Beyond the grid solar start-up Devergy believes the time has come for the next evolution in clean energy access markets: mini-grids.
The mini-grid systems Devergy deploys are essentially many solar home systems connected to a battery back-up and charge controllers distributed to individual homes throughout a village. Each of those individual units are connected to the system via old fashioned wires as well as smart, Devergy-developed machine-to-machine (M2M) technology which allows Devergy to balance the energy load, remotely monitor usage and outages, and, most importantly, collect lots and lots of really useful data.
With a highly conservative estimate of a $5 billion market opportunity and the $1 billion Beyond the Grid Power Africa Initiative launched earlier this summer, many investors have waited with baited breath to see if mini-grid operators like Devergy will succeed. Meanwhile exciting mini-grid operators like Mera Gao and OMC Power have pioneered innovative models like ‘Tower Power’, but overall the market is still very nascent. In the meantime, high-profile investors like Solar City and Bloomberg Philanthropies have started investing money in fast-growing pay-as-you-go (PAYG) solar lanterns and solar home system companies.
But that may be about to change.
To better understand the current state of play for the burgeoning mini-grid market, we caught up with Fabio de Pascale and Gianluca Cescon, respectively the ‘Chief Energising Officer’ and ‘the Chief Operations One’ at Devergy, a company at the cutting edge of mini-grid deployment in Tanzania.
It turns out Devergy’s entry into the mini-grid market started by posing a simple question: Do we need to follow the traditional approach and copy what utilities do to supply electricity? Given the abject failure of utilities to serve these off-grid, rural customers, it made little sense. Devergy realized that not paying attention to the customer’s needs was a big part of why utilities and past mini-grid operators had failed, and the reverse may help Devergy become a success.
But what exactly does that mean?
The Devergy approach has one important value proposition highly attuned to the realities of these energy markets -- the ability to start small. Because most of these communities can only afford a few initial energy services -- usually mobile phone charging and lighting -- companies that oversize these services are making them unnecessarily expensive. While oversizing is commonplace for traditional mini-grids to compensate for technological or operational constraints, this rule of thumb can hold true for individual solar home systems as well. Ultimately, if there are even a few spare watts of unused energy capacity created by these oversized services, that’s money that didn’t need to be spent.