[Enhance quality of life]
Contributing towards Enhancement of People’s Lives and Economic Development through Mini-grid Projects in Non-electrified Regions
Demand for energy has been growing throughout the world, especially in Asia and Africa, along with the steady economic growth of these regions. The power sector has seen a pronounced trend towards Decarbonization, Decentralization, and Digitalization (the “3 D’s”), and a rapid shift is underway towards renewable energy, which is more environment-friendly. Mitsui & Co. is responding to the “3 D’s” trend not only through the development of utility scale solar power and wind power projects, but also through the global roll-out of distributed power generation projects that provide service closer to the end-user.
Globally, approximately one billion people—mostly in Asia and Africa—have limited access to electricity*, and for India also, this is a major problem. At the same time, mobile phone penetration rates tend to be very high even in the inadequately-electrified regions of India and Africa, making electricity necessary for communication purposes. In 2017, we invested in OMC Power Private Limited (OMC), which is specialized in a business model with a combination of solar power and batteries to implement a distributed electricity generation business in which electricity is produced and consumed locally. With mobile phone base stations being the anchor customers, OMC supplies reliable electricity to local businesses and communities as well. Rather than using conventional fossil fuels, OMC provides stable and affordable electricity mainly through environmentfriendly solar power, with the aim of contributing to the realization of the Indian government’s goal of ensuring a 24-hour electricity supply to all Indian households, as well as enhancing the lives and economic prosperity of rural communities. We will be working with OMC to deliver electricity to other inadequately-electrified regions not only in India, but also in other parts of Asia and Africa.
* Source: International Energy Agency, World Energy Outlook 2018.
Expanding the customer base with a unique business model
Currently, OMC operates 197 power generation plants, which supply power to 211 mobile phone base stations, 5,000 local businesses, and approximately 100,000 residents in 15,000 households. I am working with the OMC team to expand the scale of operation and improve profitability, with the aim of expanding the number of power plants, which stood at 100 in 2017, to 1,000 plants in the near future, and bring stable power to over one million people living in remote and rural areas with inadequate access to the conventional grid.
In developing countries, due to the rapid increase in mobile phone usage, it is a common phenomenon that the wireless communication network exceeds the infrastructure provided to supply electric power, and India is no exception. OMC developed a unique business model that takes advantage of this situation. Starting out by supplying power to mobile phone base stations, OMC then built transmission and distribution lines in the vicinity of the base station, expanding its customer base to include local facilities, businesses and residents within a 2–3 kilometer radius of the base station. This business model makes effective use of the know-how that OMC has accumulated over the years as a leading mini-grid operator, the company’s good relationship with mobile phone service providers, and its experience of working with India’s individual state governments in the mini-grid sector. By building a distributed electricity generation platform, OMC is able to provide a stable and reliable electricity supply by managing the platform in line with customer demand. Furthermore, OMC aims to utilize this platform as a foundation for providing new businesses and services that enhance the standard of living of the local communities. Currently, the company is already providing a service that uses electricity for water purification, and a diverse range of other new services that have the potential to enrich local residents’ lives—such as refrigeration facilities and electric vehicle charging facilities—are also under consideration.
Continuous optimization of business processes to pursue higher quality and better cost
In inadequately-electrified regions of India, people normally rely on diesel fuel, kerosene, firewood, etc. for the basic needs of energy such as lighting and cooking. However, these methods place a significant burden on the environment, and they are also expensive in terms of cost per kilowatt hour. OMC’s goal is to utilize solar power to provide clean energy to these residents while bringing down the cost to an optimum level. While providing environmentally-friendly clean energy, it has to be affordable as well for the target customers.
Solar power offers outstanding cost-performance, as once it is installed, it can keep generating electricity every day (as long as the sun is shining) without the need for fuel. In recent years, the cost of solar power generation has fallen significantly, and it now constitutes a low-cost source of electricity. Utilization of solar enables OMC to generate power at low cost; in addition, OMC’s many years of experience in the sector enable the provision of highly efficient power generation. To ensure a stable power supply in response to customer demand, OMC uses solar panels to generate electricity during the day, and stores the excess energy in batteries to supply it during the night hours. Diesel generators are used only as back-up to ensure the 99.95% power availability that OMC has committed to anchor customers. By efficiently using the solar panels, batteries, and diesel generators in combination, reliable power can be supplied 24 hours a day. Running a power plant efficiently and stably is a challenging task, but OMC has achieved this, thanks to the know-how it has accumulated over the years. OMC’s generating facilities also make extensive use of information technology. It has developed its own unique power control unit to reduce generating loss within power plants and a remote monitoring system to manage multiple power plants efficiently; OMC continues to work tirelessly to realize further optimization and improvements that will enable it to produce electricity at even more competitive cost.
Delivering electricity enriches people’s lives
It is estimated that around one billion people are living in inadequately-electrified regions. Having myself grown up in the southern part of India, where the electricity power supply system was also not stable in the past, I understand personally how big a problem this can be. Living in an environment without access to electricity is more than just an inconvenience; it also causes sanitation problems, low levels of economic activity, lack of job opportunities, and even insufficient educational facilities. When OMC built its first power plant, there was little economic activity nearby.In some locations, with the establishment of OMC plants, the community has developed significantly, and now there is a primary school, a high school, a small hospital, and a large number of shops. Witnessing the improvement in living standards, and how the local economy has been invigorated, it really brought home to me how important electricity is for society.
In the future, we will be expanding our business in other countries and regions and working to strengthen OMC’s organizational capabilities, so that we can deliver stable, affordable, sustainable electricity to everyone who needs it—starting from India and expanding into Africa, other parts of Asia, etc.—as soon as possible.
Posted in August 2020