Solving Sub-Saharan Africa’s Electrification Challenges through Energy Democratization
A cleaner, united, and sustainable Africa is attainable when we band together and translate our communal sense of living into solving our electrification problems.
There is an increased case for energy decentralization globally. In Sub-Saharan Africa, the electricity deficit is gory. More than 97% of people living without electricity live in Africa and developing Asia. Particularly, an estimated 635 million people live without electricity in sub-Saharan Africa. This electrification crisis contributes to the slow pace of development in the region.
Recent trends in developed societies show a move towards energy sharing. This is often termed energy democratization. Energy democratization refers to decentralizing control of energy resources. This leads to citizen participation and local control over energy decision-making. The goal is to ensure that citizens have controlling rights over production, sharing, and collective use of energy resources. This article explores the concept of "energy democracy" through the lens of community co-ownership and energy sharing. In exploring this concept, the author provides lessons and recommendations for sub-Saharan Africa.
1. What is Community Co-ownership?
Community co-ownership of energy resources arises when individuals jointly own grid and off-grid power systems with energy developing companies. These individuals could also own the energy systems and projects. Energy co-ownership refers to a group of people with shared energy needs, goals or aspirations (also known as an energy community). Energy resource co-ownership is prevalent in Europe where the clean energy revolution is on the rise. Germany, Scotland, and Denmark are remarkable examples of such countries in Europe.
a. The Scottish models
The Scottish community ownership system allows both direct ownership and ownership through an investment scheme in energy projects. The Scottish government forecasts a target of 500MW in community ownership by 2020. The Neilston Community Wind farm is an example of joint ownership of power systems. The wind farm has a capacity of 10 MW, built through a joint trust between the Neilston Development Trust (NDT) and Carbon Free Developments Ltd. NDT owns up to 28%, with an option of raising its stake to 49.9%. The community formed the NDT in 2009 to chart the course for the regeneration of the Neilston community. The Community’s 28% ownership came from social loans, rather than grants. Proceeds from the investment go towards repaying the loan and accomplishing the community’s 2030 vision of a “sustainable, economically robust, well-planned, and well-connected small town.”
The success of this project has placed the energy fate of the Neilston community in their own hands. Dispensing with the reliance on a central grid brings energy installations closer to end consumers, thereby reducing the transmission cost. Residents of the Neilston community do not have to rely on a central utility company for their energy needs. Thus further democratizing ownership.
The Gigha community in Scotland developed a wind farm through a more direct ownership system. ‘The dancing ladies,’ three windmills owned by the Isle of Gigha is the first directly owned grid-connected wind farm in Scotland. The project (commissioned in 2005) cost the community approximately £400, 000. The cost included grants, loans, and equity holdings. Annual profits from the wind farm stand at £80,000. Some benefits of the Gigha Isle project include employment generation, energy efficiency and awareness, and providing funds for other community concerns. Energy co-ownership produces other benefits like environmental awareness and sustainable energy for communities.
The Scottish model is not without challenges. Some challenges include access to capital, lack of knowledge and expertise, regulatory barriers, and land ownership problems.
b. The Danish model
In Denmark, ownership could mean limited or full stake holding in projects. Energy project developers must give an option of owning a 20% stake in wind farms (with wind turbines taller than 25 meters). This option is however limited to private individuals who live at a distance of no more than 4.5 km from the installation site. If they decline, the larger municipality will receive the option. This Danish model has resulted in a bottom-up market where individuals wholly own small wind turbines. The grant of options to own is a mechanism for allowing greater participation of citizens in the energy decisions that affect them.
Based on the examples above, community co-ownership and sometimes individual ownership of energy resources is a way of bringing energy closer to the people. The benefits provide a stronger case for energy democratization.
2. What is Energy Sharing?
Energy sharing is a direct product of the sharing economy. Investopedia defines the sharing economy as “an economic model in which individuals are able to borrow or rent assets owned by someone else.” Sharing of assets is useful when asset prices are high, or assets are not used up to full potential.We can appreciate the value of sharing in models like Airbnb and Uber. Imagine a replication of that model in the energy sector. Energy sharing involves sharing under-utilized energy assets for a fee. This ensures energy consumers gain economic value in their unused energy resources. Millennials have championed the sharing phenomenon because it promotes a culture of access and convenience over ownership.
Energy sharing is closer to us than ever before because of the blockchain technology. On November 22, 2016, Siemens and LO3 announced plans to use blockchain technology to birth the shared energy economy. Blockchain technology can cryptographically secure and track energy generated and distributed to end-users. It also enables peer-to-peer sharing of energy resources. Blockchain technology can promote community focused energy systems, such as micro-grids and reduce pressure on upstream networks. Thus, smaller participants can transact energy in the wholesale and retail marketplace.