- What characterises innovation in the energy sector?
- How is innovation on the African continent changing the energy sector?
- What are the next generation energy innovations and disruptions driving the energy world in Africa?
Innovation is often viewed as the application of better solutions to meet existing market needs or new requirements. While a novice device or technology is often described as innovation, it is more often the result of combining various ideas in a way that offers a better solution. It can be accomplished through more effective products, processes, services, technologies or business models.
THE FOLLOWING KEY POINTS HAVE BEEN SUMMARIZED FROM THE TECHNICAL INNOVATION AND FUTURE DISRUPTIVES PANEL AT THE AFRICA ENERGY INDABA EVENT EARLIER THIS YEAR:
- Innovation focuses on the entire ecosystem, not on individual components
A common belief is that one improves and effects innovation and change by upgrading components within an energy system. However, one needs to look at the bigger ecosystem and consider how the components interact with each other and how changing one has an impact on the performance of the others, as well as of the system as a whole.
The biggest mistake for innovation is to focus only on small isolated components and not to see their interlinkages in the entire ecosystem. Innovation is an art. It required the creative side of the brain, that has the ideas and creates innovation. Innovation means to use what is there, to repurpose what is available. It may mean going back to old solutions like a windmill to solve new problems, or finding simple and affordable solutions rather than technically complicated and expensive ones. Innovation means connecting the dots between all the elements.
- Innovation in the energy sector: bringing together traditional large-scale energy solutions with new small-scale renewable solutions
Today it is normal to posit decentralised power systems in opposition to the historical centralised power systems effected through large power utilities. However, there needs to be a balance between these systems, and the interlinkages between them trigger interest, thinking and ideas. Innovation in energy advances from what we see as the conventional sources and systems of energy, bringing forth new systems and technologies to improve our well-being and capacity in the economic space.
Very large energy projects that used to define the energy space have slowed down. The largest portion of people who do not have access to electricity in Africa are in rural areas, so it is accepted that the majority of those people will not be reached by grid extension, and will require off-grid or mini-grid solutions. What is required today in Africa is smaller, more off-grid distributor generation: small systems which would eventually be linked into larger networks.
- Innovation trends for the future
- Innovation is not only a change in technologies but a change in behaviour and understanding
A common misunderstanding about innovation is that it is a technology race. As much as the technology can secure the gains and advancement that we pursue and aspire to, it is more than technology. It all ultimately starts with a change in attitude and understanding and behaviour. It is changing the attitudes, hearts and minds of leaders, managers and the work force within many industries we work in, to effect greater and sustainable change.
- Two international models for electricity innovation
There are two international models of how power networks have developed on a large scale: China and India. China developed on the basis of mega-projects, and India developed in terms of highly distributed generation with small scale projects that are fundable and technically doable. Here the reliability of the system on all levels in the project was seen as much more important than new hot technology. Only once the individual small power systems were built in thousands of villages, transmission networks were put in place to link them.
The question is which one Africa will follow? The Chinese mega-project example or the Indian example of small-scale, rural power systems that are later linked in networks.
- Government needs to facilitate innovation by preparing regulation and structuring assistance for businesses affected positively and negatively by the change
There is a need for the energy regulator to accommodate the inevitable changes that innovation is bringing to the power market, for example, in the case of Independent Power Producers. The World Bank published a study looking at IPPs in five key countries in Sub-Saharan Africa. It covers the history, common themes, and how the regulatory environments in these countries had to shift to make the projects possible.
Governments have a crucial role in facilitating innovation: it needs to introduce regulation that does not hinder innovation but also needs to offer assistance to businesses that are disrupted by innovation.
- Financing and funding systems need to adapt to new requirements
There is a need for change in funding and financing to enable innovative developments. At the moment, there are limiting factors for development capital, both for developing projects as well as for new technology and new innovations.
There are some incredible innovations in the market. The question is how inventors can take these innovations through the development phase to make them commercial so that developers can actually use them. Lenders and investors immediately want to know whether a product has been commercialised and how many GWs it will issue, limiting these innovations. The money is actually needed in the development phase of these innovations, not once they are commercialised.
Big and creative efforts are required in the legal regulatory and financial environment to develop methods to fund and finance these projects, especially for situations where it is difficult to get investment-grade guarantees for projects from government or from utilities. It will require Public-Private Partnerships, as well as other innovative funding methods such as crowd-funding.
A great example of this can be seen here in The Sun Exchange which uses a crowd-funding system: members of the public finances individual solar cells and earn rental income once it is operational.
M-KOPA Solar in Kenya is another example of innovation in funding: they are a pay-as-you-go energy provider to off-grid homes – they offer high quality solar systems on an affordable mobile money payment plan.
- Skills Development/Knowledge Transfer within the Energy Sector
There are job-opportunities in supplying electricity, but the skills gap needs to be addressed. Not only technical skills are required, but also skills of entrepreneurship and financial skills for running a successful company.
In East Africa, mini-grids are being used by governments and organisations to electrify rural areas where grid access is not possible. More projects lead to more people being trained; and as the need grows, installation and repair can become localised. Often, the project can grow with the community.
- Learning from other innovators
Innovative thinking requires looking at other predictive market trends for ideas on how to solve energy problems, using available resources with different models and skills. It requires learning from others and documenting the best business models. Solutions focusing on regional integration offer the benefit of sharing energy resources that are suitable to be shared across the continent; and a shared understanding of challenges, needs and priorities.
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