Problem

In 2017, approximately 85 percent of Tanzanians lacked access to electricity. Tanzania’s national generation capacity is low, and transformers and distribution lines are overloaded. As a result, grid-connected households only have access to intermittent electricity.

In rural areas, only 7 percent of citizens have access to the national grid. Many villagers rely on kerosene for lighting. They can’t use cell phones or household appliances.

At the current rate of grid expansion, many rural areas will not receive power within the next decade. When the grid does finally reach rural areas, households must pay a connection fee of at least $200 (often much more) to the national utility, Tanzania Electric Supply Company Limited (TANESCO). Grid-based electricity is often unreliable.

Solution

Working in rural areas of western and eastern Tanzania, Devergy uses an adaptive mini-grid system to electrify remote villages. Devergy’s mini-grids use distributed, networked solar PV with battery storage that provide 24-V direct current (DC) electricity to between 60 and 400 households. Each household receives up to 250 W of electricity for lighting, mobile-phone charging and appliances for household or small-business use.

Customers can purchase efficient, DC-compatible appliances at local kiosks. System reliability is 99 percent. The system now provides electricity to devices like refrigerators for cold storage of perishable foods and medicines, recharges carpentry machinery and ensures cell phone users can recharge their devices at half the cost paid previously.

A wireless communications system links the micro-grids to one another, enabling each micro-grid to share data with all other parts of the system. This technology allows for remote, internet-based monitoring and control of the entire system, down to individual households and meters.

An innovative, flexible payment system benefits both consumers and operators. Customers can pre-pay for affordable energy services in daily, weekly or monthly packages at a kiosk staffed by local village representatives. Credits for electricity are added to the meter in their home by using a cell phone via mobile money (such as M-Pesa). The mobile-money transaction updates a computer server, which communicates with the meter through the system’s General Packet Radio Service connection.

Devergy covers the installation costs, except for a small fee when the connection is first installed, which ranges from $6 to $12 per customer. The fee covers the meter, wiring, installation costs and two bulbs. The balance of the costs are recovered through per-use energy charges as the system is used. In comparison, a formal TANESCO grid connection could easily cost a customer $250, making Devergy’s solution attractive and affordable to many rural Tanzanians.

Although pre-financing all costs has required significant investor support, Devergy has been supported by USAID, Persistent Energy Capital, the DOEN Foundation, the Energy Environment Partnership Africa and other organizations that have provided upfront investment capital to help Devergy expand its service network.

Innovation

Unlike traditional, government-led mini-grid programs, this project’s approach to technology, finance and installation is market-driven. Key innovations include:

• Flexible payment systems
• Grid-wide wireless communications for energy-use monitoring
• Access to energy-efficient appliances
• Modular battery systems for increasing capacity as demand grows
• Experienced owner and operator

First, users can pre-pay for electricity in large or small amounts, providing a form of savings when cash is plentiful or as-needed services when cash is scarce.

Next, the wireless communications system that overlays the grid provides data about load, usage and other metrics, enabling operators to improve services in the future. When demand for energy increases, the mini-grid can supply additional power. The internet-based grid control also prevents theft, misuse and other common problems.

Devergy makes available energy-efficient, DC-compatible appliances that enable customers to use electricity for more than just lighting and cell-phone charging. Most appliances are alternating current (AC), while PV-powered mini-grids generate DC. Providing access to DC appliances enables consumers to use kitchen appliances, televisions and small equipment for income-generating activities. Efficient appliances provide good services for minimal energy, so communities can make the most of limited generation capacity.

Devergy designs scalable mini-grids based on a modular battery system, so operators can increase capacity incrementally over time. As consumers become familiar with appliances and increase their energy consumption, Devergy can add capacity to the mini-grid.

The ownership model is key to the project’s success. Since rural customers lack the skills to maintain the systems, Devergy retains ownership and responsibility for operations and maintenance. As such, Devergy makes a long-term commitment as a reliable partner for the village, as opposed to the one-off “install-and-flee” model some villages have experienced.

Challenges

When Devergy began installing mini-grids, the projects were not eligible for the $2.50 per W subsidy offered by Tanzania’s Rural Energy Agency, because the incentive program was targeted to solar home systems, not mini-grids. In response to Devergy’s success, the Tanzanian Rural Energy Agency adjusted its incentive program to accommodate mini-grids like Devergy’s, providing a smaller per-connection subsidy for mini-grids. This modification has helped Devergy provide energy to even more rural Tanzanians.

Lessons Learned

Devergy’s solar PV mini-grids in Tanzania demonstrate how financial, technological and deployment innovations can make mini-grids profitable and scalable. To promote project sustainability, Devergy continues to experiment with different tariff designs and payment methods. The company’s projects model a viable alternative to traditional grid expansion and government-led mini-grid efforts.