The ABC-Modell Anchor customers as core clients for mini-grids in emerging economies. Kathinka Kurz, GIZ Berlin, 19. March 2014

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1 The ABC-Modell Anchor customers as core clients for mini-grids in emerging economies Kathinka Kurz, GIZ Berlin, 19. March 2014

2 The A(nchor) B(usiness) C(ommunity) Model Anchor + Business + Community > Households have access to affordable energy Anchor + Business > Local businesses use power to increase operating hours Anchor > large, reliable credit-worthy customer Households: low electricity demand, mostly for lighting, mobile-phone charging and household appliances Businesses: higher electricity demand for productive use Anchor customer: financially sound, guarantees electricity purchase, secures commercial operation

Households: low electricity demand, mostly for lighting, mobile-phone charging and household appliances Businesses: higher

3 Potential Anchor Client - Telecommunication sector Case: Telco-Sector in Africa 5 Mio. mobile towers worldwide consume 1% of the world s electricity Many in off-grid regions or unreliable grids Over mobile towers in Africa Annual growth rate is assumed at 19% Rising competition leads to consolidations and cost pressure Source: Saviva Research, 2013

4 Potential Anchor Client - Mining companies Case: Mining Sector in Kenya The mining sector contributes with about 30% to the national energy demand. There is a great uncovered demand for energy (about 100 MW) currently covered by private diesel generators. Many large mining facilities (between 6-30 MW) are not yet connected to the grid and located up to 300km away from the grid. Partly, solar systems are already used to reduce fuel costs. Low gold and high fuel prices force many companies to lower their costs and change over to other technologies. Mining worker and their families live around the site Source: AHK Zielmarktanalyse Kenia 2013

Many large mining facilities (between 6-30 MW) are not yet connected to the grid and located up to 300km away from the grid.

5 Potential Anchor Client - Agro-processing companies Case: Agro-Processing in Tanzania About 80% of the population works in the agro sector. Most of the facilities are far away from the grid and very lucrative. Large agro-companies (e.g. Mohammed Enterprise Tanzania Ltd.) have a broad infrastructure with worker-camps, connection to roads, schools and health stations which builds a great chance for PV electrification. Source: AHK Zielmarktanalyse Tansania 2013

Large agro-companies (e.g. Mohammed Enterprise Tanzania Ltd.

6 Potential Anchor Client - Tourism industry Case: Tourism in Kenya and Tanzania Approximately 150 off-grid lodge sites in Kenya Most of the lodges and most tent-camps in Tanzania are not connected to the grid Most energy is currently supplied by diesel generators (50-150kW) Even grid-connected hotels and lodges would like to go green and start using solar energy as their main supply Source: AHK Zielmarktanalyse Kenia /Tansania 2013

energy is currently supplied by diesel generators (50-150kW) Even grid-connected hotels and lodges would

7 Reference-Project East-Africa

8 Reference Project: Mobile tower for rural electrification Before...After Mobile towers are run by diesel - Mobilfunkmasten werden mit Diesel betrieben - Ländliche Siedlungen haben keinen Zugang zu Elektrizität Rural communities have no access to electricity, use paraffin and kerosene No economic development in rural areas High environmental burden Solar substitutes diesel, energy costs sink - Projektentwickler installiert Solar und agiert als Netzbetreiber für significantly private Haushalte und Mobilfunkunternehmen - Solarstrom ersetzt Diesel, Treibstoffkosten sinken signifikant - Mobilfunkmast als Ankerpunkt für ländliche Elektrifizierung - Ländliche Bevölkerung hat Zugang zu Strom Establishment of small enterprises - Entstehung von kleinen Unternehmen - Steigerung der Produktivität und Rentabilität - Training in Betrieb und Wartung Creation of job opportunities in the villages - Beschäftigungsmöglichkeiten werden vor Ort geschaffen Training in operation and maintenance

paraffin and kerosene No economic development in rural areas High environmental burden Solar substitutes diesel, energy costs sink - Projektentwickler installiert Solar und agiert als Netzbetreiber

solar container and will act as energy services provider for both MNO

9 Reference Project: Uganda Telco as Anchor DC line AC line Battery bank Inverter Solar PV array Diesel generator Project developer installs solar container and will act as energy services provider for both MNO and private households Setting-up a reliable local service & maintenance structure

10 Reference Project: Uganda Pilot site Pilot site: Nakawomeka (mobile tower) Kabunyata village, Luwero District

11 Installation of solar genset for Kabunyata village and mobile tower Inverter and battery bank Pilot site at mobile tower Nakasongola Energy container and installation

12 Productive Use

13 High benefits of the model for all project partners Operater Customers GIZ Open up of new market segments Risk mitigation through secure anchor load consumption High profit potential (up-scaling in the region) Anchor customer Energy cost savings of > 40% Social responsibility SMEs/Haushaltskunde Access to energy Cost savings Productive use Contribution to reach project goals: access to electricity for rural populations Establishment as a competent partner for the private sector Development impact in Uganda: - Improvement of production capacities of rural entreprises - Capacity building and employment opportunities for solar technicians / year - Reduction of CO2 emissions through switching from diesel to solar PV

to reach project goals: access to electricity for rural populations Establishment as a competent partner for the private sector Development impact in Uganda: - Improvement of

14 Questions?

15 Back-up slides

16 A nchor customers Anchor customers require a continuous delivery of service, which is also predictable in load and availability. They are bound to contracts and they are bankable. Potential anchor customers Telecommunication towers Mining companies Agro-processing industry Tourism industry

They are bound to contracts and they are bankable.

17 Potential Anchor Client - Telecommunication sector

18 Airtel anchor point Main private use Main productive use Main institutional use KIISO VILLAGE 1.5 km to boundary Kabunyata/Kiiso village Airtel Mobile Tower KABUNYATA VILLAGE 40 Households 10 SMEs 2 Institutions 0.4km 1 km 60 Households 1.2km BUWANUKA VILLAGE 1.2 km to boundary Kabunyata/ Buwanuka village 9 Households 0.8km 0.2km 1 km Kyangabakama Primary School 0.5km Farm House with Mill 1.3km Kabunyata Trading Center 15 households 20 Households 3.3 km to boundary Kabunyata/Matembe village MATEMBE VILLAGE Structure of Kabunyata Village, Luwero District 2012

4km 1 km 60 Households 1.2km BUWANUKA VILLAGE 1.2 km to boundary Kabunyata/ Buwanuka village 9 Households 0.8km 0.

19 Tariff structure households shop/restaurants SMEs 1. Tariff village Bronce ("life line tariff") Silver Gold Load Limits <50 Watt <1000 Watt >1000 Watt Price per kwh in UGX 678 1,470 1,560 Price per kwh in UGX (including 15% VAT) Price per kwh in USD (incl. VAT) 0,31 0,67 0,71 Connection Fee village * Households SME Institiutions one time fee in UGX 204, , ,000 One time fee in USD 81,2 135,3 135,3 * According to UMEME standards Project introduction for endorsement

1,470 1,560 Price per kwh in UGX (including 15% VAT) 780 1690 1794 Price per kwh in USD (incl.

20 Monthly expenses for various consumers 4 hours every day 30 charges 4 hours every day 3500 UGX / month (1,40 USD / month) Monthly expenditures on energy: UGX UGX / month 4 hours every day 30 charges 2 hours every day Project introduction for endorsement

Prospects for investment in large-scale, grid-connected solar energy in Africa. Ivan Nygaard Senior Researcher, PhD UNEP Risø Centre

Prospects for investment in large-scale, grid-connected solar energy in Africa Ivan Nygaard Senior Researcher, PhD UNEP Risø Centre Opportunity Africa: Sustainable Energy Investments in Africa - Engaging