European Utilities Support UN Development Goals

Louis Brasington

Last month, the United National delegates came together in New York, assessing the progress for their Sustainable Development Goals. The focus this year was on how nations can provide access to affordable and reliable energy, water, and safe and resilient cities. The meeting marked three years since the UN committed to reaching universal access to affordable and clean energy by 2030. Large energy corporates have been actively involved in the push across the globe, deploying decentralized energy systems through partnering and venturing, as well as acquiring startups to help drive their own internal targets.

Development banks positioned to fast-track remote energy access have been accelerating their efforts, providing accessible capital to help deliver fast, efficient energy access in regions such as Sub-Sahara Africa and Southeast Asia where centralized grids are unreliable or expensive to deploy. In recent years the World Bank provided an average of $900 million a year in energy access financing, growing to $1.4 billion last year. Support for remote microgrid programs grew from $200 million a year in recent years to $600 million in 2017. Development banks are also crucial project partners for the international energy corporates, providing aid with country-specific regulatory and policy hurdles.

Projects involving remote microgrids are on the rise in frontier and growth markets, benefiting from declining equipment costs and increased financial backing. While much of the activity has been on the project deployment side, startups have been receiving significant attention as well.

Large European corporates are actively mobilizing around remote energy access in response to changes in strategic commitments, aiming to provide sustainable energy access solutions to under-served populations, becoming a key part of the remote energy deployment story to-date.

Engie

In 2014, Engie committed to supporting the clean energy transition, setting forth goals to help end energy poverty globally. The focus of these efforts has gone towards remote microgrid development and deployment. Internally, the aim is to bring energy to a total of 20 million people by 2020, and as of 2017, they have already reached 2.4 million through their “Rassembleurs d’Energies” impact fund.

The group is actively involved in research and development. On the island of Semakau just south of Singapore, Engie and Schneider Electric are developing the SPORE project (Sustainable Powering of Off-Grid Regions) as part of the REIDS project in Singapore. The project aims to develop a prototype of the first microgrid system, which can manage various assets such as hydrogen, PV and wind for the Southeast Asia region. It is also helping develop an efficient real-time management for off-grid microgrids that can utilize newer hydrogen generation assets in combination with others.

At the start of the year, Engie acquired Electro Power Systems (EPS), a developer of storage solutions, as part of the company’s push to decrease diesel generation dependency and drive remote renewables uptake. EPS has already implemented 36 projects in 21 countries. Furthermore, as part of the impact fund, there have been three remote microgrid investments: Mero Geo Power, a builder and operator of remote microgrids in Uttar Pradesh in northern India; Ausar Energy, a designer and operator of solar power plants with storage to feed in microgrids in West Africa; and CDS, a provider and operator of remote microgrids in Mauritania in northwest Africa.

While not directly connected to microgrid solutions – but part of the goal to end energy poverty – the company has also put considerable effort towards the solar home system approach through its impact fund, investing into BBOXX as well as acquiring Fenix International, a producer of  off-grid solar home system solutions, in the fall of 2017. Engie is also in talks with Applied Solar Technologies (AST) to provide off-grid power to cell towers in India. There is a growing interest in the Indian solar off-grid energy segment, which is in tune with Engie’s aim of setting up a 2GW capacity  across the country by 2019. Longer term, these standalone installations could connect into others to create a microgrid in remote areas.

Enel

Enel was one of the first utilities to integrate the UN’s sustainable development goals directly into their corporate policies, with a formal commitment to 4 of the 17 goals: ensure access to affordable, reliable, sustainable and modern energy (SDG 7); support for inclusive and equitable quality education (SDG 4); promotion of employment and inclusive economic growth (SDG 8); and implementing actions to achieve decarbonization by 2050 (SDG 13). The utility has the goal of reaching 3 million by 2020, and at the end of 2017, already had provided affordable and clean energy to 1.7 million people across South America and Africa.

A Powerhive Microgrid system (source: Powerhive)

In 2015, Enel invested $12 million in a Series A round to startup Powerhive to expand clean energy access in rural Kenya. Founded in 2011, Powerhive is a microgrid solutions provider and developer whose proprietary technology platform and business model enables the development, financing, and management of bankable solar microgrids in emerging markets. Powerhive was the first private utility in the history of Kenya to obtain a concession to generate, distribute, and sell electricity to the Kenyan public.

More recently, Enel built a solar/storage remote microgrid in the Atacama Desert in Chile with Electro Power Systems last year. The project claims to be the world’s first “plug and play” microgrid powered by solar and hydrogen-based storage in Chile. Enel also has plans to expand business in the Asia Pacific region. In January 2018, the utility and Seedstars awarded $50,000 for SolarFreeze, a startup of solar-powered cold storage system for farmers in Kenya.

Iberdrola

Since Iberdrola launched the “Electricity for all” program in 2014, the utility has provided 4 million people with access to electricity through projects carried out in different countries in Latin America and Africa, fulfilling their commitment for 2020 two years ahead of schedule. By the year 2030, they are now aiming to extend their reach to 16 million.

In September 2017, the utility invested $600,000 in Iluméxico, which provides solar home systems to rural customers in Mexico. It also built microgrids in the state of Bahia, Brazil, providing electricity to 21,000 customers. Iberdrola has also invested in SunFunder, a startup that finances off-grid solar projects in developing countries in Africa and Asia.

Additionally, Iberdrola partnered with Alianza Shire, the first public-private alliance to bring electricity to refugee camps in Ethiopia. Alianza Shire will develop a project to improve access to electricity for about 40,000 people. Last year, Alianza completed its first project supplying 8,000 refugees with clean electricity.

EDF

Despite not directly committing to a UN Sustainable Development Goals target, EDF announced the “Electricity Storage Plan” to become the leader by 2035. The plan is to develop 10GW of additional storage globally by 2035, on top of the 5GW already in operation. This acceleration represents an investment of $9 billion during 2018-2035 and an attempt to provide deeper resilience for remote microgrid solutions. Africa is a priority market, and EDF is aiming to develop a portfolio of 1.2 million off-grid customers without access to electricity by 2035 through local partnerships.

Last June, EDF invested $19 million in a PIPE investment round to McPhy, a developer of solutions integrating hydrogen storage technologies specifically for isolated sites. EDF took a 22% stake, providing McPhy with additional resources to help it fund its expansion.

The group is also an active partner in the REIDS project in Singapore, where they are helping to build a hybrid microgrid to demonstrate interoperability in support of remote microgrid deployment across Southeast Asia. Despite not being directly microgrid related, in 2016 EDF and Off Grid Electric, a pay-as-you-go solar provider, created a joint venture called ZECI to distribute off-grid solar kits in the Ivory Coast, as well as replicating the model in Ghana in 2018.

Outlook

European energy companies are stepping up participation in global electrification efforts. In the Americas, none of the top five utilities (by market cap) mention the UN’s energy goals as part of their targets, focusing only on home markets. Looking east, China’s biggest utilities have not been explicitly part of the UN goals; however, they are involved in the Belt and Road Initiative along the Silk Road. The other big utilities in Asia, NTPC and Tenaga Nasional Malaysia (TNB), do not specifically reference the UN’s goals, either.

For those who are actively involved, country-specific partnerships and localized strategies are becoming more prevalent for many of the utilities driving remote microgrid deployment. Despite only being a part of the picture, remote microgrids are a meaningful method for meeting the UN’s Sustainable Development Goals.

While we only touched the fringes of activity in the space, be sure to keep track of all the developments through our i3 platform.