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BUSINESS MODELS FOR

MICROGRIDS STORAGE SOLUTIONS

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So how can we use storage that it has value for everyone?

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So what are the functions of storage?
Really only two:
- Grid stability
- Time shifting of energy generation

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Many of the other uses we know are really different functions of the timeshift:
- Electricity backup
- Storage when generation is low or non existence (solar, wind)
- Avoiding time of use charges
- Peak shaving
- Load shaping
- Arbitrage
- And of course, spinning reserve for intermittent renewable

We can talk about residential, commercial/industrial, and utility scales, but these are all just
the size scale.

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Grid stability

Let’s talk about grid stability use cases. Is there value for this function of energy
storage? In SE Asia, except for where we are today. In 2015, Energy Market Authority
(EMA) in Singapore opened its electricity market to Energy Storage Systems to provide
ancillary services, specifically for frequency regulation.

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Other than that, what other markets in SE Asia gives a value for grid stability? Indonesia for
example: a prominent neighborhood isn’t immune from grid stability issues. One particular
instance, each of the three phases measure below 210 volts, with two of them below 200
volts. There is no penalty for the grid operators when the consumers experience voltage
and frequency outside of the grid code. Ancillary services have no value in most of the SE
Asia market.

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Time shifting functions, is there value in it?

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ARBITRAGE

Arbitrage for sure doesn’t, again except in Singapore and countries where you have
spot market of electricity. Australia for example. An innovation here can be where
you have a software monitoring the trends in prices and automatically buy and sell the
electricity for you utilizing storage. We can even use this at household levels if that’s
allowed, such as Australia.

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Renewable Energy
Integration

Let’s think about this for a moment. Is there real value here? The value here is to
avoid curtailment, and to sell more of the generated renewable energy. Spinning
reserve uses have no value in most cases unless there is a tariff for ancillary services.

So that means the value of storage is the same as the PPA tariff. Have you seen solar

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PV tariffs lately? Even the brand new wind farm in Indonesia that was just inaugurated
yesterday has a PPA tariff of around 10 cents per kWh. Are we at a point where chemical
energy storage can cost 10 cents? The closest we have to this is probably mechanical
energy storage such as pumped storage….under the right conditions.

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System
upgrade
deferral

Such as transmission and distribution lines. Many upgrades are prompted by short
peaks of excess power required. This can be deferred by having storage systems local
to the demand requiring the excess power. If I remember correctly there was an
auction in Australia where this was the specific goal. Who can provide system upgrade
deferral for the least cost. The value of the system upgrade is known, and the utility

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company is looking to find a less expensive solution.

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Demand Management

In general demand management covers a lot of different use cases.


- Flattening the duck curve, to become more like a platypus. We can use storage for
this, shaping the load curve.
- Peak shaving, on the grid side and on the consumer side

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Consumer Side Electricity Management

This include:
- Backup during blackout; is there value to the consumer? Such as factories with
high start up cost and loss of products when there is production interruption
- Avoiding time of use charges. Except for Singapore and Philippines, most of SE
Asia has very low electricity tariffs even with time of use.

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- Peak shaving where the subscribed power or available power is limited

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Making $EN$E
of storage

So where does storage make sense in SE Asia?


Diesel fuel replacement. This is where the value of storage is at least $0.25/kWh

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LET’S TALK
MINIGRIDS

We can talk about grid connected minigrids, but it goes back to value again. In most of
SE Asia, grid connected minigrids to perform the functions we talk about before
doesn’t make financial sense.

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Off-grid minigrids where the value is diesel replacement at a minimum price of
US$0.75/L. Under the best of circumstances, the cost of electricity produced with that
fuel cost is US$0.20/kWh. Often this is higher.

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Who’s using minigrids?
- off-grid commercial and industrial companies such as lumber industry, mining,
palm mills, pulp and paper, even food processing for fisheries
- Rural communities

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There are many similarities in both use cases, but there is one big difference. WILLINGNESS
TO PAY. Rural communities often have no big incentives to sustain willingness to pay. We
have seen this in many of the 500 communities we have data for.

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Challenges

What are the challenges in serving these clients? Are there any?

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Logistics

There is a reason these locations are still using diesel generators. They’re not
economical enough to be served by the grid. So those of you with containerized
solutions, how do we get your equipment there?

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O&M

Professional operation and maintenance in remote areas. How do we manage day to


day operation, preventive maintenance tasks, reactive maintenance and repairs?

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SYSTEM
SIZING

Do you size it for current needs? Plus a little bit extra? How much extra? What if that
extra isn’t being used for a few years? Basically, who pays for future growth? And
when does it get invested? In the beginning or when it’s needed?

This is the reason I’ve actually invented the modular microgrid topology that’s already

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piloted in Papua with smart metering and innovative solar panel mounting on top of the
distribution poles. This has been deployed in other villages to serve over 1,000 households.
A total of 500kWp have been installed so far. This technology and the business model is
what interested a large company to invest. Maybe you’ve heard of the company, it’s called
Engie.

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Source: GIZ Indonesia

In the case of a grant, you can afford to oversize the system

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Source: GIZ Indonesia

These are government funded solar minigrids in Indonesia

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REMOTE
STATUS
MONITORING

Often there is no signal in these areas, and the option is expensive satellite. Although
it is decreasing in cost now, so it’s becoming less of an issue.

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PRODUCTIVE USE
OF ENERGY?

We need to talk about productive use of energy if we’re talking about rural
communities. This feeds into willingness to pay. Our team members have data on
about 500 remote locations and we have manage projects where the team spent close
to 60 expert-months on the field with the communities, not including travel time in
between.

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The data shows that without REAL productive use of energy, willingness to pay beyond the
first 2 years can decline sharply. There needs to be a very close tie between electricity and
growth and an increase in buying power

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PRODUCTIVE
USE OF
ENERGY?

Most importantly, productive use of energy is not a concept that is part of a daily
routine of most villagers. It is not part of the ecosystem they’re used to for survival.
We have seen many instances where there is no appreciable, sustainable productive
use of energy even after access to electricity is provided.

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Let’s talk about pricing for a minute. I alluded to utility company coming in to electrify
these remote areas. When are they going to do this? What’s the threshold at which
they can do this?

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GRANT BUILT MINIGRIDS
Location Size Technology Project Cost / W House Cost/HH
Value holds

Wakatobi, South Sulawesi 800 kWp Solar PV $8,833,169 $11.04 1,038 $8,509
Mamuju, West Sulawesi 598 kWp Solar PV $6,588,883 $11.02 784 $8,404
Mentawai, West Sumatra 700 kW Biomass $13,417,229 $19.17 1,204 $11,144
Sumba, East Nusa 492 kWp Solar PV $10,091,279 $20.51 909 $11,102
Tenggara
Berau, East Kalimantan 1,243 kWp Solar PV $10,705,875 $8.61 463 $23,123
Lombok, West Nusa 1,320 kW Hydro $10,845,788 $8.22/W 1,650 $6,573
Tenggara (*)

(*) – Cancelled due to grant co-financer failed to provide a bank guarantee for the remaining project construction phase
beyond the grant timeline

Sources : Millennium Challenge Corporation, Akuo Energy, Sky Energy, Clean Power
Indonesia

If we look at these grant minigrids, boy there’s enough money there per household to
connect them to utility grids in many cases.

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MEMR BUILT PV MINIGRIDS
US$8/Wp

Utility grade poles and cables, energy limiters at each house, street lighting, mostly at
VERY remote areas, and in the last couple of years, long life batteries have been
specified (requiring de facto use of lithium ion batteries or zinc-air batteries). Despite
this high requirements, the cost remain competitive.

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PLN GRID EXTENSION
IN REMOTE PAPUA
VILLAGES
US$10,400/HH

PLN built gas power plants (one of them in Nabire is 20MW), substations, medium
voltage distribution lines and low voltage lines to electrify 1,040 households. 150
million IDR for each household. Now this is a much more radical solution, specifically
because the Indonesian utility company have just been ordered by the president to
provide electricity in Papua.

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In general, there’s a threshold between $1500 to $3000 per household for the Indonesian
utility company to extend their grid.

“"Banyak tantangan yang kami hadapi dalam pemasangan listrik di desa-desa terutama
pedalaman Papua dan Papua Barat, diantaranya mobilisasi alat karena medan yang sangat
berat, ada juga beberapa masalah sosial yang harus kami hadapi, namun senyum puas
warga yang akhirnya bisa menerima listrik menjadi kebahagiaan kami dan memacu kami
untuk terus melistriki desa-desa lainnya," ungkap Direktur Bisnis Regional Maluku dan
Papua PLN Ahmad Rofik, di Nabire (19/12/2017).
Rofik melanjutkan untuk 74 desa total investasi yang dilakukan PLN sebanyak Rp 150 Milyar
dengan jumlah kepala keluarga yang rumahnya sudah tersambung di 74 desa tersebut
sebanyak 1.040 kepala keluarga. Sedangkan, potensi pelanggan yang belum tersambung
2.700 kepala keluarga. Untuk melistriki satu kepala keluarga membutuhkan biaya Rp 150
juta karena hal ini disebabkan beratnya geografis desa yang akan dilistriki.”

Source: https://petrominer.com/jokowi-resmikan-program-lisdes-di-74-desa-papua-papua-
barat/
http://www.tribunnews.com/nasional/2017/12/20/pln-kebut-listriki-desa-desa-di-papua-
papua-barat
https://kumparan.com/@kumparanbisnis/cerita-pln-tembus-pegunungan-papua-demi-
melistriki-desa-terpencil

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Proven Technology

I’ve seen electrolyte leaking and crystalize on new battery chemistries. We’ve all seen
videos about exploding batteries.

As much as we believe in technologies, especially when we’re the provider, or the


proponent of that technology, we have to be honest. Is my technology fit for

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purpose?

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MICROGRIDS PROVIDE THE
HIGHEST VALUE

So after looking at everything, clearly microgrids in off-grid areas provide the highest
value for storage.

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Hybrid systems

It wouldn’t be complete to talk about microgrids without talking about hybrid systems.
In the additional slides at the end of this presentation I’ve included a quick summary
of the different types of hybrid systems. This is important to figure out how you can
create a business model around each type.

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Types of Typical system
Solar PV –
Diesel Hybrid
Systems

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The Goal –
Minimizing
LCOE

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MICROGRIDS PROVIDE THE
HIGHEST VALUE

Including hybrid systems. It is still diesel replacement that is currently providing the
highest value and will continue to do so in the near future.

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Andre Susanto
andre@pt-inovasi.com
+62 811 911 0427
https://id.linkedin.com/in/andresusanto

ACEF 2018, Manila, Phillippines

EMPOWERING rural communities through INNOVATION

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Annexes

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