With acknowledgements for the above image to IFC’s Report: The Dirty Footprint of the Broken Grid.
The most promising aspect of the start-up company I chair – A-Deus – is the radical, decentralised and transformative energy concept at its heart. Once operating, the company could help empower millions of Africans that consume very little or no energy at all. Second it would help lower carbon emissions across Africa by rendering BUGs – Back-up Generators – redundant. In transforming the global economy away from its addiction to fossil fuels we need to build and create alternative energy systems to enable low-income societies to both make a just transition to a sustainable future and achieve their development and sustainability goals.
Energy is inextricably linked to every one of Africa’s critical sustainable development goals (SDGs) including, health, food security, poverty reduction, and climate change (and) as Sarkodie and Adams argue “energy deprivation is a leading contributor to morbidity, political unrest, and environmental instability.”
According to the World Bank, More than 600 million people in Africa live without electricity, including more than 80 percent of those residing in rural areas. Per capita residential consumption of electricity averaged 483 kilowatt hours in 2014, which is roughly the amount of electricity needed to power a 50-watt lightbulb continuously for a year.
I was born in and grew up in South Africa where households and firms suffer on a daily basis from erratic cuts in energy supply known as “load-shedding”. So desperate is the government to address this issue and its impact on livelihoods and the economy, it even considered inviting Turkey’s ‘Karpowerships’ to moor eight ships in its harbours and provide emergency diesel-fuelled electricity to the national provider, ESKOM. That raised regulatory and environmental eyebrows, given that the energy would come at an eye-watering price estimate of more than R200-billion.
The biggest and most populated country I have worked in was Nigeria, where, in 2005, I helped the then finance minister, Mrs Ngozi Okonjo-Iweala clear $30 billion of sovereign debt. Nigerians suffer from an extractive, often corrupt, dirty energy system; one that forces them away from the grid and towards the use of expensive (in both carbon and financial terms) diesel and gas-generated ‘backup generators’ – one of the dirtiest fossil fuel sources in Africa and Asia.
More about BUGs and Nigeria
Nigeria is a notoriously large market for backup generators. While it has the largest population (200 million people) and economy ($1.1 trillion GDP PPP adjusted) in Africa, there are only 5.3 GW of largescale power reliably connected to the national grid. This amounts to about 30 Watts per Nigerian. The global average is about 900 Watts per person It is 10 percent of the capacity of South Africa with a lower population of 55 million and $0.767 trillion GDP PPP adjusted..
The BBC calculates, in this report, that 60 million people own generators in Nigeria. A study by Dalberg, the Access to Energy Institute (AEI), estimates that households and SMEs are powered by 22 million small gasoline generators. The Nigerian government banned the bulk import of BUGs in 2015. Despite that ban, the energy capacity of BUGs is 8 times larger than that of Nigeria’s national grid.
The bad news is that the BUGs market is predicted to increase by 3% p.a. to 2030 to service Nigeria’s growing population and economy.
BUGs harmful to health
Backup Generators release toxic fumes that lead to illness and death, according to the IFC.
The “tailpipe” emissions of BUGS contain thousands of chemicals, including many that impact human health and the environment. They are a significant and growing source of NOx emissions, and an important contributor to ozone-forming pollutants. The World Health Organization (WHO) recognizes four pollutants relevant to outdoor air pollution: particulate matter, ozone (O3), nitrogen dioxide (NO2), and sulfur dioxide (SO2), all of which are directly emitted or formed from pollutants found in generator exhaust fumes.” (Pages 23 and 24 of the IFC report.)
So replacing or displacing BUGs with cleaner energy is literally a matter of life or death for many millions of people in low income countries.
BUGs costly – to governments and users.
The Government of Nigeria subsidizes the cost of gasoline used in the generators, so that consumers pay a fixed price at the pump. That subsidy amounts to $1.6 bn – $2.2 bn per year, resulting in the 3rd cheapest fuel in Africa.
Nigerians spend an estimated $12 billion each year on buying and operating diesel and gasoline generators. That sum includes expenditure on the generator itself, fuel and maintenance. Moreover, generators tend to be replaced on average every two years.
The alternatives? Comparative costs for solar energy.
In Nigeria there are technically viable solar products that meet the needs of households and businesses. “And” argue the Dalberg researchers “given that gasoline generators typically run far below 100% load, they can be replaced by relatively smaller solar systems.”
However, solar systems are currently 15 to 20 times more expensive, which means they are not available at scale. A typical 1.5 kVA gasoline generator costs $150, while a 1.5kVA solar system costs $2,500, Dalberg explains. Given high upfront costs, it currently takes 8-9 years before the total costs of a solar system fall below those of generators.
While the upfront costs for solar systems are expected to fall sharply in the near future, they are still 15-20x the price of a gasoline generator. The cost of gasoline for generators is typically $20-$40 per month, where solar system have no ongoing costs. And while gasoline generators have, at best, a lifetime of 5 years, solar systems have a lifespan of 20 years, with certain elements such as batteries needing to be replaced every 5 years.
A-Deus and Nigeria’s CO2 Emissions
The A-Deus model would solve several challenges in countries like South Africa and Nigeria because it is a decentralized energy system, based on a low-carbon energy network with individuals, households and firms as members of the network. A-Deus integrates fuel cell, solar, heat pump and battery technology into one system with energy management constantly adjusted and enabled by smart use of Artifical Intelligence (AI). The system operates on a high-efficiency and high-utilisation basis, which means that the network produces up to 95% fewer emissions than traditionally delivered electricity and gas heating. Generating heating or cooling this way, A-Deus argues, reduces greenhouse gas emissions to zero, unlike conventional heating networks.
The system operates a little like a smartphone network. There is no upfront capital cost for the user, just a contract or mortgage to pay for clean energy use, as and when it is used. When users join the A-DEUS network, they get an energy plan that suits their varied needs and an energy mortgage that will cut their life-time energy costs and carbon emissions to the lowest levels.
The added bonus for users is that any surplus energy that may accrue on account can be shared with others (for example family or community) or traded.
Installation of A-Deus units at scale in countries like South Africa and Nigeria (but also e.g. Britain, the US and Brazil) will make low-carbon energy accessible and affordable for impoverished communities currently dependent on much dirtier, and far more costly sources of energy.
That is why I am proud to chair the board of A-Deus.