Around the world, about 1.3 billion people live without power. According to the International Energy Agency (IEA), over 95% of these people live either in sub-Saharan African or developing Asia and around 80% of these are in rural areas.
50% of the total unconnected population is in Africa, where in many countries there is no electricity sector for the majority. Those who are connected are paying 20 to 100 times more than developed countries to power their homes and businesses with kerosene lamps and generators.
Providing affordable and reliable electricity to some of these rural places would make an enormous difference. This excites the people at steama.co, a company that is helping utilities retail electricity in rural Africa. The firm just raised £640,000 to expand access to its smart metering and data analytics technologies, and won the Ashden Gold Award in 2015 for its work in Kenya.
The pull of East Africa
Steama.co CEO and co-founder Harrison Leaf says the company started off in 2010 simply looking at the energy access problem very broadly, and starting up an engineering, procurement, and construction (EPC) company that built wind turbines from scrap.
During this time, something that struck the team was that although people weren’t connected to any sort of reliable grid system, the automotive supply chain into really remote parts of Africa was quite extensive.
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"You’d have guys on the side of the road, mechanics who can take apart a truck, put it back together again, and send the truck on its way," Leaf says. "These guys had all the necessary skills and all the necessary equipment and supply chain to build energy devices that could meet the energy needs of the house right next to them."
One device, called an automator, keeps all the electronics going in a truck. Leaf says one could power an entire village.
From this initial set-up, steama.co was formed when the team realised that what was really needed was a space that provided good software, predictive analytics, and efficient ways to charge customers and monetise assets out in the field. They had the resources; they just needed a space to facilitate the usage of them.
"We looked around and that wasn’t available, so we built it," Leaf says. "We stopped being an EPC and we started just being the company that you see today.
"We know the customer because we were the customer, and we built a set of technologies that helps them do better business out in remotest Africa."
The company doesn’t sell directly to customers, but it connects the utility companies to them by assisting with proper communication, using technology and analysis of data.
"There are two benefits: the end user gets power and our customer gets scalable returns in a massive new market," says Leaf. "So everyone’s a winner."
Developed vs rural: few large vs many small
In developed countries the electricity market is saturated, and so the only companies that are able to operate are gigantic. The energy sector is sophisticated, but the problems lie in making generation more efficient and cheaper for the consumer.
In comparison, Africa has a massive market that is, in many regions, completely unserved, and the solutions to fixing the energy problem are not the same. Grid systems work in cities and densely populated areas because they are cheap, big and the power quality is high, and a single massive power plant could be built if energy needs aren’t being met. Africa is massive and the continent’s population is distributed widely across it, so a grid system isn’t feasible.
An alternative is for African countries to build a lot small energy generating developments over a large area to spread over the vast landscape.
Diesel micro-grids have been run in Africa for about 20 years, but Leaf says although they are fairly low-cost, they are a nightmare to run. Diesel fuel is valuable, and so is prone to being stolen from a depot or on the road. Renewable energy doesn’t have this problem, as there is no fuel supply chain.
"The advent of solar and wind has forced a lot of countries to have a more progressive set of regulations," Leaf says. "That’s opened the door to having more exciting micro-grids or distributed generation."
However, renewables do bring up their own problems, and Leaf says finding the money to fund many small projects can be complex.
"The biggest blocker to our industry is financing," he says. "You’ve got good regulatory systems in most countries, you’ve got the smart tech through steama.co and you’ve certainly got the demand out there if you can put all those bits together…It’s really the financing."
Leaf says that in much of the African market, distributed generation makes an enormous amount of sense, with the use of solar lanterns, solar home systems on every roof, and semi-centralised systems such as micro-grids. There are several answers to the problem because different people and businesses have different energy requirements.
The technology required to run these sorts of systems didn’t exist ten years ago but Leaf says that, thanks to mobile connected devices and the industrial internet, it’s now possible to run a grid service that’s just as good as the equivalent in central London but out in the middle of rural Kenya.
"[This] is essentially what we’re offering," he says. "You need to have community payment, you need to be able to operate the machinery…and it’s really new that humanity has been able to do that.
"So we’re capitalising on that, filling in our bit, and then hopefully all the rest of it comes together, and then you have an industry."
Connecting everyone: life on the edge
There are 630 million people unconnected in Africa, but there are also those people at the edges of the grid that have a connection, but it’s so poor that they have blackouts every day. Also, the electricity tends to be so expensive that people – especially business owners – need to have back-up generators too.
"Look at the economy of Nigeria, South Africa or Ghana," Leaf says. "These are massive economies that are blacking out daily."
Business owners in these countries have to buy fuel, maintain the generators and keep them safe from theft, do a second wiring through the building, otherwise they risk having to shut down the business for the hours of the day they have no power.
"Put that all together, apparently that’s another billion people," says Leaf.
Over the next six months, steama.co is looking to support some new companies entering the industry. The company is also aiming to extend into multiple countries, from the six in which it already operates. Leaf says there are also plans to move into the agricultural machinery market, with an as-yet unnamed company that produces solar-powered water pumps.
"These small pumps go out to a small farm and completely transform what the farmer is able to output from an acre plot," Leaf says. "These are productive elements of society; these are hotels, bars, agriculture processing units, middle-income households…and so it’s part of the equation as well."
Over the next few years, steama.co will use all the data collected from the projects and hopefully catalyse the growth of the market.
"Owners and investors need real data; they have that with steama.co, in a way that the world hasn’t had before for this market," Leaf says. "We want to tread the path between the operators and the customers, and those who might enter the market, and that’s when the industry really starts to grow."