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Innovation to solve energy trilemma in developing countries

Development finance institutions have approached energy projects in three different ways in the last three decades, according to a recent report.

This reflects the complexity of development challenges and the changing energy systems.

The priority during the 1990s was to demonstrate how energy projects would contribute to the national GDP in developing countries.

The assumption was that energy supply was essential to support economic growth, and economic growth would in turn solve most development problems.

By analogy, the issues in this decade were sort of a linear equation with one variable.

To achieve inclusive economic growth, energy projects in the 2000s focused on the demand side, mainly expanding energy access through rural electrification.

Projects had to make energy affordable for poor households, while maintaining their economic and financial viability.

By analogy, the equation became nonlinear with two variables, becoming much more difficult to solve.

Extreme weather events became more frequent, threatening particularly vulnerable developing countries in the 2010s, thereby changing the priority again to climate change mitigation and adaptation.

Nowadays all energy projects must be designed to be economically sound, socially inclusive, and environmentally sustainable.

Typically, such projects include both supply-side renewable energy such as wind, solar, hydro, and geothermal; and demand-side such as industry, buildings, and commercial energy efficiency projects.

Moreover, they have to demonstrate how much they will reduce greenhouse gas emissions.

This is what is known as the Energy Trilemma, a nonlinear equation with three variables.

A nonlinear energy equation with three variables is very hard to solve, since different countries are at different stages of development and have different energy resource endowments.

Solutions can only be found through technology innovations that can be categorised as the “3 Ds” of distributed, decarbonised and digitalised energy systems.

Distributed systems offer tailor-made energy supply solutions at the consumer level without relying on centralised national grids.

Around 70% of the 1 billion people still without access to electricity can be served with off-grid local micro- or mini-grids.

This is much cheaper to install than connecting the people residing in remote rural areas and islands to the national grid.

Decarbonised systems are distributed systems based on renewable energy.

They do not generate emissions and include energy battery storage, which means there is a 24/7 power supply despite the intermittency of solar and wind.

Digitalised systems regulate and optimise the power supply with minimum human intervention and maintenance.

Deploying blockchain technology, for instance, in micro- and mini-grids would turn rural consumers into “prosumers,” sharing their surplus production among the local community.

Artificial intelligence (AI) can likewise help program and schedule energy use for maximum conservation and efficiency.

Technology innovations have great potential for developing countries to address the Energy Trilemma, but deployment and scaling up will not happen automatically.

Beyond technology, these countries also need innovative business models, financing instruments, and procurement methods.

First, business models should incentivise developers, financiers, operators, local communities, and consumers, to maximise project benefits while sharing the risks in a fair manner.

In this regard, governments should provide policy and regulatory transparency and certainty for businesses.

Second, new financing instruments must be introduced to complement banks, mostly accustomed to financing large-scale energy supply projects with adequate FIRR, or providing concessional resources to socially oriented, government-subsidised rural electrification projects.

Financing micro- and mini-grids in remote areas, however, is much more complex, as they involve innovative technologies and new business models yet are often relatively small in size and deal with multiple stakeholders.

Third, procurement methods that usually favour the lowest-priced bids should be enhanced to give more weight to quality and innovation in project design and specifications.

High technology funds could be established to cover the viability gap when piloting innovative technologies for possible scaling up in future.

With the shift in focus of the global development agenda changing from economic growth to inclusive and sustainable growth over the last three decades, energy technologies have also evolved with increasing sophistication.

Engineers have replaced supply-oriented, large-scale, fossil-based power systems with demand-focused systems characterised by the “3 Ds.”

To further scale up the deployment of such technology innovations, policy makers, regulators, investors, financiers, and other stakeholders must also innovate in business models, financing instruments, and procurement methods.

This will bring a real chance for developing countries to overcome the challenges of the Energy Trilemma and leapfrog to secure, affordable, and clean energy systems.

PARTNER

Qlik’s vision is a data-literate world, where everyone can use data and analytics to improve decision-making and solve their most challenging problems. A private company, Qlik offers real-time data integration and analytics solutions, powered by Qlik Cloud, to close the gaps between data, insights and action. By transforming data into Active Intelligence, businesses can drive better decisions, improve revenue and profitability, and optimize customer relationships. Qlik serves more than 38,000 active customers in over 100 countries.

PARTNER

CTC Global Singapore, a premier end-to-end IT solutions provider, is a fully owned subsidiary of ITOCHU Techno-Solutions Corporation (CTC) and ITOCHU Corporation.

Since 1972, CTC has established itself as one of the country’s top IT solutions providers. With 50 years of experience, headed by an experienced management team and staffed by over 200 qualified IT professionals, we support organizations with integrated IT solutions expertise in Autonomous IT, Cyber Security, Digital Transformation, Enterprise Cloud Infrastructure, Workplace Modernization and Professional Services.

Well-known for our strengths in system integration and consultation, CTC Global proves to be the preferred IT outsourcing destination for organizations all over Singapore today.

PARTNER

Planview has one mission: to build the future of connected work. Our solutions enable organizations to connect the business from ideas to impact, empowering companies to accelerate the achievement of what matters most. Planview’s full spectrum of Portfolio Management and Work Management solutions creates an organizational focus on the strategic outcomes that matter and empowers teams to deliver their best work, no matter how they work. The comprehensive Planview platform and enterprise success model enables customers to deliver innovative, competitive products, services, and customer experiences. Headquartered in Austin, Texas, with locations around the world, Planview has more than 1,300 employees supporting 4,500 customers and 2.6 million users worldwide. For more information, visit www.planview.com.

SUPPORTING ORGANISATION

SIRIM is a premier industrial research and technology organisation in Malaysia, wholly-owned by the Minister​ of Finance Incorporated. With over forty years of experience and expertise, SIRIM is mandated as the machinery for research and technology development, and the national champion of quality. SIRIM has always played a major role in the development of the country’s private sector. By tapping into our expertise and knowledge base, we focus on developing new technologies and improvements in the manufacturing, technology and services sectors. We nurture Small Medium Enterprises (SME) growth with solutions for technology penetration and upgrading, making it an ideal technology partner for SMEs.

PARTNER

HashiCorp provides infrastructure automation software for multi-cloud environments, enabling enterprises to unlock a common cloud operating model to provision, secure, connect, and run any application on any infrastructure. HashiCorp tools allow organizations to deliver applications faster by helping enterprises transition from manual processes and ITIL practices to self-service automation and DevOps practices. 

PARTNER

IBM is a leading global hybrid cloud and AI, and business services provider. We help clients in more than 175 countries capitalize on insights from their data, streamline business processes, reduce costs and gain the competitive edge in their industries. Nearly 3,000 government and corporate entities in critical infrastructure areas such as financial services, telecommunications and healthcare rely on IBM’s hybrid cloud platform and Red Hat OpenShift to affect their digital transformations quickly, efficiently and securely. IBM’s breakthrough innovations in AI, quantum computing, industry-specific cloud solutions and business services deliver open and flexible options to our clients. All of this is backed by IBM’s legendary commitment to trust, transparency, responsibility, inclusivity and service.

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