: unpredictable depending on the weather conditions that affects agricultural productivity. 516 00:31:12,000 --> 00:31:18,240 Speaker 1: By that it's sometimes difficult for minigry customers to pay 517 00:31:18,400 --> 00:31:23,480 Speaker 1: for the electricity from sula hybrid miniguies, even though the 518 00:31:23,480 --> 00:31:27,920 Speaker 1: the cost of the migrant is still competitive against other alternatives. 519 00:31:28,800 --> 00:31:31,520 Speaker 1: That second way, yeah, the second reason, just to delve 520 00:31:31,520 --> 00:31:33,720 Speaker 1: into that a little bit more. Not only is it 521 00:31:33,720 --> 00:31:35,240 Speaker 1: going to be difficult for them to pay, but my 522 00:31:35,320 --> 00:31:38,840 Speaker 1: question is how do they go about even requesting this access? 523 00:31:39,120 --> 00:31:41,920 Speaker 1: How does some of these governments go about actually trying 524 00:31:41,920 --> 00:31:45,440 Speaker 1: to find out who wants these sorts of projects and 525 00:31:45,680 --> 00:31:49,480 Speaker 1: is most engaged and interested and supportive of them. So 526 00:31:49,840 --> 00:31:53,600 Speaker 1: essentially many customers won't have the labor ectacity. But the 527 00:31:53,640 --> 00:31:56,840 Speaker 1: way the way to find out where they develop the 528 00:31:56,880 --> 00:32:01,760 Speaker 1: migrants is different by an organization, the typically government. If 529 00:32:01,760 --> 00:32:05,440 Speaker 1: the governments think that minigrates it is very important technology 530 00:32:05,600 --> 00:32:12,440 Speaker 1: to provide exacity UM. Sometimes they they do the investigations 531 00:32:12,480 --> 00:32:15,280 Speaker 1: and then they stop the candidates. For example the case 532 00:32:15,320 --> 00:32:18,880 Speaker 1: of Nigeria are initially the government selected the two thousand 533 00:32:19,840 --> 00:32:24,840 Speaker 1: candidate sites and then after that they listed up. But 534 00:32:24,960 --> 00:32:28,000 Speaker 1: also the private companies. Some private companies do that. Example, 535 00:32:28,080 --> 00:32:32,680 Speaker 1: it's identification of the potential minigrate site is work that 536 00:32:32,840 --> 00:32:37,240 Speaker 1: many developers do. So they sometimes use the satire images 537 00:32:37,480 --> 00:32:43,360 Speaker 1: to identify the concentrated communities with commercial industrial customers. Often 538 00:32:43,400 --> 00:32:47,800 Speaker 1: the case they also visit the candidate communities to check 539 00:32:47,840 --> 00:32:50,960 Speaker 1: the feasibility with the minigrate projects. So there are different ways. 540 00:32:51,280 --> 00:32:55,480 Speaker 1: Points three is a typical size of minigrate is very small. 541 00:32:56,200 --> 00:32:59,960 Speaker 1: So in the countries like the United States, the microgride 542 00:33:00,080 --> 00:33:02,400 Speaker 1: mini grade project is typically more than one MiG a lot. 543 00:33:02,920 --> 00:33:07,200 Speaker 1: This is huge and but they need African case for 544 00:33:07,600 --> 00:33:12,200 Speaker 1: mini grades for communities that typically less than fift So 545 00:33:12,320 --> 00:33:16,040 Speaker 1: from the investors point of view, if you invest good 546 00:33:16,440 --> 00:33:20,760 Speaker 1: single so will hybrid many grades. UM. The retail can 547 00:33:20,800 --> 00:33:24,240 Speaker 1: be very limited. So unless you have a portafolio of 548 00:33:24,400 --> 00:33:28,800 Speaker 1: many many projects, it's not very attractive for invest from 549 00:33:28,800 --> 00:33:33,240 Speaker 1: the investment perspective. So that's why I'm making ports for you. 550 00:33:33,400 --> 00:33:38,400 Speaker 1: Is another input on saying um to make the investment workable. 551 00:33:38,960 --> 00:33:42,640 Speaker 1: So TAK, thank you very much for joining us today. 552 00:33:43,040 --> 00:33:51,360 Speaker 1: Thank you very much, Thank you for having us. Bloomberg 553 00:33:51,400 --> 00:33:53,920 Speaker 1: Anya is a service provided by Bloomberg Finance LP and 554 00:33:53,960 --> 00:33:56,880 Speaker 1: its affiliates. This recording does not constitute, nor should it 555 00:33:56,920 --> 00:34:00,880 Speaker 1: be construed as investment advice, investment recommendations, or a recommendation 556 00:34:00,960 --> 00:34:03,960 Speaker 1: as to an investment or other strategy. 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