Independence is a very broad concept. Here in the United States, it is most frequently associated with July Fourth and how we as a nation are no longer being encumbered by a distant monarchy in what is now known as the United Kingdom. But go to parts of Africa and other parts of the developing world, and the concept of independence takes on a much more fundamental meaning: self-sufficiency, and in the extreme, survival.
Independence here is deeply intertwined with the notion of access to the most fundamental of basic human needs such as food, lights and, increasingly, laptops and mobile phones. These citizens of the world are still often slaves to subsistence approaches to harvesting energy.
President Barack Obama announced during his recent trip to Africa that the United States would be investing in a new "Power Africa" initiative, backed by $7 billion in federal funding and another $9 billion coming from the private sector. The goal linked to these investments would be to provide electricity to 20 million new homes and commercial enterprises in Ethiopia, Ghana, Kenya, Liberia, Nigeria and Tanzania.
Among the programs identified for funding under "Power Africa" are the U.S. Clean Energy Finance Initiative and others designed to increase access, reliability and sustainability of electricity via policy reforms and government-backed risk mitigation measures for private investments in power infrastructure.
Electricity has become the lifeblood of modern society, displacing steam and mechanical systems. Even our cars are increasingly running on this nearly invisible substance that was once considered magic. The spider web of electricity infrastructure now powers our lives as we evolve to what many describe as the digital economy, an array of devices computers, cellphones and appliances all requiring electrical power.
On the surface, one might wonder why the United States would want to invest in providing power to the poorest of the poor? One reason, clearly, is strictly humanitarian. The United Nations declared last year as the year of "Sustainable Energy for All" and called upon nations all over the world to devote increasing attention to the provision of universal access to electricity through renewable energy and technologies that bolster efficiency, displacing the primitive reliance on wood-burning and other more polluting forms of energy.
Yet another reason Obama made this new pledge is clearly strategic and would help lift the U.S. economy. It centers on the immense business opportunity surrounding something called a microgrid, islands of power and self-sufficiency that are the current rage among technologists peering into their crystal balls. These microgrids scare the hell out of most utilities, since if they are widely successful, could spell their doom. Yet they also represent a bottoms-up approach to solving not only what the United Nations calls "energy poverty," but the looming catastrophe of runaway global climate change.
What is a microgrid? In layman's terms, it is a network of diverse power sources, often featuring a mixture of renewable energy, fossil fuels and batteries that can operate as a unified system for a network of consumers. If the larger utility grid goes down, these microgrids can create a little island of power, making sure the most vital operations for a business, utility or community stay powered up during major storms or other power outages.
The Sacramento Municipal Utility District has constructed a microgrid adjacent to its corporate headquarters, which would power up its emergency control room in the event of a rolling blackout. Every single military base in the United States is exploring the microgrid option, and they are now also being deployed in Afghanistan and ultimately in the 600 forward operating bases of the U.S. Department of Defense located in remote regions of the world.
Ironically enough, the United States features a power grid clearly inferior to Europe and Asian countries such as Japan and South Korea. Because the reliability of the U.S. power grid is going down, not up, it is the world's leading market for microgrids today. Yet the biggest market over the long run is the developing world where there is no utility grid, or such existing grids are so unreliable and expensive that villagers and businesses would prefer to create their own mini-networks for electricity less dependent upon imported fossil fuels.
How big is this total microgrid market? My most recent estimates are an $8.5 billion global market today, which will grow to almost $40 billion by 2020, with an increasing share of this revenue shifting from the United States to Africa, India and South America, places where today energy is unreliable, costly and extremely polluting.
Between now and 2050, population growth in Africa and the rest of the developing world is expected to almost double to more than 8 billion; meanwhile, the more developed world's population is projected to remain relatively constant at roughly 1.2 billion. Developing countries make up approximately 80 percent of the world's population, but consume only 30 percent of global commercially traded energy supplies, making them the top prospective market for remote microgrids. Roughly 400 million households or approximately 40 percent of the population of developing countries still do not have access to reliable electricity.
Incredibly enough, 550 million people out of the estimated 1.4 billion people without power own a cellphone, which is why telecommunication towers have emerged as a leading choice for anchors to small microgrids serving rural villages. Banks are willing to finance the cell towers; entrepreneurs then figure out ways to extend electricity to nearby villages and small businesses. Often, the analogy is made that just like the developing world skipped telephone landlines to cellphones, the same is happening with electricity. Africa and other less-developed nations will go directly to microgrids, without the need for large nuclear reactors or coal plants connected to giant transmission lines.
Coincidentally, the declining prices for solar photovoltaic systems are the primary reason why microgrids are increasingly cost-effective, especially when compared to diesel fuel, the default fuel for most remote communities. The rise in mobile phone usage, and simultaneous decline in solar PV prices, is prompting many companies to take this cell phone analogy even further. Companies such as Mobisol of Germany use solar PV to supply power to off-grid cellphone towers. Villagers on bikes then transport batteries charged up by these towers for use at their own homes, another version of a distributed power system.
It has become increasingly clear that the fundamental architecture of today's electricity grid, which is based on the idea of a top-down radial transmission system predicated on power flowing from large centralized power plants, is becoming obsolete. If, indeed, the electricity grid begins to resemble the Internet due to the proliferation of a variety of distributed electricity-consuming devices including solar PV, small wind turbines, batteries and even electric vehicles then a distributed network that can organize these devices into a coherent system such as the microgrid will become vital.
These and other trends are converging to create promising markets for microgrids in the United States and the Asia Pacific region, but ultimately offer the promise of genuine energy independence in Africa and the rest of the developing world. Peter Asmus has been writing about energy issues for 25 years and is a leading global expert on microgrids. For more information, go to www.peterasmus.com.