Airbnb made everyone a hotelier, while Uber allowed ordinary drivers to become taxi cabs. Now people can become power stations, selling what they generate from solar and other renewables to their neighbours.
This is a concept of microgrids – small community electricity networks that exist outside of the monopoly power suppliers. It has attracted investments from giants like Shell, and threatens to revolutionise the industry in South East Asia.
The promise of microgrids
In rural Myanmar, microgrids are providing villages disconnected from the main grid with electricity. Yoma Micro Power is building solar-powered microgrids backed up by diesel generators and batteries. It plans to build 2000 of these by the end of 2022, its CEO Alakesh Chetia told GovInsider. They are quicker to build than waiting for the government to expand the national grid infrastructure, he says. “From the time you order materials and they arrive in Myanmar, through to commissioning the power plant, you’re looking at for four to five months,” he says of microgrids.
In countries such as the Philippines and Cambodia, Japan is investing in microgrids, says Shinichi Imai, Managing Director of International Business Development at Tokyo Power Electric Company’s Power Grid business. “We have a plan to invest more than US$60 million within five years, mainly for microgrids.” This investment will come from a partnership between the Japanese utility and WEnergy Global, a Singapore-based company running clean electrification projects in the region.
Taiwan, meanwhile, is installing microgrids in mountainous villages and the capital city to serve as backups during natural disasters. If a typhoon takes out the main grid, these localised stations “become a backup system,” as they come equipped with their own energy storage capacity, Chen Yen-Haw, Deputy Secretary-General of the Taiwan Smart Grid Industry Association says.
Delivering on the promise
One of the weaknesses of microgrids is that they can be unreliable, especially those running on the variables of wind and sun. This makes them less appealing as the main source of power. In many cases, such as with Myanmar’s Yoma, they are backed up by a diesel generator.
Dr Surat Tanterdtid, Chief of Enterprise Architecture of the Electricity Generating Authority of Thailand sees here an opportunity for the traditional utilities. Their 24-hour power stations could provide electricity to microgrids when they run out of juice and help avoid blackouts, in exchange for a fee. “The power grid needs to prepare resources to balance between new demand and supply. It is an opportunity for us,” he says.
At the same time, the cost of batteries for energy storage is steadily falling and could make for a more appealing option to ensure continuous supply in the future. There was an 85 per cent cut in the cost of lithium-ion batteries between 2010 and 2018, according to Bloomberg New Energy Finance. It believes that it will be further halved by 2030.
Are they legal?
As with most disruptions, the law has yet to keep up. Politicians in the Philippines, for instance, found themselves going up against traditional utilities which have monopoly franchises in specific regions in the country. Currently, any company looking to supply microgrids needs to get permission from the incumbent utility supplier for that area, says Teresa Ira Maris P. Guanzon, Director of the Energy Commission in the Senate of the Philippines. “Which is crazy, right?”
Guanzon is pushing forward a bill that will remove the requirement for that permission. It will bring about three key changes: Simplify the process to get permits for microgrids; allow the use of microgrids in any area without proper access to electricity; and shorten the government’s two-year approval process.
As we’ve seen with all the other forms of decentralisation, this one will bring about uneasiness and unrest too. Companies are marching ahead with a promise to provide power to the unconnected, quicker and cheaper than many of their governments have been able to. The public sector needs to step in quick to define what its role in this reform will be.