WEBVTT - Mini-Grids, Mighty Power 0:00:00.080 --> 0:00:03.280 Today on switched On, I speak with Takea, Haro Kawahara 0:00:03.440 --> 0:00:06.080 and ulm Ezekiel, who were part of the team that 0:00:06.160 --> 0:00:10.440 wrote State of the Global Minigrids Market Report. This report 0:00:10.600 --> 0:00:13.960 is a minigrids partnership report and it was published by Bloomberg, 0:00:14.040 --> 0:00:16.439 n e F and Sustainable Energy for All. The aim 0:00:16.480 --> 0:00:18.959 of the report was to raise awareness around minigrids and 0:00:19.040 --> 0:00:22.120 to mobilize investments in the minigrids sector, as well as 0:00:22.160 --> 0:00:24.919 to serve as a benchmark to measure progress. In the 0:00:24.960 --> 0:00:29.200 process of writing the report, they interviewed sixty eight organizations 0:00:29.280 --> 0:00:32.840 and they also included six detailed case studies. The case 0:00:32.840 --> 0:00:39.159 studies were for Uganda, Tanzania, Nigeria, India, the Philippines and Indonesia. 0:00:39.479 --> 0:00:42.000 You can see the full report and the data under 0:00:42.040 --> 0:00:45.920 the publication section at SE for All dot org. That's 0:00:46.159 --> 0:00:49.400 s E F O R A L L dot org 0:00:49.720 --> 0:00:52.919 and there you will find State of the Global Minigrids 0:00:53.000 --> 0:00:57.320 Market Report. Additionally, it can be found at b NF 0:00:57.400 --> 0:01:00.920 GO on the Bloomberg terminal and at benof dot com 0:01:01.040 --> 0:01:03.959 or on b ANF mobile app. Quick reminder, b an 0:01:03.960 --> 0:01:07.080 EF does not provide investment or strategy advice and you 0:01:07.120 --> 0:01:09.560 can hear our full disclaimer at the end of the show. 0:01:09.959 --> 0:01:12.680 I am Dana Perkins and you're listening to Switch It 0:01:12.760 --> 0:01:15.680 on the b N e F podcast. Now let's hear 0:01:15.840 --> 0:01:28.400 from Tak and Ulama about mini grids. Hi, Tak, nice 0:01:28.400 --> 0:01:31.600 to see you as a see you know we'll actually 0:01:31.640 --> 0:01:33.319 hear you. I guess we we can't even see each 0:01:33.360 --> 0:01:35.800 other now, but nice to hear you. And Ulam, nice 0:01:35.840 --> 0:01:37.360 to have you on the show as well. Nice to 0:01:37.360 --> 0:01:39.319 be on the show. So we are going to be 0:01:39.360 --> 0:01:43.200 talking today about global mini grids in the state of 0:01:43.200 --> 0:01:46.199 the minigrid market. So let's start at the very beginning talk. 0:01:46.480 --> 0:01:49.080 What is a mini grid so many grey is like 0:01:49.640 --> 0:01:54.320 small independent PAS system can be either isolated computerly from 0:01:54.320 --> 0:01:56.520 the main grid or it can be connected to the 0:01:56.560 --> 0:01:58.960 grid to make it the more context it is a 0:01:59.000 --> 0:02:02.440 group of intaco have to distributed energy resource its with 0:02:02.640 --> 0:02:07.960 load or with loads within clearly defined electrical boundaries. And 0:02:08.000 --> 0:02:11.840 then these distributor energy resources can be very different kind 0:02:11.880 --> 0:02:17.919 of technologies are typically the modern minigrates, combined solar energy 0:02:17.960 --> 0:02:22.320 storage and diseel generators, but they all work as a 0:02:22.320 --> 0:02:26.399 single entity and typically in the emerging markets, this minigrids 0:02:26.480 --> 0:02:29.480 is used for energy access in the remote areas where 0:02:29.840 --> 0:02:33.360 there's completely off gride. However, it is also can be 0:02:33.919 --> 0:02:37.040 connected to the main gride. So for example, when the 0:02:37.040 --> 0:02:41.080 main grid system has some troubles m the milgrid control 0:02:41.120 --> 0:02:45.040 system can give order to the mitigrate to disconnect from 0:02:45.040 --> 0:02:48.080 the main grid and the minigrate can continue to operate 0:02:48.600 --> 0:02:52.160 and supply extacity to the customers. So sometimes it connects 0:02:52.160 --> 0:02:54.919 into the main grid, sometimes it doesn't, but it could 0:02:54.960 --> 0:02:58.440 in theory operate completely autonomously. That's kind of the differentiator 0:02:58.560 --> 0:03:04.440 from my understanding. You mentioned solar storage and diesel generation. 0:03:04.760 --> 0:03:07.040 Tell me a little bit quickly about the storage element. 0:03:07.120 --> 0:03:09.160 So what are we talking about with storage? Is it 0:03:09.440 --> 0:03:11.800 the lithium my own batteries that were familiar with in 0:03:11.960 --> 0:03:14.480 cars or is it a different type of battery technology 0:03:14.520 --> 0:03:16.800 that we're calling upon. Yeah, that's a good question. So 0:03:16.880 --> 0:03:20.080 it really depends on markets. But typically in imagine market, 0:03:20.360 --> 0:03:23.960 which is our main focusting this research, is let us 0:03:24.000 --> 0:03:27.680 in batteries because the biggest reason is because still cheap 0:03:27.720 --> 0:03:31.320 and then available in many of the African countries or 0:03:31.400 --> 0:03:35.840 imagine Asian countries. However, if you look at the high 0:03:35.880 --> 0:03:39.440 income countries. It's such as the US waste Adia the 0:03:39.520 --> 0:03:43.040 reason why own botteries are taking more share, and then 0:03:43.600 --> 0:03:47.120 we can see gradual uptake of Riffin wine botteries in 0:03:47.160 --> 0:03:51.000 emerging markets to be integrated into the minigrate as well. 0:03:51.360 --> 0:03:55.480 So those who listened to this show switched on usually 0:03:55.520 --> 0:03:58.000 focuses on a research report that we did. Now this 0:03:58.000 --> 0:04:00.680 this is a really big one. So it's a long, 0:04:00.840 --> 0:04:03.520 in depth global research report. Tell us a little bit 0:04:03.560 --> 0:04:07.000 more about what our mini grid research for this report 0:04:07.080 --> 0:04:11.360 was focused on. So the main focus is very comprehensive 0:04:11.920 --> 0:04:15.440 topics to be covered about mini grids, but the essential 0:04:15.440 --> 0:04:18.359 purpose is to understand what's the latest status of the 0:04:18.360 --> 0:04:24.640 minigrids for energy access in emagine markets, particularly in South 0:04:24.680 --> 0:04:28.960 South Africa, Asia and island nations. And then the reason 0:04:28.960 --> 0:04:32.520 why I said comprehensive is because, um, there's a lot 0:04:32.560 --> 0:04:36.320 of information and a clear understanding of what is happening, 0:04:36.760 --> 0:04:39.520 not only just in terms of market strends, but also 0:04:39.600 --> 0:04:44.679 the business models, financing policy reguations and impacts and also technologies, 0:04:44.920 --> 0:04:48.920 and I we need to cover those areas in the research. 0:04:49.839 --> 0:04:53.440 Um Hence I said it's comprehensive. Now I know that 0:04:53.520 --> 0:04:56.760 this piece of research from our standpoint, you know, we 0:04:56.760 --> 0:04:59.000 we tend to be very engaged with the research that 0:04:59.040 --> 0:05:01.039 we do. And I don't think I've spoken to anybody 0:05:01.040 --> 0:05:03.120 who works at be Enough who isn't excited about the 0:05:03.120 --> 0:05:06.479 projects they get they end up doing. However, I think 0:05:06.520 --> 0:05:08.679 every now and then we get something that we feel 0:05:08.720 --> 0:05:11.040 like it's truly meaningful. And I think doing a project 0:05:11.120 --> 0:05:14.839 with sustainable energy for all is for us, you know, 0:05:14.960 --> 0:05:16.800 great honor, and I think this is where I kind 0:05:16.800 --> 0:05:18.760 of want to take it with, you know, when you 0:05:18.760 --> 0:05:21.200 guys were given the opportunity to work from this, and 0:05:21.240 --> 0:05:23.479 maybe we'll pivot to you just because we haven't heard 0:05:23.480 --> 0:05:25.479 from you yet on the show today. You know, what 0:05:25.640 --> 0:05:30.400 about this project did you personally find really engaging? And 0:05:30.720 --> 0:05:32.560 you know, maybe why were you excited to work on 0:05:32.560 --> 0:05:35.480 this project? So I originate from the south of Nigeria 0:05:36.560 --> 0:05:40.720 River State to be specific, that's also known as the 0:05:40.760 --> 0:05:44.400 Self Self or in the Niger Delta region, and when 0:05:44.440 --> 0:05:49.760 traveling back home, I see energy poverty every day and 0:05:49.800 --> 0:05:52.880 the lack of stable, stable power seriously affects people's lives, 0:05:53.160 --> 0:05:57.240 and where the grid is available, consumers experience frequent power 0:05:57.279 --> 0:06:01.400 cuts ranging from as much as four to fifteen hours 0:06:01.440 --> 0:06:03.599 per day. And I think about it, that's four to 0:06:03.680 --> 0:06:08.160 fifteen hours of no light at random points during the day. Right, 0:06:08.160 --> 0:06:10.400 it's hard to get anything done by that. I mean 0:06:10.760 --> 0:06:14.280 almost everyone relies on their own gasoline or diesel generator 0:06:14.680 --> 0:06:18.320 if they can afford that of course, Um that's how 0:06:18.360 --> 0:06:22.840 bad the grid is. I mean almost every household has 0:06:22.880 --> 0:06:26.679 a switch outside their door where you can basically switch 0:06:27.200 --> 0:06:31.600 between grid power, so main grid power or your own generator. 0:06:32.120 --> 0:06:34.400 And that concept is actually unthinkable in the West if 0:06:34.400 --> 0:06:37.600 you think about it. So to put things into context 0:06:37.720 --> 0:06:42.919 in alone, actually Nigeria spent a whopping sixteen billion dollars 0:06:42.960 --> 0:06:47.680 to power these privately owned generators, and honestly, I really 0:06:47.680 --> 0:06:52.120 think mini grids or distributed distributed energy systems in general, 0:06:52.760 --> 0:06:57.919 for example rooftop TV, will solve this problem and provide 0:06:57.960 --> 0:07:01.880 localized regions with stable power instead of the country relying 0:07:01.960 --> 0:07:06.720 on one massive, unreliable national grid. And what is it 0:07:06.760 --> 0:07:10.960 that makes the national grid so unreliable and needing this 0:07:11.040 --> 0:07:15.480 distributed source so important? Nigeria has struggled with the grid 0:07:16.080 --> 0:07:18.400 for a long time. Nigeria has a population of some 0:07:19.320 --> 0:07:24.400 two million people and in total, the install capacity is 0:07:24.520 --> 0:07:27.960 probably just over thirteen gigawatts of power, and of that 0:07:28.080 --> 0:07:32.400 thirteen gigawatts, they probably generate on average less than four 0:07:32.440 --> 0:07:35.680 gig gigga watts per year as an average generation. I mean, 0:07:35.720 --> 0:07:39.320 the grid is outdated, there's not enough capacity to go around, 0:07:40.000 --> 0:07:42.440 and of course there's a lot of political issues as well. 0:07:42.480 --> 0:07:46.080 So I would say they're the basic problems, which is 0:07:46.120 --> 0:07:49.160 basically what's caused people to go to their own private generation. 0:07:49.600 --> 0:07:51.640 And from the population standpoint, this is one of the 0:07:51.640 --> 0:07:54.480 fastest growing countries in the world, so in you know, 0:07:54.520 --> 0:07:57.400 in reality, this is an important problem to fix pretty 0:07:57.440 --> 0:08:00.920 quickly because their demand is only to be higher. So 0:08:01.000 --> 0:08:03.560 from mini grid standpoint, we've established that we definitely think 0:08:03.560 --> 0:08:06.320 it's critically important um and that there's an advantage here 0:08:06.360 --> 0:08:10.880 because really these diesel generators are serving almost like a 0:08:10.920 --> 0:08:14.560 mini grid for individual homes. So my question is what 0:08:14.720 --> 0:08:18.600 is the role of diesel generation in the storage and 0:08:18.640 --> 0:08:21.320 mini grid market, because you guys mentioned at the beginning, 0:08:21.320 --> 0:08:23.600 and I believe that was Utak, you said that diesel 0:08:23.640 --> 0:08:26.600 generation still does have a role to play in the 0:08:26.600 --> 0:08:30.120 mini grid market. So conventionally that mini grads are not 0:08:30.240 --> 0:08:34.760 really new, but conventionally that many rural communities rely on 0:08:34.760 --> 0:08:37.760 only diesel minigrades or sometimes hygder mitigrate depending on the 0:08:37.760 --> 0:08:41.720 resources are available. But that there a program now is 0:08:41.960 --> 0:08:45.440 I mean if you if you have to partise, if 0:08:45.480 --> 0:08:48.920 you want to run These are two narrators to provide existcy. 0:08:49.000 --> 0:08:53.760 It's expensive and also it's environmentally harmful and then also 0:08:54.200 --> 0:08:57.680 for good for health of neither. In the last ten years, 0:08:58.280 --> 0:09:02.640 technology has become more cheaper, especially solar and battery storage, 0:09:02.640 --> 0:09:06.880 and also technologies such as control system to integrate and 0:09:06.920 --> 0:09:10.680 operate distribute to enery resources as a sample entity has 0:09:10.760 --> 0:09:16.720 become available, so many countries or developers have paid attention 0:09:16.800 --> 0:09:23.400 to switching. Um those diesel integrates to solar hybrid integrates 0:09:23.880 --> 0:09:27.079 as it's cheaper in terms of cost of excity and 0:09:27.200 --> 0:09:32.040 then it's rest harmful environmentally UM. But diesel still makes 0:09:31.480 --> 0:09:35.680 the important rule because if you install just solar together 0:09:35.720 --> 0:09:38.720 with energy stories only, the system can be much bigger 0:09:38.760 --> 0:09:41.760 and then becomes expensive in terms of capics the initial 0:09:41.880 --> 0:09:45.160 costs because the minigrates still need to supply sciity to 0:09:45.760 --> 0:09:49.120 customers during the night when sun is not shining, so 0:09:49.160 --> 0:09:53.240 that diesel generator still preates the role to provide exacity 0:09:53.679 --> 0:09:57.000 even part of the twenty four hours. But if you 0:09:57.120 --> 0:10:01.000 combine with the sort of hybrid systems, you could potentially 0:10:01.120 --> 0:10:05.120 reduced round hours of Diger generations. Hence the course of 0:10:05.160 --> 0:10:08.880 exacity and also the course of diesel fuel would be reduced. 0:10:10.040 --> 0:10:12.720 So the diesel generation was almost being replaced by the 0:10:12.720 --> 0:10:15.640 storage rather than by the soular so to speak. If 0:10:15.679 --> 0:10:18.320 if we're thinking about it from a transition standpoint, so 0:10:18.400 --> 0:10:21.520 regarding many grids in emerging markets, so may you had 0:10:21.520 --> 0:10:24.199 pointed out that you know, having a diesel generator is 0:10:24.200 --> 0:10:26.600 almost unheard of, and I must say, you know, we've 0:10:26.640 --> 0:10:28.680 got one in my house in California, but that's only 0:10:28.720 --> 0:10:31.880 for when you know, you have a massive earthquake and 0:10:31.920 --> 0:10:34.080 the power goes out, which I will say some of 0:10:34.120 --> 0:10:36.559 that has to do with well also when I was 0:10:36.600 --> 0:10:38.719 a kid and we had rolling blackouts due to end ron, 0:10:38.840 --> 0:10:40.920 so that that was a totally different story and we've 0:10:40.920 --> 0:10:44.080 moved far far beyond That's your right, Consistent power is 0:10:44.120 --> 0:10:46.240 something that we're used to and diesel generators aren't going 0:10:46.320 --> 0:10:50.280 to start popping up. So these mini grids, this flexibility, 0:10:50.320 --> 0:10:53.800 this ability to you know, generate locally, store locally and 0:10:54.120 --> 0:10:57.400 also not lose as much energy, and the transmission distribution 0:10:57.480 --> 0:11:01.040 process has some benefits. Do you these many grids and 0:11:01.040 --> 0:11:06.400 micro grids having the applicability in emerging economies only or 0:11:06.440 --> 0:11:08.880 do you see them in other parts of the world. So, 0:11:08.960 --> 0:11:12.960 for example in California where I grew up. So what 0:11:13.120 --> 0:11:16.480 I'd say, I mean, my focus clearly has been looking 0:11:16.520 --> 0:11:19.600 at Sub Saharan Africa. Personally, I would say it's for 0:11:19.800 --> 0:11:24.640 emerging markets where the grid has been unreliable, possibly for 0:11:24.640 --> 0:11:27.520 the past ten or so years, or even twenty or years, 0:11:27.720 --> 0:11:32.160 for example in Nigeria. Having spoken to many of the 0:11:32.200 --> 0:11:36.840 stakeholders in the industry, be that developers or financiers, all 0:11:36.880 --> 0:11:40.199 of them seem to be really clear that they don't 0:11:40.200 --> 0:11:42.679 see the grid getting much better in the next five years. 0:11:42.840 --> 0:11:46.160 And that's similar for for many of the Subsuan African countries. 0:11:46.640 --> 0:11:48.800 So when we talk about emerging markets, I will say 0:11:48.840 --> 0:11:53.839 that many grids can potentially be the future of providing 0:11:53.920 --> 0:11:57.679 stable power in these emerging markets. Now, the reason why 0:11:57.679 --> 0:12:00.720 I say that is because I'll give you one good example. Actually, 0:12:00.760 --> 0:12:04.920 So at one point I visited a mini grid in 0:12:05.080 --> 0:12:08.120 again in the south of Nigeria, next to port Ourcots. 0:12:08.200 --> 0:12:10.199 To be specific, it wasn't a very big one. It 0:12:10.240 --> 0:12:14.680 was probably around Killer Whatsoso. However, what you find is 0:12:14.760 --> 0:12:18.040 that the guys it was a fully off grid location. 0:12:18.400 --> 0:12:21.880 But one interesting thing there was that the community take 0:12:21.960 --> 0:12:24.920 ownership of the power in a way, they provide security 0:12:25.000 --> 0:12:28.120 because when they get grid power, they can't control if 0:12:28.120 --> 0:12:30.280 it works or not. However, if you have the minigrid 0:12:30.320 --> 0:12:33.920 on site and everybody has their own, community kind of 0:12:33.960 --> 0:12:36.080 clock closes that gap. So I would say that that 0:12:36.160 --> 0:12:40.439 example sort of showed me that once you see stable 0:12:40.480 --> 0:12:44.160 power and you can operate your business or do the 0:12:44.200 --> 0:12:46.240 standard things that you need to do, you would want 0:12:46.280 --> 0:12:48.319 to see more of those systems go up. So to 0:12:48.640 --> 0:12:51.720 summarize this, I'll see that clusters of minigrids can solve 0:12:51.760 --> 0:12:55.640 all the localized problems. If the grid improves in ten years, fine, 0:12:56.040 --> 0:12:58.439 but in the next five years, I don't see that happening, 0:12:58.480 --> 0:13:01.040 and I think that minigrids by the way forward in 0:13:01.080 --> 0:13:03.720 these emergent markets. Let's talk a little bit more about 0:13:03.720 --> 0:13:06.720 the financing, because you quickly touched upon that. You know, 0:13:06.840 --> 0:13:11.000 the demand is there for people who want access to electricity, 0:13:11.240 --> 0:13:14.920 the need for them to have reliable, consistent you know, no, 0:13:15.080 --> 0:13:17.760 no fifteen hour blackouts is definitely there as well. But 0:13:18.040 --> 0:13:20.840 from a financing standpoint, who are building these projects and 0:13:20.960 --> 0:13:23.959 kind of what are there big economic gains or they 0:13:24.040 --> 0:13:27.120 largely organizations like the World Bank and the i m 0:13:27.200 --> 0:13:29.200 F that are going in and doing the projects for 0:13:29.360 --> 0:13:31.920 you know, another purpose as well. During the report we 0:13:31.960 --> 0:13:34.240 looked at so we had fourteen funders in the minigrid 0:13:34.280 --> 0:13:37.960 Funders group and essentially they approved a total of say 0:13:38.000 --> 0:13:43.920 two billion dollars by the end of February. However, only 0:13:45.679 --> 0:13:48.560 had actually been dispersed into the mini grid sector. Let 0:13:48.640 --> 0:13:50.920 that sink in thirteen percent, which the low number of 0:13:51.120 --> 0:13:53.560 two billion dollars, right, and most of those funds were 0:13:53.600 --> 0:13:57.000 directed to African countries. Now, while the picture on the 0:13:57.040 --> 0:14:00.000 ground is likely to be better than the data suggest, 0:14:00.559 --> 0:14:02.920 it's clear that there can be significant delays and getting 0:14:02.960 --> 0:14:08.400 funding and therefore in projects basically moving forward. Right. So 0:14:08.440 --> 0:14:10.360 that's on the finance inside. And then I mean there 0:14:10.400 --> 0:14:13.679 are some possible reasons behind why that there's such a 0:14:13.679 --> 0:14:17.280 low disbursement rate. Again, I repeat that thirteen of two 0:14:17.280 --> 0:14:22.360 billion dollars and for example, one complex and lengthy procurement 0:14:22.360 --> 0:14:27.160 processes in governments to the minigrid market is not mature enough, 0:14:27.680 --> 0:14:30.760 meaning there's a lack of potential funded fund receivers I 0:14:31.040 --> 0:14:35.280 developers in the market. And three policy reform to make 0:14:35.320 --> 0:14:38.920 the minigrid market to be I say, more friendly with 0:14:39.000 --> 0:14:43.480 project development and funding timelines. Just don't think, I guess 0:14:43.880 --> 0:14:47.480 the policy. So policy is probably critically important to get 0:14:47.480 --> 0:14:49.120 this off the ground. As you point out, So which 0:14:49.160 --> 0:14:51.520 countries are kind of doing the best at adopting this, 0:14:52.360 --> 0:14:55.680 I'd say Nigeria. Now it's not because I did this 0:14:55.760 --> 0:14:58.400 case studies, So just going to say, you're really happy 0:14:59.400 --> 0:15:04.160 this is the one you know, Just just clear. Look, 0:15:04.360 --> 0:15:09.800 I worked on the financing section, the economic section, and 0:15:09.840 --> 0:15:12.640 the Nigeria case study. But when you ask me that question, 0:15:12.720 --> 0:15:16.640 which countries doing the best this is actually industry would 0:15:16.760 --> 0:15:19.000 agree with me. It will be Nigeria. It's I would say, 0:15:19.000 --> 0:15:22.360 it's a country that has made the minigrid market conditions 0:15:22.440 --> 0:15:26.520 friendlier towards product development and investment, more sold than others. 0:15:26.920 --> 0:15:30.800 And basically in twenty seventeen, the Nigerian government introduced a 0:15:30.960 --> 0:15:36.760 robust MINIGOD regulation which includes clear grid arrival rules. So 0:15:36.840 --> 0:15:40.760 it sets up three options for mini good developers for 0:15:40.880 --> 0:15:43.880 when the main grid reaches their mini grid asset, because 0:15:43.920 --> 0:15:48.000 one problem developers have always had is okay, you say 0:15:48.040 --> 0:15:49.760 that the grid may not improve in five years, but 0:15:49.840 --> 0:15:54.400 what aboutally improving ten years? Right then you've got to say, okay, Therefore, 0:15:54.480 --> 0:15:58.080 if I invest money into a minigrid, what's going to 0:15:58.160 --> 0:16:02.280 happen when the I don't know the distribution company, the 0:16:02.360 --> 0:16:06.000 national distribution company decides to extend my grid to my 0:16:06.080 --> 0:16:10.480 local community. And then I would say that the minigrid 0:16:10.520 --> 0:16:14.440 regulation Nigeria covers this because one, they provide a clear 0:16:14.480 --> 0:16:17.920 compensation schedule, so they say you get twelve months of 0:16:17.960 --> 0:16:24.320 revenue plus appreciated asset value should the national grid take over. Two, 0:16:24.600 --> 0:16:28.000 developers can export their mini grid electricity to the grid, 0:16:28.200 --> 0:16:32.240 their minigrid gets recognized as the main grid system. And 0:16:32.480 --> 0:16:35.720 three operating the minigrid in parallel to the main grid. 0:16:35.840 --> 0:16:38.920 There's another option. So another point why I say in 0:16:38.960 --> 0:16:42.800 Nigeria is the government has developed the largest results based 0:16:42.840 --> 0:16:48.240 finance in mechanism under what's called the Nigeria Electrification Project 0:16:48.320 --> 0:16:51.320 also known as the NET or n EP. Now, the 0:16:51.400 --> 0:16:55.600 total amount of the budget to support solar minigrids under 0:16:55.640 --> 0:16:59.640 This program is two hundred and twenty million dollars which 0:16:59.640 --> 0:17:03.480 comes from the World Bank and the African Development Bank. Now, 0:17:03.520 --> 0:17:06.600 results based financing is very interesting and as I said, 0:17:07.000 --> 0:17:09.520 we feel like it's the future. Results based financing is 0:17:09.560 --> 0:17:14.280 where the host government agrees to pay a per connection 0:17:14.400 --> 0:17:19.280 grant developers once they can prove a minigrid is operational 0:17:19.800 --> 0:17:24.880 and provides reliable power to end users. So, in summary, 0:17:24.920 --> 0:17:27.600 I would say results of based financing is an excellent 0:17:27.720 --> 0:17:31.359 way of ensuring developers complete their end of the deal 0:17:31.960 --> 0:17:35.399 before they get the grant from the government and again 0:17:35.480 --> 0:17:37.800 keeping all parties happy, right because the end user gets 0:17:37.840 --> 0:17:41.119 stable power. But that's taking on an awful lot of 0:17:41.200 --> 0:17:43.800 risk on the part of the person building the project 0:17:43.880 --> 0:17:46.080 to begin with. How easy is it for them to 0:17:46.119 --> 0:17:48.320 get ahold of the financing at the end, and how 0:17:48.359 --> 0:17:50.040 are they able to get the loans to start the 0:17:50.040 --> 0:17:52.280 project to begin with. This is where we think results 0:17:52.280 --> 0:17:56.679 based financing essentially closes the viability gap. So if you 0:17:56.720 --> 0:18:01.200 can get a guarantee from the government that you are 0:18:01.240 --> 0:18:05.840 going to be paid x amount of like x percentage 0:18:05.840 --> 0:18:08.760 of your capex, say six months after what once your 0:18:08.760 --> 0:18:11.080 projects go online, and you can prove that the operational 0:18:11.320 --> 0:18:13.479 It's great, right, because then you can go to the lenders, 0:18:13.520 --> 0:18:17.080 the commercial banks, which actually we have spoken to quite 0:18:17.119 --> 0:18:20.239 a few commercial lenders that said they really feel that 0:18:20.760 --> 0:18:24.280 results based financing will close this viability gap. So once 0:18:24.400 --> 0:18:28.760 the results based financier sees that actually you have this 0:18:29.680 --> 0:18:34.960 agreement from the government two to basically cover your capex 0:18:35.480 --> 0:18:38.040 or to cover a portion of your capex once you've 0:18:38.320 --> 0:18:41.400 completed the project. So it is a grant cash. You're 0:18:41.440 --> 0:18:43.320 not going to have to pay this money back, remember that, 0:18:43.760 --> 0:18:46.880 So it's different finances, it's a grant. What really makes 0:18:46.920 --> 0:18:50.879 sense here is that the commercial financier will say, okay, 0:18:51.000 --> 0:18:54.480 since you've got this guarantee from the government, we can 0:18:54.520 --> 0:18:58.560 therefore lend you the money for you to carry out construction. 0:18:59.000 --> 0:19:02.120 So once construction complete, you know you're gonna you're going 0:19:02.160 --> 0:19:05.200 to be paid within six months, right the I don't 0:19:05.240 --> 0:19:11.160 know whatever percentage could potentially depending on what the agreement 0:19:11.280 --> 0:19:13.440 is with the government, you will be paid for each 0:19:13.440 --> 0:19:17.080 of those connections and you can therefore pay back the lender. Right. 0:19:17.520 --> 0:19:22.040 So it just makes the viability of the project far 0:19:22.160 --> 0:19:26.840 more promising with results based financing, and it gives some 0:19:26.880 --> 0:19:31.159 sort of guarantee the commercial lenders too, So this is 0:19:31.160 --> 0:19:33.040 a bit of a path forward that other countries can 0:19:33.080 --> 0:19:37.160 definitely learn from you mentioned previously. And and maybe let's 0:19:37.160 --> 0:19:40.359 pivot over back to you tak Uh. We're saying that, 0:19:40.480 --> 0:19:42.920 you know, Nigeria that a lot of people are saying 0:19:42.960 --> 0:19:46.080 that over the next five years, they're not anticipating that 0:19:46.160 --> 0:19:49.360 the state grid is actually going to expand. I don't 0:19:49.359 --> 0:19:51.160 know if that's the right way to phrase it, but 0:19:51.560 --> 0:19:54.040 this minigrid market is a really good place to look. 0:19:54.080 --> 0:19:56.840 So let's look further beyond the next five years. How 0:19:56.880 --> 0:19:59.199 about the next ten years. What do you see the 0:19:59.240 --> 0:20:02.439 outlook for mini grids in the next ten years, not 0:20:02.560 --> 0:20:05.600 just in Nigeria, but globally the island nations as well 0:20:05.640 --> 0:20:07.399 and the other places that you also looked at in 0:20:07.400 --> 0:20:09.680 this report. I think the globally, I think the more 0:20:09.720 --> 0:20:14.480 governments we expect that the more governments are realizing that 0:20:14.840 --> 0:20:18.400 distributed energy technology is including many grides and the soul 0:20:18.400 --> 0:20:21.679 of home system for the PRAMO roles for en as 0:20:21.720 --> 0:20:25.359 the access purpose, because I mean, the one issue in 0:20:25.400 --> 0:20:29.480 this sector is a roup of governments conventionally thought that 0:20:29.680 --> 0:20:33.760 great extension is the best way to supply exacity and 0:20:33.840 --> 0:20:36.320 a reliable way. However, there are two problems. One it's 0:20:36.520 --> 0:20:41.480 it's very expensive in terms of building such infrastructure and 0:20:41.520 --> 0:20:45.359 also secondly in terms of the cost parer ecstacy on 0:20:45.480 --> 0:20:50.000 ky to about the our basis, it's difficult for rural 0:20:50.000 --> 0:20:54.200 customers to pay for the extacy because this high cost 0:20:54.480 --> 0:20:59.000 compared to other distribute energy resources such as minigrations or 0:20:59.040 --> 0:21:01.800 consist What are we talking about in terms of costs, 0:21:01.840 --> 0:21:04.399 like how much more expensive is it? Yeah? We have 0:21:04.480 --> 0:21:09.320 it actually, so give me immediate collarlesses and in calgated 0:21:10.040 --> 0:21:13.800 cost of excity for different technology configurations. If you use 0:21:13.840 --> 0:21:16.520 a soul or hybrid mini grads um, the cost of 0:21:16.560 --> 0:21:20.040 excity in a hey to about our basis can be 0:21:20.040 --> 0:21:25.119 between fifty cents and one dollar party about hour. But 0:21:25.680 --> 0:21:30.439 if you used let's say just diesel generates in the 0:21:30.480 --> 0:21:33.080 same scenario, it could be more than it could be 0:21:33.119 --> 0:21:38.119 more than double dot simply because the community uses a 0:21:38.160 --> 0:21:41.960 lot of diesel fuels, which is costly. Do we foresee 0:21:42.119 --> 0:21:48.560 a situation where mini grids cost competitive compared to um diesel, 0:21:48.600 --> 0:21:51.600 I think is what you're saying correct exactly? So do 0:21:51.680 --> 0:21:54.200 we foresee a situation where many grids which are cost 0:21:54.200 --> 0:21:57.399 competitive compared to diesel, but not really when compared to 0:21:57.440 --> 0:22:02.480 some of these you know, well developed, established large infrastructure 0:22:02.480 --> 0:22:05.800 grids like the one i'm recording this podcast on now. Um, 0:22:06.080 --> 0:22:10.840 do we foresee a situation where they become price competitive 0:22:10.960 --> 0:22:13.679 close to parity or is it always just going to 0:22:13.760 --> 0:22:17.159 be more expensive given the level of complexity. So I 0:22:17.160 --> 0:22:19.920 think that the economics of the many grids of microL 0:22:19.960 --> 0:22:24.199 it's quite complex, um depending on where it is. So 0:22:24.240 --> 0:22:28.119 if I talk about imaging markets, it's definitely cheaper in 0:22:28.240 --> 0:22:31.920 terms of cost party or our basis, but the program 0:22:32.040 --> 0:22:36.399 is still it's course, is expensive from the customers prospective. 0:22:36.520 --> 0:22:39.720 That's why public funding is always very important to make 0:22:39.800 --> 0:22:42.520 projects possible. But in the context of the country is 0:22:42.560 --> 0:22:47.000 such as the US Austra area, it's a different story there. 0:22:47.160 --> 0:22:52.679 It's not only just cost comparison between many grids or 0:22:52.720 --> 0:22:56.360 micro grids and the great exist. It's also about the 0:22:56.440 --> 0:23:00.560 value you get from reliability of texicity. One of the 0:23:00.600 --> 0:23:03.720 big reasons why some developers are installing micro grids or 0:23:03.760 --> 0:23:07.760 minigrades in the US is resiliency improvement, because there are 0:23:07.800 --> 0:23:11.240 in some state there is a potential risk of greater 0:23:11.280 --> 0:23:16.000 nexiscity is cut down due to the hurricanes or sometimes wildfires. 0:23:16.840 --> 0:23:20.080 So combination with those of different reasons resiliency in the 0:23:20.200 --> 0:23:24.760 cost some deripairs, some customers decide to install s to 0:23:24.840 --> 0:23:27.720 micro grids. SOAK, you've you've taken a look into the 0:23:27.760 --> 0:23:31.280 future for us, What is your view on the next 0:23:31.359 --> 0:23:35.000 ten years for many grids micro grids? So what I'd 0:23:35.040 --> 0:23:38.000 say is to scale the mini grid market. It is 0:23:38.040 --> 0:23:41.520 important to have these two things right. So one, it's 0:23:41.520 --> 0:23:44.960 important to have subsidies as many good projects do have 0:23:45.000 --> 0:23:48.920 a high risk, as take mentioned earlier, and results based 0:23:48.960 --> 0:23:53.480 financing is the favorable subsidy as it's straightforward, as we 0:23:53.480 --> 0:23:58.080 also explained, and again as it also ensures that the 0:23:58.160 --> 0:24:00.960 work gets done right. You don't want to give that 0:24:01.080 --> 0:24:03.200 grants and then all of a sudden nothing's getting done. 0:24:03.440 --> 0:24:07.760 Number two now, being able to get project financing. This 0:24:07.920 --> 0:24:10.360