Microgrids Might Make Sense — Especially for Remote Businesses with Limited Grid Access

When businesses deploy microgrids, they have different goals — ranging from resiliency to sustainability to cost reduction. And in some remote regions without access to centralized grids, those localized grids may make sense. 

Indeed, microgrids add reliability. Businesses stay up and running. And economies can keep purring, which justifies the upfront capital needed to build those projects. 

That’s the view of Robert Cruess, president of California-based ZeroNox, which is in discussions to build microgrids for major businesses based in Ghana, Africa — a place ideally suited for such construction: the lights flicker on and off, and the region has limited access to the grid.

“The microgrids use clean energy, and they are agile under stress,” Cruess told Environmental Leader. “Our target audience has more to do with unreliable power. In Africa, the infrastructure is decades behind western society. The continent is expanding economically, and it needs access to reliable power. And it has a lot of access to wind, solar, and hydro.”

Microgrids work in concert with rooftop solar and energy storage. And with the price of solar panels precipitously falling, they could replace the dirty diesel generators upon which African businesses now depend. 

It’s a huge step up and a high-tech solution. It’s all automated and monitored from afar. Controllers can direct the electrons to where they need to be. With the price of the underlying technologies dropping, the microgrid technology market is growing by 20% a year, says Bloomberg New Energy Finance.  Microgrids allow African businesses to skip centralized systems and go straight to distributed generation with localized mini-grids.

But how are businesses expected to pay for these microgrids? According to the International Energy Agency, sub-Saharan Africa will require $400 billion by 2035 to modernize its energy foundation. Microgrids are, therefore, a more affordable option. But governments must provide a reliable regulatory structure that offers streamlined permitting and a process to attract would-be investors. 

Making It Pencil Out 

Businesses want networks that are resilient and sustainable at prices they can afford. That is happening as those technologies gain economies of scale.

“These African businesses are suffering from continuous blackouts,” says Cruess. “They can rely on microgrids, and that is important to them. The diesel generators are expensive and hard to maintain. Renewable generation is much cheaper, so the total cost of microgrid ownership drops. They are easier to build, and there are no monopolies. These businesses are begging for more power and more help.”  

Cruess acknowledges that the upfront cost is significant. But he says that there are many options to help pay for such an expansion of energy infrastructure. For example, there are multi-billion funds, including the Green Climate Fund and the Power Africa initiative. Generally, governments, businesses, and investors are behind all of the efforts. It allows prospective microgrid users to buy power purchase agreements — long-term contracts to lock in a fixed, low cost to buy the power being generated and delivered by microgrids. 

But what about the cost of energy storage? BloombergNEF says that despite supply chain bottlenecks, the price of lithium-ion battery packs is falling and could dip below $100 per kilowatt-hour. Such prices have already dropped 89% from 2010 levels. And that will facilitate growth. 

While lithium-ion batteries are the most prevalent, there are other options. Flow batteries, for example, provide long-term storage that can deliver power for up to 15 hours. Lithium-ion batteries discharge for four hours or less. If a catastrophic event occurs, then diesel generators are used for long-term relief — but are limited by the amount of available fuel.

There’s also the “CO2 battery,” which can discharge for up to 24 hours. Unlike lithium-ion batteries that degrade over their 7-10 year lifespan, the CO2 battery can operate for 25-years, says Claudio Spadacini, chief executive of Energy Dome, in a talk with Environmental Leader. That means it is a more affordable option for commercial and industrial businesses. 

“Long-duration energy storage will be the key for the decarbonization of microgrids,” says Spadacini. “The CO2 battery’s sweet spot is daily cycling with an ability to, at a low cost, turn a variable and intermittent renewable generation into reliable, 24/7, decarbonized power supply for end-users.”

Some businesses want reliability. Others want sustainability. Under any circumstance, they all want affordable power and a speedy return on investment. It’s especially true for those African businesses in remote locations and without easy access to the transmission grid.