Energy storage and universal access to

modern energy services

Alistair Wray, DFID

11 May 2016

Frontier Energy Storage Technologies and Global

Energy Challenges

Smart Villages and University of Edinburgh

Outline

1. Development context and RE market dynamics

2. DFID research and innovation programmes

3. Energy storage barriers and opportunities

4. Discussion of challenges

Development context and drivers for

DFID energy and innovation funding

• 1.1 bn lack of access to modern energy services, mostly in SSA and SA

• Grid based systems are often insufficient, unreliable and expensive,

constrained by poor sector policies, governance and lack of investment

• In addition, large numbers connected but “under-served”; limitations to

grid extension solutions in meeting needs of poor and for productive uses

• Increasing opportunities for scaling up off-grid clean energy solutions,

expanding local grids, and smarter integration with grid systems

• Sustainable Development Goal for Affordable Clean Energy (SDG7) has

reinforced the central role of energy in development

– Universal access to modern energy services by 2030;

– Doubling the global rate of improvement of energy efficiency by 2030;

– Doubling the share of renewable energy in the global energy mix by 2030.

RE deployment - context

The solutions for expanding access to clean energy will be a

mix of grid expansion (generation, transmission and

distribution), mini-grid development and off-grid expansion:– The International Energy Agency (IEA) estimates, based on population

densities and distributions, that in order to achieve universal electricity

access in SSA, the most economic route would be 40% with grid

connections, 40% mini-grid (isolated networks) connections and 20% stand-

alone household systems – although this will vary between countries.

– Investment in renewables is increasing ($318bn in 2014 and 5 times figure

for 2004). Solar accounts for nearly third of capacity additions globally, split

between small and utility scale installations. Solar PV offers potential for grid

and off-grid solutions but overall this is largely unrealised on Sub-Saharan

Africa. (New Energy Outlook 2015, BNEF)

Scale of Demand and nature of Supply :

Focus on Africa

Market dynamics –opportunities and

challenges

• Rapid expansion of off-grid market (costs of PV; LED lighting; mobile

phone charging; business models based on mobile technologies and

PAYG) - platform for progressing up energy and development ladder

0

50

100

150

200

250

300

350

1/1/2011 1/1/2012 1/1/2013 1/1/2014 1/1/2015 1/1/2016

Th

ou

sa

nd

s o

f u

nit

s (

cu

mu

lati

ve

)

Date

Installations

The Market Potential is Real:

M-KOPA Growth Case Study (Kenya)

7

£475k

REAC

T

£2m DFID/Shell

Foundation

£300k

Innovation

£500k

REAC

T

£2m

NEADM

$10m (soft) debt

$14m debt/equity

$3.5m Series A

equity

$19m equity

DFID support

Others

DFID Energy and Innovation Portfolio- current projects

Addressing

Barriers to

Sustainable

Energy

Access for

All

Scaling up

the Use of

Clean

Energy

Sustainable Energy, Access and Gender (SEAG)

research on energy and gender, RE resources and

impact.

M4D Utilities mobile enabled service provision –

half is energy, managed by GSMA (mobile phone

trade association)

New Energy Applications and Delivery Models

(NEADM) innovation scale up with Shell Fdn.

Green Mini Grids Action Learning and Evaluation

Moving Energy Initiative MEI sustainable energy

provision in humanitarian situations,

Transform: Innovation partnership with Unilever

The

Challenges

Current projects

.ESMAP addresses a range of energy sector policy

and best practice options guidance

Understanding Sustainable Energy Solutions

(USES) partnership with EPSRC, DECC.

Scaling up clean cooking solutions includes

research into cook stove standards, behaviour

change, market development etc.

Bio-energy for Sustainable Local Energy

Services and Energy Access in Africa

Some expected outputs

Technologies and Innovation

Future Plans

Addressing

Barriers to

Sustainable

Energy

Access for All

Scaling up

the Use of

Clean Energy

Scaling up existing successful programmes:

M4D GSMA strategic partnership for mobile enabled

applications and digital inclusion

Moving Energy Initiative MEI (£3-8m) for pilot testing

phase of humanitarian sustainable energy provision

Crowd Power trialling crowdfunding platforms for peer to

peer solar (included in TEA above)

Clean Cooking expansion with Global Alliance for CC

ESMAP (policy, best practice and knowledge , including

RE mapping

The Challenge:

Global Goal 7 by 2030

Going Forward

New Pipeline Programmes

Low Energy, Inclusive Appliances

Frontier Technologies with EPIC

DFID/DECC Mission Innovation

Where we want to be

TEA - A major new clean energy access R&D

programme Transforming Energy Access

(£65m):- Expanded partnership with Shell Foundation (TIME)

- Open calls with Innovate UK Energy Catalyst

- Clean Energy Innovation Partnerships (incl.

crowdfunding)

- Skills and capacity building

Energy and Innovation Portfolio-

future pipeline options

Energy storage barriers and

opportunities

• Opening up technologies and reducing costs of energy storage

Retail price of pico-solar off products that provide lighting service of 120 lm for four hours/d

• Increasing use of smart technologies, data management and mobile

technologies (condition monitoring, energy use profiling) - leap-frogging

• Smart energy demand management - reducing storage needs

• High energy efficiency of appliances and productive energy using

equipment – reducing storage needs

• Enabling distributed generation; integrating variable renewable energy

into grid (local and national)

Outline of relevant DFID research

and innovation support

• Energy Africa initiative - household solar, country compacts,

toolkits and innovationa nd business support

• Innovation – supporting early stage innovation through open

competitions, prizes; scaling up promising innovation and

business models via seed funding for early stage businesses

• Utility scale variable renewable energy grid integration (via

ESMAP)

• Pipeline plans: Low energy inclusive appliance (LEIA);

Frontier Technologies promotion; cross UK government

initiatives (Mission Innovation, clean energy funds)

Incubation /

R&D

EADFTEAACE

EA Compacts

Growing

businesses

• Technology innovation

research and support

• Business model

development and

innovation;

• Skills and expertise to

support prototyping

• Demand based

approach across Africa

and Asia

Market development

interventions:

• Compact related

policy/regulatory

reform in 14 countries;

• Start up support for

~40 businesses

• Test innovative market

based delivery

• Working capital to

accelerate growth

of businesses

Nurture and incubate

concepts and early

stage ventures

Prime enabling

environment &

business investment

readiness

Tackle financing

constraints to

unleash growth

Potential

growth path of

a SME

Proposed Integrated Energy Africa Offer

Need

Interventions

Aim

Time

Scale

Resource

commitment

Potential Co-

Funders /

Mobilisation

£65m £65m £30m

• CDC currently evaluating investment

opportunity

• AfDB (£30m + further £30m 2nd phase)

• Guarantco (£60m guarantees to 2nd Phase)

• Power Africa / USAID

• Shell Foundation - £30m

• Innovate UK - £15m

• Other funding (tbc)

• First phase £24m

(estimated from partners

such as Power Africa,

Canada, GOGLA, WB/IFC,

Sweden)

• Plus min 1:1 leverage

Investment

readiness /

Conducive

Market

Transforming Energy Access (TEA)-

research and innovation

Project Purpose: To address critical evidence gaps and test

innovative technology applications and business models that

will accelerate the provision of affordable, clean energy based

services to poor households and enterprises

• Early stage support for innovation development and related

resource requirements

• Build on and scale up previous proven innovation ventures

• Holistic approach with focus on :

– research, development, demonstration and incubation of new

technologies and business models (Innovate UK Energy Catalyst)

– incentivising innovation and entrepreneurship; (Shell Foundation)

– supporting collaborative partnerships; (scoping)

– supporting development of local skills and expertise (scoping)

TEA Energy Catalyst component

• DFID will contribute to Energy Catalyst rounds to support the best

innovative proposals from UK business or research organisations, who

need to identify the relevance to developing country energy challenges.

• The current Energy Catalyst application process will be followed. The

briefings and project budget limits and intervention rates also reflect those

currently applied by Energy Catalyst.

• An additional question for applications will be included: "Do you

consider that your application could be relevant to the problems of

developing countries?", with a "yes/no" answer to identify "DFID-

relevant" applications.

• DFID support can include the early, mid & late stages. The parameters

and features of these awards (process, duration, co-funding etc) will be

the same as for the earlier Energy Catalyst rounds.

• Themes include Energy Networks and System Integration (storage

technologies, smart grids, integration and system design etc)

TEA Energy Catalyst process

• “Guidance for Applicants" documents reflects additional guidance on

completion of the question where DFID requirements are set out.

• "DFID-relevant" project applications (only) will be allowed with

encouragement to include overseas partners from developing countries;

however, overseas partners will not be able to lead project.

• UK partners in funded DFID projects will be contracted, grant-paid and

monitored directly by Innovate UK. UK leads will undertake due diligence

for overseas partners and take responsibility for payments made.

• Innovate UK's assessment and scoring processes remain unchanged,

although additional assessors may be used.

• EC Round 4 is now live (closing 8th June)

https://www.gov.uk/government/publications/funding-competition-energy-catalyst-round-4

Innovate UK Energy Storage Projects –

portfolio to date (inc EC Rounds 1-3)

• 31 live projects in 3 competitions (Energy Catalyst; Smart

Systems; Localised Energy Systems); £15m live grants

• 6 themes

–12 business models, trading and systems integration - £8.7m

–7 battery and flow battery technology - £2.5m

–5 heat storage - £1.6m

–3 H2 and chemical storage - £0.9m

–3 power converters - £0.5m

–1 flywheel - £0.6m

ESMAP Variable Renewable Energy

Grid Integration Support programme

Supporting grid variable RE grid

integration

Discussion- priority energy storage

challenges for developing countries

• What are the barriers to more effective energy storage?

• Potential for technology developments; new business

models?

• Complementary role of mobile technologies? Smart

community grid management?

• Are the incentives for R,D & D right?

• What applications and businesses will drive innovation?

• Elephant in the room - addressing the electricity clean

cooking challenge

• Are there other gaps to be addressed?