Zonke Energy Case study: Low-cost renewable solar power for households in informal settlements
Zonke Energy is a South African Company that aims to provide innovative, safe, and scalable renewable energy solutions to informal settlements and markets not served by the national grid.
Through a unique metering and billing platform, Zonke energy delivers clean, affordable, and reliable microgrid electricity to informal settlement communities in Cape Town, South Africa. Fiscal and tactical support from Energy Catalyst enabled Zonke to improve on metering hardware and software, business modeling, and site selection in informal settlements.
At least 10% (4.4 million people) of South Africa’s population live in informal urban settlements and approximately 1.5 million people in these settlements are without grid electricity. Energy use in these settlements remains limited to paraffin, wood, plastic, and dangerous illegal connections to the grid, which often pose health and safety threats to residents.
A wide range of challenges prevents households in informal settlements from accessing legal electricity from South African power providers. These include high connection costs, settlements being on private or disputed land, low spending power hence minimal returns for investors. For instance, grid electrification in these areas remains a challenge due to rapid unplanned urban population growth rates in areas unsuitable for habitation. The congestion presents a challenge when building infrastructures such as grid distribution lines, wind turbines, or solar panel platforms. For these reasons, building a financially sustainable solution to address the energy poverty in these areas may look unattractive to many investors. However, with innovative technologies and new business models, Zonke Energy has shown that it is possible to deliver low-cost and sustainable renewable energy to urban informal settlements and similar markets.
Zonke Energy provides clean, reliable power through a distributed solar system powered by a 1.5kW solar photovoltaic generator. The system can serve 10-15 households and allow each to power a television, radio, lights, refrigerators and power tools. Through a payment and pre-paid metering system, customers can easily make payments and track electricity used.
The microgrid entails building a custom distribution and metering system for congested environments. Unlike the traditional grid connections, which are costly and out of reach for most households, the solution is affordable and suitable for informal settlements. The solution involves building modular DC mini-grids which are usually simpler, safer, cheaper, and more efficient than equivalent AC systems. For example, a DC system reduces the electric shock and fire risks while requiring less costly wiring and control gear. The innovative, custom payment system allows customers to purchase a flexible number of electricity units using mobile money or vouchers from local authorised vendors. This means that the solution accommodates all customers, including households with limited budgets and those outside the formal banking system.
Energy Catalyst has provided the technical expertise, tools, and other resources that have enabled Zonke to improve its innovation. For example, Energy Catalyst has helped Zonke identify cost-saving opportunities, such as supplying DC, building low-cost towers in central places to reduce wiring costs, and optimising metering and payment systems. In addition to building mechanically strong structures to hold and secure the panels and storage batteries, Zonke Energy works on gaining community buy-in and trust, preventing vandalism and theft of the cables and components. Finally, the web-based cloud platform allows operators to remotely monitor the mini-grid to identify and address performance issues, ensuring maximum uptime and low maintenance costs.
Zonke Energy has encountered various technical and financial challenges which need addressing to ensure affordability, reliability, and sustainability. In particular, the congested environment, unstable rooftops, and lack of empty ground space present a challenge when mounting the panels and housing the storage and control circuits. Currently, the power supplied as DC is insufficient or unsuitable for heating appliances such as electric cookers and water heaters. Moving forward, Zonke is looking at new business models and ways to expand capacity to connect more households and supply such equipment – but this requires more capital. Unfortunately, most commercial lenders avoid funding new technologies and business models which they have no experience financing. Consequently, the lack of finance and other challenges such as the COVID-19 pandemic, which led to lockdowns that prevented people from accessing the sites, slows down the project implementation activities and scaling. Energy Catalyst is supporting the company in accessing finance for expansion, through identifying high-potential financiers and readying the organisation for capital raising.
The solar-based DC mini-grid provides environmentally friendly, safer, and cheaper energy compared to paraffin, petrol-powered generators, and other forms of dangerous or harmful fuels. Electricity enables a wide range of social and economic activities, local procurements, and other opportunities that result in job creation and better living standards. For example, indoor and outdoor lighting reduces crime while enabling the communities to engage in various economic activities during the night. Also, it allows customers to charge their mobile phones at home and power their DC radios and television sets.
The Zonke solar-based DC mini-grid demonstrates how technological and financial innovations support reliable and safe energy solutions in the informal settlement not served by the national grid. Support and incentives from Energy Catalyst have provided the necessary technical skills, resources, and financial models to ensure low project cost and sustainability. “The Energy Catalyst project is a great opportunity for us to build partnerships in the UK and reach communities in need of clean and affordable energy. We’re excited that through this project, we’ll also be able to build and extend our technology platform, improving our operations and scaling this critical sector” explained Alex Densmore, Technical Director for Zonke, South Africa. Ultimately, Energy Catalyst’s support has enabled Zonke Energy to build successful pilot projects and business models as they look forward to expanding and connecting over 10,000 households in the next five years.