Read the full episode transcript
00:00:00 Intro
Welcome to the Power Bytes Podcast, brought to you by Caterpillar Electric Power with your host, Ryan Karlin. Each month we deliver the latest insights, trends, and cutting-edge tools to keep you ahead in the dynamic energy industry. Whether you're streamlining operations, embracing new technologies, or want to stay informed, Power Bytes is your go-to source. Join us as we explore innovations shaping the future and the resources you need to succeed. Welcome to Power Bytes, where energy meets innovation.
00:00:26 Ryan Karlin
Welcome back, listeners, to another episode of the Power Bytes Podcast. I'm your host, Ryan Karlin, and I’m thrilled to be with you all again today. In today's episode, we want to discuss microgrids, but specifically microgrids in rural and underdeveloped communities. We want to discuss why they're important for these communities, which challenges they may face in installing and planning out microgrid applications, what technologies are being deployed, and much more. It's going to be a great topic. We're going to dive into it. But to help us talk about microgrids, we wanted to bring in Caterpillar’s specialist in this area, Neil Smith. So, with that, Neil, thanks for joining.
00:01:01 Neil Smith
It's a pleasure, Ryan.
00:01:02 Ryan Karlin
Neil, to start it off before we get into microgrids, can you just give a little bit of background on your experience and kind of how you got to the role where you're at today?
00:01:10 Neil Smith
I've got over 30 years’ experience now in electric power generation, over 20 years of that with Caterpillar, but I also worked with Caterpillar dealers in various places prior to that. I lived in Nigeria and in Ghana for a while. A lot of my Caterpillar experience has been within Africa and the Middle East. So my role as strategy manager now with Retail Electric Power, part of that is looking to develop new [regions] and new products to suit new opportunities in the power generation [industry]. As part of that, I've been working with the Caterpillar Foundation for a couple of years now on a special project, looking at where we can apply some of our new products to their projects that are involved in human development through applying our Electric Power products to microgrids in rural locations.
00:02:00 Ryan Karlin
Maybe just to level where we're at in this conversation, what size range of projects are we talking about today? You know, large scale, small scale? Can you kind of just give the audience a little bit of a range?
00:02:11 Neil Smith
So really what we're looking at here is – and although people talk mini-grid, people talk microgrid, people talk rural electrification, a lot of those terms kind of overlap – but what we're really looking at here is small community power. So anything between 50 and 200 kilowatts is really what we're looking at at the moment, which would usually be powerful enough to power a small rural community in some of these remote locations that we're looking at helping out.
00:02:39 Ryan Karlin
So the first question I have to ask, Neil, is why are microgrids being turned to as a solution in some of these communities?
00:02:45 Neil Smith
Well, I think historically when you look at the way electricity utilities were developed, the most economic way of producing power was usually on a very large scale and then distributing through a national grid. The problem for very remote communities or communities in developing countries where they maybe haven't had the investment to be able to develop those national grids is if you're right at the end of the cable or right at the end of the list of people to be connected to that cable, communities tend to get left behind. So, really, the growth of that distributed generation rural electrification is to supply power to those communities that haven’t had a connection to a national grid system or where the grid isn't developed enough to supply all of those communities. Or maybe if they do have a grid connection, it's not very reliable. And in some countries, even where these communities are on grid, you might see power only a few hours a day, and obviously if you're relying on that power for healthcare, for businesses, for commerce, you can't survive on four hours a day of power. Power is a necessity of modern life. All of these communities really need and deserve that connection. And if a national grid at that scale can't do it, then a small mini grid, microgrid, can, so that's really what we're looking to develop.
00:04:09 Ryan Karlin
So microgrids, here. What technologies are we kind of using to achieve the power – 50 kilowatts to 200 – that we're talking about? Can you give us a sense of what type of technologies are coming to the table to create this microgrid?
00:04:24 Neil Smith
The interesting thing really is that we're seeing an overlap of a big increase in global power demand with some new technologies and some not-so-new technologies also that are actually far more cost-effective now than they were even a few years ago. When I first moved to West Africa in the 1990s, everybody was running diesel generator sets or they had no power. But the issue is, if you're in a very remote location, actually just getting a hold of diesel can be a challenge. Getting it transported can be a challenge, and continually affording fuel can be a challenge. But as solar panels have gotten much, much cheaper over the last ten years, and as lithium ion batteries have gotten a lot cheaper over the same period, we can now look at a hybrid solution where you have the reliability of the diesel generator set as a backup, but your prime power generation is from low cost solar panels. It reduces the amount of fuel you need, but it also is a good balance of capital costs, because we could have built a solar diesel hybrid power station on this kind of scale 20 years ago, but no community could have afforded it.
So modern manufacturing and modern supply chains have really made that kind of technology far more affordable. The majority of the projects that we're looking at will be a combination of solar power, energy storage to store that power for use overnight when the sun is not shining, and a diesel back up for if the sun's not shining and you have used all your battery power. It gives you that combination of low fuel costs and reliability.
00:05:58 Ryan Karlin
And when we talk about projects and looking to develop projects, who are the entities who are looking to develop these projects? Are they private developers? Regulated utilities in the country, nonprofits and NGOs [non-government organizations]? Can you kind of give us a sense of who's looking to develop these projects?
00:06:16 Neil Smith
There's a combination, really. I'm working with the Caterpillar Foundation, who is putting funding into developing some of these projects, but we don't want to fall into the trap that aid projects have fallen into in the past where you install something and walk away and it can't be maintained and it's not self-sustaining. So a lot of the work we're doing with the Cat Foundation is to develop local skills to try and access capital locally to work on business models where communities can be self-sustaining. There's a combination really of private enterprise aid agencies in some places that do some supporting work. If your expertise is running 200 MW gas fired power stations, then a 20-kilowatt rural electrification plant may not be in your scope of expertise. So there's a lot of new skills being brought in as well. There're a lot of new organizations getting involved, but we see – certainly the projects that we've done in India and the projects we're looking at in East Africa at the moment – there are a lot of local developers that want to work with us. And that's really part of what we're trying to do to help grow those local skills bases and grow the local economy. The microgrid is part of that economy.
00:07:28 Ryan Karlin
And, Neil, there's a lot of great stories, when I think about what I've seen from these microgrid projects and developing communities, around the first ribbon cutting. We're able to install power and microgrid. But I think a lot of the failure comes around with, “What is the operation and maintenance plan?” We touched on that a little bit earlier, but these are rural communities, and in faraway areas where maybe local servicing is not close and it's not easy to get there, when you need power, it may take days to get out there. So can you give a little bit of sense of how these communities are planning for operation and maintenance?
00:08:06 Neil Smith
Yeah. So if you take the projects that we did in Nagaland, these are remote locations. It's rainforest, it's mountainous. The road system is very difficult to bypass. While we were delivering the XS 120 Battery Energy Storage Systems to these three sites in Nagaland, we had roads washed out. We had our back-up road that we were going to take when we thought the first road was going to wash out also wash out for the last few miles. The products had to be disassembled and carried by hand up some very steep inclines because there was just no way to get a vehicle up there, given the location. It's a very tough place to operate, but coming back to the reliability question, we need to make sure that these sites are self-reliant. You don't want a situation where, in the middle of the monsoon, you can't get to site if there's a problem. They don't want to have to wait until the rain stops to get a service technician. So what we try and do is to help these communities be self-reliant. We've done a lot of training of local engineers. Knowledge transfer and skills growth is part of what Cat Foundation likes to do as well.
00:09:21 Ryan Karlin
A couple of times now you've mentioned Nagaland and going into this podcast, I wasn't familiar with the Nagaland project. So, Neil, could you maybe expand upon what the Nagaland project is and what its purpose and kind of mission is?
00:09:34 Neil Smith
Nagaland is a very remote corner of Northeast India. It's almost the foothills of the Himalayas, if that kind of gives you a picture of the communities there. They are very remote; they’re agricultural communities. If you're like me and you like spicy food, you might have heard of Naga chilies. One of the hottest chilies in the world. Naga chilies come from Nagaland. That's where the name comes from. So the community there, one of the things they farm are these famous, fiercely hot chilies. But at the moment, if they're to be processed into chili powder or whatever, they're dried in the sun, which takes a long time. Bad weather can ruin a crop. Things can go wrong. When power’s connected to those villages, they can use electrical drying. It allows them to process their crops faster, get them to market faster. Obviously, that's part of that productive use of energy. But some of the other things that we've looked at are using machinery to process the crops, whether it's chilies or other crops there. One of the problems that remote, rural, particularly agricultural communities have is, they put a lot of back-breaking work into growing the crops, but then to get that to market, the crop is sold to a middle man who then sells it to a factory, who then maybe sells it to another middle man who then sells it to market. A lot of the people in that chain are making profit out of that hard work that the farmers are putting in. So through putting power into a community like those in Nagaland, we can help them to do some of that processing locally and capture more of the profit of their work into that community. So this is really what's going on in communities like those in Nagaland.
And then as you start to get economic growth, you start to look at other things, like people can open restaurants because there's disposable income in the village, shops, commercial operations like that. We've had success with some projects with providing things like welding sets, sewing machines, where small businesses, once they have access to power, can use machinery. They can set up their small business and provide services that maybe the local people had to drive hours away to get those services in the past. So having that power makes that community more self-sufficient, helps them capture more of the profit from their labor, and that excess profit is what pays for the power plants at the end of the day. For the people there in Nagaland that are part of these communities that have microgrids now, they will see economic growth. They'll still be farmers. They're very proud of what they do in the land. But it'll help them make a bigger share of their efforts stay with their families in the communities.
00:12:29 Ryan Karlin
When we think about scalability of some of these projects, a project in Nagaland versus a project in West Africa, they may be 50 kilowatts or 200 kilowatts. How similar are they in the technology they deploy in the final solution, or how specific are they to maybe the communities’ needs, environmental conditions – what kind of goes into that thought process there?
00:12:55 Neil Smith
Well, the basic components are pretty much the same; it's like building blocks. You have your diesel generator. That can be a variety of different sizes. You have your battery pack. You can add more battery if you need it. So we size for the location, we size for the application. If you've got enough space, you can add more solar as the economy grows, but in terms of the actual building blocks of that microgrid system, there's not a lot of difference between a rural electrification community application and a small commercial or industrial application. Those building blocks are still the same.
Some of the work we're doing in East Africa is communities that have a fishing industry. As that fishing industry grows, more of those loads will become industrial rather than residential loads. But it's still the same - keeping the lights on. It's a very flexible approach we're going for because that economic growth obviously comes with some form of commercialization or industrialization.
00:13:59 Ryan Karlin
That's a great point there that we've talked a lot about – communities and bringing them up and improving their way of life, but also this concept of a microgrid, mini grid, whatever we want to call this size here, can be used for companies, for industrial companies, for manufacturing and processing to have their own reliable power, right? That's kind of the other iteration or other flavor of this, is using the same concept of a microgrid for a community, but also applying it to more commercial type applications, right?
00:14:34 Neil Smith
Yeah. And certainly people in the microgrid industry, particularly in rural electrification and community development, talk about an ABC model. So when you're building a microgrid, the A of the ABC’s is your anchor client – the main loads that you're talking about, which will often be industrial. B is the businesses – the small commercial uses. And C is the community. A lot of early microgrids that were funded from the aid sector really were focused on that community development. But if you want long term economic growth and economic sustainability of these models, you need the A&B as well as the C. You need those industrial users to be putting on the power loads and generating revenue from them as paying customers to that microgrid, because then those industrial and commercial users can subsidize that community development, and it all works together. But yeah, it's the same. It's the same equipment that would supply an industrial user as would supply those residential users.
00:15:37 Ryan Karlin
Before we wrap up, if someone's listening to this podcast who has an interest in partnering or developing their own microgrid community for their local community or business, what's the best way to get involved and to reach out?
00:15:55 Neil Smith
It's always to talk to your local Cat dealer. Obviously, for a micro grid in a remote location in India or in East Africa, the local dealers there know the situation. But if we've got commercial users in North America or Northern Europe who’re looking at a microgrid for their factory, that's maybe a different solution and different kind of systems. But their local Cat dealer will know what those are, so we always have a local connection. Anybody that's looking at going off-grid or looking at self-generating or looking at having more control over their energy use and production on their site, no matter where it is in the world, call their local Cat dealer. We're all working it together.
00:16:36 Ryan Karlin
I just want to say thank you for your time. I've learned a lot myself – I'm sure our listeners have – about how some of these microgrid power solutions are driving impactful change. I think a key piece for me is the reliability we talked about of making sure that the systems we're installing are going to be there for the long term and are going to promote incremental growth for communities. So again, Neil, I just want to say thank you for all you do for Cat, for what you do for Caterpillar Foundation and for coming on this podcast. It's been a pleasure.
00:17:08 Neil Smith
Anytime, and hopefully I'll come back again and talk to everybody again soon with stories of some more projects, because we're rolling out these microgrids in quite a few of the countries now, and I think we'll have a lot of good news to share over the coming months and years.
00:17:23 Ryan Karlin
That would be great. I'm going to hold that pressure to you. I better be hearing from you so we can get you back on and talk about that stuff. But, listeners, appreciate you all again for tuning into the Power Bytes Podcast. Make sure to stay tuned for new episodes and, till next time, talk to you later.
00:17:26 Neil Smith
It's a pleasure.
00:17:40 Outro
Thanks for tuning into the Power Bytes Podcast. If you enjoyed the show, head on over to cat.com and check out Electric Power for more exciting content. Let's power tomorrow together.
