>> sean esterly: i'm sean esterly with thenational renewable energy laboratory and welcome to today's webinar, which is being hostedby the clean energy solutions center in partnership with the united nations foundations energyaccess practitioners network. today's webinar is focused on the future ofenergy innovation, applications for off-grid energy in developing countries. one importantnote of mention before we begin the webinar is that the clean energy solutions centerdoes not endorse or recommend specific products or services. information provided in thiswebinar is featured in the solutions center's resource library as one of many best practices,resources reviewed and selected by technical experts.
and before we begin, i'll quickly go oversome of the webinar features. you have two options for audio, you might either listenthrough your computer or over the telephone. if you do choose to listen through your computer,please select the mic and speakers option in the audio pane to help eliminate any feedbackand echo. and if you choose to dial in by phone, please just select the telephone optionand a box on the right side will display the telephone number and audio pin that you shoulduse to dial in. if anyone's having technical difficulties with the webinar, you may contactthe gotowebinar's help desk at the number displayed at the bottom of the slide. thatnumber is 888-259-3826. and if at any point during he webinar youhave questions for our panelists, we do encourage
you to submit those questions through thequestion pane in the gotowebinar window. we will address those questions following thepresentation. and if you're having difficulty viewing the materials through the webinarportal, we will be posting pdf copies of the presentations through the clean energy solutionscenter website and you may follow along as speakers present. also a video recording ofthe presentations in the webinar will be posted to the solutions center training page withinabout a week of today's broadcast and will also be added to the solutions center youtubechannel where you will find other informative webinars, as well as video interviews withthought leaders on clean energy policy topics. and we have a great agenda prepared for youtoday which is centered around the presentations
from our guest panelists, richenda van leeuwen,nancy pfund, mateo jaramillo and susan kennedy. these panelists have been kind enough to joinus to showcase several leading innovations in the renewable energy industry and potentialapplications for off-grid energy in developing country settings. before our speakers begin, i just want toprovide a short informative overview of the clean energy solutions center initiative,and then following the presentations, we will have the question and answer session wherepanelists will address questions submitted by the audience, followed by some closingremarks and a very brief survey. this slide provides a bit of background interms of how the solutions center came to
be formed, and the solutions center is 1 of13 initiatives of the clean energy ministerial that was launched in april of 2011, and it'sprimarily led by australia, the us and other cem partners. some outcomes of this uniqueinitiative include support of developing countries and emerging economies through enhancementof resources on policies relating to energy access, no-cost expert policy assistance andpeer-to-peer learning and training tools such as the webinar that you're now attending. there's four primary goals to the solutionscenter. our first goal is to serve as a clearinghouse of clean energy policy resources, the secondis to share policy best practices, data and analysis tools specific to clean energy policiesand programs. third is to deliver dynamic
services that enable expert assistance, learningand peer-to-peer sharing of experiences, and then finally the fourth goal is to fosterdialogue on emerging policy issues in innovation from around the globe. and the primary audienceare typically energy policymakers and analysts from governments and technical organizationsin all countries, and then we also strive to engage with the private sector, ngos andcivil society. this slide gives a brief overview of one ofthe marquee features that the solutions center provides, which is the no-cost ask an expertpolicy assistance. and the ask an expert program has established a broad team of over 30 expertsfrom around the globe who are each available to provide remote policy advice and analysisto all countries at no cost to you.
so for example, in the area of rural electrification,we're very pleased to have ibrahim rehman, director of the social transformation divisionat the energy and resources institute, serving as one of our experts. so if you have a needfor policy assistance in rural electrification or any other clean energy sector, we do encourageyou to use this valuable service. and again, it is provided to you free of charge. so if you have a question for our experts,please submit it through our simple online form at cleanenergysolutions.org/expert, orto find out how the ask an expert service can benefit your work, please feel free tocontact me directly at sean.esterly@nrel.gov. and we also invite you to spread the wordabout this service to those in your networks
and organizations. and so now i'd like to provide introductionsfor today's panelists. our first speaker today is richenda van leeuwen, executive directorfor energy access with the un foundation. she founded and leads the work of the energyaccess practitioner network and also works on the secretary general's sustainable energyfor all initiative. and our second speaker today is nancy pfund,founder and managing partner of dbl partners. she will present key aspects of financinginnovation, providing a venture capital perspective on renewable energy solutions, and how commercialviability, specifically concerning the off-grid sector, can be determined from a financier'svantage point.
after nancy, our next speaker will be mateojaramillo. mateo head tesla's stationary storage business and will talk about tesla's new homebattery, powerwall, its potential application in developing country contexts and other innovationstesla is working on that could have relevance for off-grid. and then our final speaker today will be susankennedy. susan is the ceo of advanced microgrid solutions, who has been at the center of manyof california's groundbreaking environmental policies, including the carbon reduction mandateand cap-and-trade program, will present ams' suite of energy storage solutions, includingtheir hybrid electric building fleets. and so with those brief introductions, i'dnow like to welcome richenda to the webinar.
>> r. van leeuwen: thank you very much, sean,and thank you very much to everybody. i'm just dealing with a technical issue rightnow, i can't see my own screen, so please hold on one moment. >> sean esterly: richenda, we'll go aheadand show your slides for you, if that's all right. >> r. van leeuwen: yes, because i can't seethem, so if you could show my slides, thank you very much, now i can see them, so next slide, please. so to all who work in technology issues, evenwith great it, great technology, there are always glitches, it's always something toremember. so the issue and the challenge that
we are still seeing with energy access isone of last-mile distribution particularly, which is that we have struggled as a sectorto be able to bring the benefit of energy electricity to the world as a whole. so today, about 1.1 billion people aroundthe world still do not have the benefits of electricity. at the un foundation, the reasonthat it is of particular importance to us, not only in and of itself, but is with therecognition of the development benefits that come from having access to electricity, bothin terms of affordability of electricity and reliability, but really in terms of drivingdevelopmental improvements in terms of education, kids being able to study in the evening, betterhealth outcomes, being able to actually offer
more health services, whether through theclinics and being able to perform surgery after dark, or even just a woman being ableto give birth by light, not having to bring a candle to a clinic, and so on. we see also many benefits of people beingable to operate home-based businesses into the evening and improvements in income. sowe are seeing – having been in the sector now for well over a decade, first as the – asan investor and now working much more on policy and advocacy, we have seen a sea change inaddressing energy access, particularly with the scaling of and emergence of a whole newclass of companies that are able to now work in the off-grid sector, particularly throughminigrids and decentralized energy solutions.
and over the last ten years, we've seen alot of innovation already driving change in this sector, in terms of technical innovation,with the advent and the uptake of things like leds at scale and the improvements that we'veseen over time, with cost innovation, if you will, with the financing coming down for solarpv particularly, but also other aspects, as well. energy storage, where we know that thereis a lot of innovation happening, but it's not always been that fast to really be ableto enter into a developing country setting, so we're really keen to hear susan's presentationlooking at energy storage and how – and tesla, as well, for that matter, how we seethat going to be able to drive change and opportunity in the coming years.
the financial innovation we've seen in termsof really being able to bring energy solutions and services to communities who really hadn'tbeen prioritized previously because they didn't necessarily have the income level where itwas believed to be necessary in order to be able to pay for your energy service, and ithink nancy will probably touch on that in her presentation, as well. and then also process innovation, we've seena lot of process innovation in terms of really being able to prioritize the way that processesare streamlined so that, in fact, it works on the customer side and it works on the deliveryside more in terms of the customer financing that you make that work, the delivery financingthat you can bring the products to the markets,
and then also just really looking at boutiqueapplications, as well, where you're able to align the technology, the financing, the process,to be able to scale a particular solution, whether on the agricultural side, let's say,with solar-powered irrigation or in terms of being able to support the development ofa microgrid using clean energy technology that hadn't been able to be done at scalepreviously, as well. and, of course, the policy innovation, as well, that really makes thathappen in terms of ensuring that the regulatory environment is supportive for those solutions. so particularly today we've been focusingon off-grid and really seeing that something like 60 percent of new electricity solutions,according to the iea's best estimate, will
be likely provided by some type of off-gridsolution, particularly minigrids and also distributed generation like solar home systemsas well as larger grid-tied systems, as well. next slide please. so many of you, if you'recoming from this sector, will recognize this slide really just showcasing that the innovationgoes all the way from the very basic entry level lighting solutions that help to allowa family to switch away from the use of kerosene or candles or dry cell batteries and haveaccess to some sort of renewable energy solution. again, the software is also key in enablingthe optimization of the light and the solar panel and the battery combination there. and then we see it all the way on through,through standalone solar home systems, nano
and microgrid solutions, all the way throughto grid-connected solutions, as well. innovation is happening across the whole space. as imentioned, we've really seen a sea change, particularly in the last five to ten yearson the first and the second tiers, we've always had solar home systems, but really were notaffordable in the past to very low income families, and now through some financial innovationssuch as pay-as-you-go and mobile money payments that have made people have a lower barrierto entry in terms of paying over time or on a weekly or monthly basis, that we are seeingthat these solutions are now more available to very low income families, although notavailable to everybody, which is why still these initial small-scale lighting solutionsare such an important part of the solution
set, as well. next slide please. next slide please. so atthe un foundation, we operate the energy access practitioner network, where we have more than2,000 members, primarily businesses and social enterprises, many of which are small and mediumsize enterprises, but also some large corporations, as well, that are really focused on helpingto promote and support the uptake of new technologies, new solutions, innovative financial and businessmodels, also on the – at the same side advocating to ensure that we have the right regulatoryframework in the countries where these solutions are needed to help drive more rapid solutionuptake for energy access over time, again, across a range of different solution sets.but clearly looking to help people at least
get their foot on the energy access ladderand then move up over time as the solutions allow and also according to their own affordabilityand their capacity to pay for them. so we are really focused on driving primarilymarket-led, decentralized energy applications. we focused primarily on what's already outthere in terms of utilization of existing technologies, looking at quality standards,looking at really trying to drive a more uniform approach to quality. but we're also very,very interested to see what is coming down the pike, particularly in the venture space,also from hubs like silicon valley and elsewhere, where there are new technologies coming inwith tesla, the powerwall. what are the implications of some of these technologies in a developingcountry setting? do they have immediate or
potential future applications for the off-gridsector? and how can we best and most rapidly help to match them and utilize them wherethey do that applicability and help to drive the uptake more quickly across markets whereperhaps it would be much slower to – and more risky for them to be tested if it werejust left to sort of the usual market channels without additional supports. we're also very much focused on trying todisseminate this information, because as an entrepreneur working in let's say rural cameroon,it's very difficult to be able to track what's happening in these other markets on a realtimebasis, particularly where you may have even limited access to the internet yourself orare getting the internet over your mobile
phone. so we're also really trying to bridge thisgap with webinars like this one to help showcase what's happening and then look at and askthe questions around how can we see whether this is applicable, is it applicable today,are there opportunities for us to pilot or showcase the uptake, or is it something thatwe just need to be aware of and track for potential future applications. next slideplease. so just to say something about the scale ofwhat we're seeing with the companies that we're working with. last year alone they reportedproviding over 30 million people with clean energy products and services in the last year.they work – based in and work across 170
countries. so first of all working on thosecountries like india which have still several hundred million people without the benefitsof electricity, and then also in some smaller settings where the majority of the populationmay have access to electricity, but there are still communities and applications wherethey've not yet been able to bring electricity to everyone. countries like argentina, wherein the north there are still some communities that don’t have access to electricity. so it's a very wide suite of solutions thatsome much more tailored to smaller community applications, some really trying to seek toget scale across a wide range of households and community applications, as well, schools,health clinics, also agricultural processing
and small business and the like, as well.next slide please. so one of the things that we do see on theinnovation side is it's an extremely rapidly evolving marketplace. many of our membershave only be in operation for under five years. they are driving, they're bringing innovationto the marketplace but many of them are still small and so don’t really have that internalr&d capability to really necessarily look at what's happening in the market and to beable to test that and try that out as quickly and as at scale as they would like to inherently. so it really is dependent on others stillto be able to do that r&d and then help to look at how we can be bringing that back intothe existing marketplace. the need is there
for technical solutions, but again, the primaryneed that still remains is really to look at the financing architecture, so the innovationis still needed in terms of access to finance for companies. some of them are doing verywell, and nancy i'm sure will talk about some of the recent transactions, including oneof the companies she's involved with for off-grid electric. but we would say the majority of the sectorstill do struggle somewhat to be able to fulfill their own financing needs and also reallyto be able to look at aligning the financing for the customer solutions together with theircompany financing needs, as well. so there is a need for additional financing. there'san additional need for derisking and bringing
in those financial minds who can help to lookat this more systemically across the sector, beyond an individual transaction level, aswell. last slide please. so i'll stop there, wehave some amazingly innovative companies already that we're working with very closely. someof them are referenced on this final slide. what we see as the innovation really is beingable to drive that affordability, that sustainability of the solution, tailored to the needs andthe wants of the communities and the households, and i'm delighted now to be able to pass overto nancy from dbl and then tesla and mateo and susan to really talk about both financialinnovations, but also how they see the technologies that they're working very closely with potentiallyor even today having this applicability, particularly
in the off-grid sector for developing countries,but also as well more broadly. from un foundation, we are technology neutral,we're approach neutral. grid is great where you can get it, where you can do it very cleanly,affordably, and also where it really is able to be accessible to all. so thank you allvery much. >> sean esterly: thank you richenda. we'llturn things over now to nancy. >> nancy pfund: thank you, richenda, greatintro. and just mentioning the clean energy ministerial, we – the folks in the bay areaon this call maybe don’t know, but the meeting – the annual meeting is going to be in thebay area on june 1st and 2nd of the clean energy ministerial, so we're super excitedabout that.
i want to talk about the off-grid opportunityfor microgrids and solar and storage. i want to spend just a few seconds just telling youwhat dbl is and then we'll launch into the topic. dbl stands for double bottom line,we are a double bottom line venture capital firm headquartered here in san francisco. what it means is that we invest for both top-tierfinancial return as well as social return, we believe those two goals enhance each otherrather than anything else. and we spun out of jp morgan in 2008 after getting startedthere in 2004, and for the past 11 years, we've had some great portfolio companies andsuccesses and so we've helped to melt away some of the biases about mission-related investingand in fact, the field is getting so much
more popular with every year that we've beenin it. so we're very excited and investing in africa is important and generally, moregenerally, off-grid countries, developing countries, is a very important new facet ofimpact investing's growing reach. so in terms of a backdrop, while there's ahuge opportunity, mateo jaramillo: we've heard, today only four percent of the world's totalclimate finance ends up in africa, so we've got a long ways to go. as richenda mentioned,there's over a billion folks without access to electricity and 640 million of them arein africa, and yet the potential on the continent is huge. the african development bank has said 11,000gigawatts of solar, 350 gigawatts of hydropower,
110 gigawatts of wind, there's – it's reallya continent rich in resources for making this transition. and this slide shows you whatthat transition is going to be like and in venture capital, we're always looking at patternrecognition to help us kind of guide our way to investing in the future, and there's avery bright pattern here. and that is what happened in developing countrieswith the cell phone, where basically we skipped there the – in many ways the generationof the landline and went straight to distributed cell phones. in 2002, for example, only 3percent of people in africa had mobile phones, and by 2010, that was up to 48 percent andlast year it was 70 percent and climbing. in nigeria, they only had 100,000 landlinesin 1994 for 100 million people, now nigeria
is the leading african country for mobilephone usage, with over 100 million active mobile users. along with the growing use ofmobile phones, mobile payments have become extremely popular. this is a key attributethat makes distributed power very easy to pay for in developing countries, and so mobilepayments are expected to reach 101 million users by the end of this year. so energy presents a very similar leapfroggingopportunity and ability to leverage the thriving mobile payments market. so that's a reallyimportant part of the story. in terms of our – well, richenda went over this fact veryclearly, so i'm not going to spend a lot of time on it, but there is – there are a lotof – there are 15 percent of the population
in our world without access to grid powerand over half of those are in sub-saharan africa. so that's why africa is such a focalpoint for investment, although obviously not exclusively so. there are all kinds of opportunitiesacross the globe. i want to tell you about our investment decisionregarding off-grid electric as an example. there are many great companies out there thatrichenda mentioned some of them. m-kopa, mobisol, bbox, powerhive, so what's important is torealize that there is a cluster of companies developing that are getting financing, andthis is very reminiscent of when in our – in the united states we moved from just momsand pops in the solar industry to very well-funded technology-and-finance-driven national companies.and so this is a little bit of dã©jã vu what
we see here. so when we looked at the opportunities toinvest in off-grid, the thesis really had various elements. obviously we need largemarkets, the kinds of numbers we just talked about are large, the total available marketin tanzania is 40 million, 640 million in africa. because of costs coming down, as richendadescribed, as we'll hear more about, decentralized solar is often cheaper than the centralizedgrid, especially when partnered with storage. and you can get to cost parity with keroseneand phone charging options now, which wasn’t the case even a few years go. as i mentioned, mobile money, cheap smartphones,decreasing costs really make a base of the
pyramid consumer business model possible,and when we looked at off-grid and saw the amount of money that it generated from a leasevery similar to leases here in this country, about the net present value of that beingright now at about $290 per lease, if you just figure out your millions of leases, thiswould allow oge, off-grid electric, and others to be valued at very significant levels, lookingat that billion-dollar valuation, at some point. and in the case of, as richenda described,in the case of rooftop small systems with storage, there's already some great traction.oge, for example, has 45,000 installations to date. now, as impact investors, and it'simportant to mention this because impact investors
are playing a big role in developing countries,we really love the economic upside of this. because it's not just that we are solvingan energy problem, we're helping to create a middle class in a region where only sixpercent the population is middle class. and the employment opportunity already off-gridhas 800 employees, projected to grow to over 10,000 over the next few years. there's anacademy that off-grid has created and others are doing similar work where they're gettingreally good graduates from universities and it's becoming one of the most – these typesof places are becoming the most exciting places to work in africa. creating the ability forsolarpreneurs to proliferate, starting with solar charging kiosks for cell phones andmigrating all kinds of solar-powered businesses.
so in sum, when we looked at the impact opportunity,company like oge both creates jobs that build access to the middle class as it creates itsown multiplier effect by catalyzing entrepreneurs' business growth. so those were some of theappealing aspects of the deal for us. now, looking at just getting into some ofthe specifics, we – solar city had been an investor in off-grid, along with the omidyarnetwork and vulcan capital and serious change. so folks that we know and had experience with,so this always gives you comfort in terms of being able to take something small andmake it big. that was helpful to us, the focus on sub-saharanafrica was very important to us as we – as i described, given its attributes, and thepay-as-you-go service model at parity with
kerosene and cell charging is a huge aspectof kind of robustness as a model. in terms of where the company is now as itrelates to richenda's chart a few minutes ago, they have an entry kit, which is a 12-wattsolar module, a 30-watt-hour lithium battery, 3 bright led lights, a phone charger and arechargeable portable led light. then there's a next level up, which adds a portable radioand an optional efficient television. now, the company will evolve to include microgridsin areas that are amenable to that, and we'll hear more about that from mateo and susan.but this is a great place to start and it's very current in terms of addressing the needsof the population. another – in impact investing, you alwaysneed to look at policy, and we spend a lot
of time on that. another encouraging aspectis that the tanzanian national government has sort of took a playbook from californiaand has its own one million solar homes initiative, which is a big percentage of that country'spopulation, ten percent. and so they have a goal to provide 1 millionhomes with reliable solar electricity by 2017. this will generate 15,000 jobs and transfer86 percent of tanzanians from kerosene and candles. so that's – that kind of a policyboost is super important to everyone. on the financing side, what this combination of opportunityhas allowed for, i think we'll see more and more of this, not only with off-grid electricbut with the other players, is now we're getting equivalents of the solar lease funds thatwe all know about here in our country, because
they've been around for several years now,that allow people to avoid the up-front expense of solar and pay more like a monthly lease. and so this – the first model for this off-gridannounced right before the end of the year, raised a $45 million loan fund with impactinvestors. the packard foundation, ceniarth and the calvert foundation, along with someunnamed family offices, have put together basically a solar lease fund for tanzania.very precedent setting, never been done in a developing nation at this scale, and 45million goes a long way in the developing world and just for reference, the first solarcity solar lease fund was only 50 million. so this is just a really heroic achievementand this kind of a model will proliferate
and allow investors to reap low-risk returnsas we build distributed clean energy and the economic opportunities that go with that inthe developing world. so just to close, i want to – this chartjust shows you what a tremendous opportunity exists in africa and we could do similar chartsin india and other parts of the world, but we're starting here. the availability of impactfinance migrating to more traditional finance to get this scaled is a very good sign andextremely pivotal, and the fact that we already have a big customer base, we've proven themodel, it really is an exciting combination of technology and finance innovation. veryreminiscent of solar city and the other rooftop solar players' early days, and it will benefitthe entire region's health, economic potential
and quality of life, as it helps the worldtransition to a more sustainable energy future. and the companies that join off-grid likem-kop and mobisol and bbox and powerhive and the others are really building the 21st centuryenergy and economic development infrastructure for the developing world. and the opportunityfor return and impact is huge, and the time is now. so with that, i'm going to turn thebaton to mateo and of course, happy to answer questions at the end. thank you so much forthe opportunity to tell you about this – about off-grid. >> sean esterly: great, thank you very much,nancy, and we'll go now to mateo for his presentation. >> mateo jaramillo: thanks very much. i'vejust attempted to share my screen.
>> sean esterly: yep, we're seeing that, andyou'll just – perfect. >> mateo jaramillo: fantastic. first of all,thanks very much for inviting tesla to join the conversation. i think tesla is, of course,well known for the cars in the united states perhaps, and in northern california in particularmore than anywhere else in the world. but we are growing our presence worldwide, andwith the launch of tesla energy this past year, in april, we're sort of – have startedto chart a new market force, which extends beyond the areas where even the car is atpresent today. so i'll talk a little bit about that and nancy, thanks for the setup there. it's a very good introduction when we starttalking about grids, because that's really
the focus of tesla energy here. but to justsort of take one step back anyway, the mission of the company for tesla overall is to acceleratethe world's transition to sustainable transport, obviously that means focusing on automotivetechnology and transportation technology overall and moving to electric mobility. that – it is a more efficient means of transportationand so that's why tesla has made a very big dent on all the technology going in there.we're only committed to electric transportation, there's no hybrid aspect to it on the carside for us. however, if all we do is focus on the automotive applications and we ignorethe grid that is charging those applications, then we've left at least half of the opportunityon the table, because ultimately, of course,
electric vehicles need to come back and chargeonto some kind of grid. and they're charging from some form of resource.obviously, we think the trends are moving more and more towards a renewable resourceand to even beyond that, a distributed renewable resource. and so that's where our battery-storedtechnology comes in. cost is by far and away the most important driver on the electricgrid. that's true in the united states as well as it is in any emerging markets wheregrids are being developed. and in sort of an unusual was, tesla's focusing on the high-endmarkets and selling the volumes that we think we can do there on the vehicle side reallyallows us to go into other very cost-sensitive markets, as well.
just a brief history of tesla, of course we'rea very young company relative to the markets in which we're operating. the automotive industryis 100 years old, the electric grid industry is similar. and so by comparison, we're justover 12 years old, sorry if i got my math wrong, little more than that. and in thattime, though, we feel we've come a pretty long way. the first car we introduced in 2008 and thatwas a very small, very high-end roadster, a sports car. model s, which was our – isour sort of flagship sedan we launched in 2012 and then in 2015 we added a vehicle tothat same platform, the model x, which is a crossover vehicle. we also launched thetesla energy effort.
and the tesla energy effort, as i mentioned,it's sort of a new path for us overall. but the automotive products that we've developedover those past 12 or so years have incorporated more than just our own cars. we have developedpower trains for other car companies, as well, and this was sort of a – the confirmationthat tesla has best-in-breed technology overall, but it also reinforces the idea that teslareally is a systems developer for batteries. batteries, of course, all by themselves don’tdo much, they need to be able to interconnect with the grid and feed the right kind of powerto the right kind of devices in the right context in which they're operating, and sothis mentality of delivering complete systems is very much a part of the tesla engineeringapproach overall and very much informs the
direction that we're taking on energy storage. i also highlight the fact that we're veryinteractive with the grid through our superchargers, as well. so these are our high-powered dccharging stations, i've put just two of the maps up here, for europe and for the unitedstates, we have similar maps for parts of asia, as well. and it just highlights thenature, too, of tesla to really interact with the grid and to be very engaged in the developmentof that grid. in the process of deploying both our carsas well as our infrastructure, our charging infrastructure, we've seen just about everykind of grid commission there could be. it's probably not surprising to most of you, butin many of the developed world, in fact, the
grid has reliability issues and has othersort of unique characteristics that one needs to be aware of that sort of sets the stagequite well for going into some of these newer markets. collectively, tesla's delivered nearly 100,000cars into the world right now, we think of that as a collective fleet. and when we sortof take that perspective, that means that basically we've got more than six gigawatthours of deployed energy storage out there, which makes us the largest battery manufacturerin the world. we also have more than 27 gigawatts of bidirectionalthree-phase ac inverters, which is basically the grid connection point for the vast majorityof the world, three-phase ac power, different
voltages of course, and collectively thosecars have driven, at this point it's more than one and a half billion miles. and so that really sort of informs the waythat we approach our interaction with the grid overall, and also the scale at whichwe're attempting to solve these problems. of course, in order to really work at veryhigh volumes, which is what our intention is, not just with our current car but witha forthcoming car in a couple of years, the model three, we have to scare on supply. lithium ion batteries have really taken ahold in the market, we think they're the clear winner for the next ten years or so at least.but right now, there's not enough supply in
the world, to be perfectly frank. and so that'swhy tesla has taken the steps to develop what we call the giga factory. this is our firstgiga factory, we've contemplated additional ones beyond it, and it's under constructionright now in the state of nevada in the united states. and this will supply enough batteries forboth our vehicle side as well as for the tesla energy side. this plant, as currently envisioned,essentially would double the world's supply of lithium ion batteries. so the current worldsupply for all chemistries from all manufacturers in all regions would be equivalent to thisindividual factory operating for tesla. and so this is one of the major drivers forcost, and this is what allows us to really
step into new markets where cost is, of course,the most important issue. so this is, as i said, very much underway and already supplyingbatteries for the tesla energy side. as i mentioned, the – we are sharing technologiesbetween the car and the tesla energy side of things, and the reason we're able to isbecause of the architecture that we take into the battery packs. so we start with a smallcell, those blue cells there, about the size of your thumb, and from that individual cellwe create what we call modules, groupings of hundreds of cells and then those modules,depending on how many we need per battery pack, are going into the different batterypacks. but that allows us to essentially utilizea common form factor at the cell level and
as well a common form factor at the modularlevel, and on top of that, all the engineering work that goes into developing the architecturesand building the robust systems, and then of course the supply chain and the manufacturingside of things, which supports the massive scale at which the company will be operating. and so that's what really allows us to takesome very concrete steps into these new markets without requiring a massive re-engineeringeffort or supply chain effort to really hit the low cost targets that we need for bothmarkets, frankly, the car side as well as the grid-connected side of things. and so this is how we start to see the benefitsfrom working in the automotive scale going
over into the grid-connected side of things.it's a very big lever, there's a lot of energy that goes into transportation and once westart to convert a relatively small portion of that energy to electric energy, then thelevering effects back into the electric grid are very, very big. and so that's why we're able to address allthese different applications. i've listed all the applications here that are able tobe addressed by both the powerwall, which is the tesla home battery, and as well asthe powerpack, which is the tesla commercial utility-scale battery, because one nice thingabout batteries and the particular architecture that we've taken is that these are very scalablesolutions.
and nancy mentioned the 30-watt-hour battery,we're not going down quite that small at this point. we're still in the single digits ofkilowatt hours and we'll probably remain there for some time, but nonetheless, you can addresseverything from a microgrid all the way up to transmission distribution support eitherat the centralized level or at the distributor level. we see very big opportunities in microgridsin emerging markets, we have already started up our efforts in africa, in fact, we havean effort underway currently in south africa and we'll use that as sort of a launchingpad for the rest of the continent. there's a – there, of course, is a verystrong interest in surge technology for the
very simple reason that energy is not alwaysproduced, electricity is not always produced when ideally you would like to use it. sothe concept of storage being introduced especially into a more and more renewable grid is a veryintuitive one, in many ways. and so that's really what tesla is aiming to do. as i mentioned, we're starting at the highend of the market, but we see very, very quickly coming down into that market that really allowsfor a proliferation of energy access across developing markets. and the products thatwe're designing are very much intended to serve those markets, ultimately. right now,some of the form factors are more suited to the developing world, but there is definitelya path to address the global market for energy
storage as we see it emerging very quicklyhere over the next couple of years and into the coming decades. on top of the applications for the microgrids,of course, ultimately there is still, of course, a lot of interconnected assets and there'sa lot of services that still need to be procured in the electricity markets and the energystorage devices that we're developing are fully capable of providing all of those servicesand increasing the value of the grid, essentially. perhaps the best way to think about is theseare the warehouses of the electricity grid that to date have never existed. every industryhas inventory, every industry to operate efficiently has warehouses and that's essentially whatwe're developing and will be deploying here
soon. just a little more detail on the powerwall,of course. we're further refining this for the markets and making sure that we're deliveringsolutions that really solve the problems that are out there, and again, just an exampleof that, some of the scale that we have going from individual units for very small microgridsall the way up through much larger systems, as well, and then very large, centralizedsystems, as well, to support the existing infrastructure at the transition or distributionlevel. and then finally the complete sustainablefuture as we see it. of course, this is a very say let's say developed world home, butwe see this as basically being the exemplar
for pretty much anywhere in the world. soultimately you'll have solar, you'll have a battery to be able to feed your loads, hopefullywe'll all be using electro ability, as well. so this happens to be a picture, of course,of the developed world, but it's quite easy to imagine a developing world version of this,as well. so with that, i'll end and again say thank you and of course happy to answerquestions as they come up here in the dialogue. >> sean esterly: great. thank you very muchmateo. we'll move right along now to susan kennedy for her presentation. >> susan kennedy: thank you very much, i reallyappreciate the united nations fund and the clean energy solutions center for puttingthis together. and let me give you a little
bit about my background first. i'm at the– i've been at the policy level both as a – at a utility regulator for the last20 years. most recently, i was the chief of staff to california governor arnold schwarzenegger.and before that, i was on the california public utilities commission where we regulated theelectric and telecommunications and water utilities. in those positions, we – i helped to draftand implement many of the energy policies that we are working in – with today, includingthe carbon cap-and-trade system, the low carbon fuel standard, the renewable profile standard,net energy metering, the million solar roofs initiative. so i've been at – working inenergy as a regulator and policy person for
the last 20 years. so we started at – advanced microgrid solutionsis a developer of energy storage projects. so we don’t have our own – we don’tbuild our own batteries and we don’t built our own technology, we select the best availabletechnology from around the world and we design projects using energy storage to harness andcontrol building load, and then we use that building load to provide large-scale, grid-connectedresources. our software platform focuses on two things,integrating distributed energy resources, like advanced building load management systems,solar, wind, fuel cells, cogen, electric vehicles and energy storage, and then aggregating andoperating those distributed resources to provide
large-scale, grid-connected resources to utilitiesand grid operators. so the way we – let me give you a coupleexamples of the way we are using energy storage and here's – in this case, we – one ofthe key issues is integrating with distributed resources, including solar. if you look atthe red line on this chart, that's a building load that has solar and you – and it's veryvolatile. during the day, it's producing more solar than can actually be consumed by thebuilding, so it's sending it back to the grid, and then when the sun stops shining for periodsand then at the end of the day stops shining, the building load dramatically shoots backto the – to grid resources. this blue line on the – on top is what thedistribution system operator sees and has
to plan for, and so you have many resourcesbeing spent trying to handle the volatility of the distributed resources on the grid andit's in a very, very expensive headache for grid operators and utilities to manage forwhen they – when this load comes back to the grid. but when you add energy storage, this greenline actually smoothes out the – it absorbs some of the solar earlier in the day and thenuses the battery to smooth out the consumption pattern so that not only do you not have thisvolatility on the consumer side, which is a very expensive proposition, but also thegrid operator has some control – some – it reduces stress on the grid by eliminatingthis enormous jump up in demand.
so capturing – at scale being able to capturethe benefits of energy storage for both – on the consumer side of the meter, but also atthe distribution level is the – is what we're aiming to do using energy storage. energy – the single question of why energystorage is because it's the only technology that allows you to integrate these renewableresources and harness the building load in a way that can provide distribution-levelbenefits. utilities around the world are going to spend more than a trillion dollars overthe next decade trying to manage this volatility in the distribution system. a trillion dollars.in the united states alone in 2014, utilities spent more than $100 billion on the distributionsystem alone.
so you can see the level of the need for storageat the distribution level is enormous. so storage provides reliability, power quality,integration of renewables, avoids the distribution-level upgrades, and it allows consumers of electricityto harness their load for revenue streams from grid resources. the key to being able to harness – to useenergy storage effectively is to unlock the multiple benefits of energy storage, demandmanagement, integration of renewables, power quality backup, negative demand recaptureand providing for things like electric vehicle charging infrastructure, these are all servicesand uses of a battery that you can – the multiple uses that you can put in one batterysystem, in many ways.
so the key to cost effectively deploying energystorage is to use as many – use the battery for as many resources as possible. on thedistribution level, the same is true at the distribution level. when you distribute batteriesbehind – controlling customer loads on a large scale, it becomes the most – the cleanest,fastest, most cost effective resource for capacity for load serving entities, for load-followingintegration of resources, voltage regulation and reactive power, conservation voltage. so the key will be to provide the technologiesthat allow those batteries and storage systems to be utilized on – at the customer loadfor these distribution-level buildings or resources. so what ams is doing is we arebuilding the – 50 megawatts of energy storage
systems for grid support in southern california,and so we're utilizing some of this – some of the theories i just laid out for a gridsupport project for southern california edison. in the last couple of years, a very largenuclear facility, san onofre, was taken offline in southern california, and so it createdan enormous need, 2,500-megawatt procurement for southern california edison in this area,and in this area, you cannot – you can't put another peaker plant. you can't put aten-megawatt peaker plant in downtown los angeles or in areas – in very urban – dense,urban areas. you cannot solve their problem with another 500 or 1,000-megawatt solar arrayin the desert and try and transport it in, because transmission distribution system can'thandle it.
so this type – this enormous need had tobe handled by harnessing the building load itself, and that's where we saw the opportunityto demonstrate behind the meter grid-scale resources. so we have identified by – buildingload in this area at a large scale where we are harnessing the building load using energystorage systems, happens to be that we're – our projects are primarily using the teslapowerpack, again, i said best available technology and there's no question that the tesla systemswere the best in class. and so we're using as large a system as wecan, inside the buildings or i mean, with – to harness the building load and thenaggregating many buildings into a fleet for grid service. and the way it works is similarto the way a hybrid electric car would work
in that the batteries go on and off to beable to shift as much of the building load when possible when the utility needs the resource,just to control the consumption. so it acts like a hybrid electric car, goingback and forth from grid to battery, grid to battery, until it's given a dispatch orderwhen it shifts the batteries – shifts the building load to batteries. this is a caseof using the batteries with an aggregated load and a large system. it has solar andwind resources, as well. so this is what the load – this is what the building load lookslike without batteries where you've got solar that happens early in the day and then goeson and off, goes up and down and then the wind kicks in late in the day, and withoutany battery storage to harness this, you basically
have solar that's very cost ineffective earlyin the day and you went – and you don’t have enough resources for the peak periodof the day when it's most costly to be taking from the grid. so when you add energy storage, the way we'reusing it is you store it, you use it just to – the solar to charge the batteries whereveryou can, and then you use the batteries to basically shape the load and shift the buildingload, harnessing the distributed resources so that you are optimizing the load shiftingduring the periods of highest stress on the grid or when it's most expensive to be usinggrid electricity. and so what the grid operator now sees isa fully optimized load, where it's very flat,
very easy to plan around, this is what thegrid actually sees and has to plan for, and then when we – during the on-peak periodof the day, the load is reduced using the batteries and the on-site resources, so thatyou have a very fully optimized load. our first project is a fleet of – it's aten-megawatt, hybrid electric building fleet where it involves 26 office buildings throughthe use of the very large – the average system size behind a particular meter is halfa megawatt, so these are very large systems. in some cases, it's four to six hours of batteries.we're able to shave peak demand by 25 percent, which is a 20 percent reduction in greenhousegas emissions for this fleet of buildings. it results in a ten percent reduction in energycost for the building owners. it provides
ten megawatts of firm, dispatchable capacityto the utility. zero emissions, zero distribution upgrades. we target the substations in a particulararea and we identify what are the – where are the major building loads in that areaand we harness specifically the load that is required in order to relieve stress onthat part of the grid. we cluster the buildings, we – to get – harness as much as of thebuilding loads as we possibly can in those areas, and then we use the software and telemetryto operate it as a fleet so that the utility can actually drop small clusters at a timeor the entire portfolio together in order to provide dynamic load management for theutility.
the key for us in our view is scale. theseare – batteries are very expensive, it's very expensive technology, and the key tomaking it cost effective for either the – for deployment for the grid operator is scale.and so aggregating individual resources into fleets and being able to optimize those resourcesand provide them in realtime or very close to realtime support for the grid so that youcan create distribution-level benefits and benefits for the cost reduction and otherservices at the host level, at the building level is the key to making energy storagean effective and a cost-effective distributed energy resource. i think i – that's – i'm going to stopthere and i think we should go to questions.
>> sean esterly: great, thank you very muchsusan, and thank you to the rest of the panelists for the great presentations. we will moveright along now to the question and answer session. we had a number of questions comein from the audience. the first question that we had, i'll just work my way through these,first question's for dbl. it's wondering what the appetite of investors is to invest inmanufacturing locally products in developing countries and what also is the path to growthe off-grid lighting sector? >> nancy pfund: well, thank you. yeah, localmanufacture is a popular topic, it is something from an economic development point of viewthat is beneficial. for example, the giga factory in sparks, nevada that mateo referenced,that's in nevada, it's in the united states,
it's not offshore. the solar cities factorythat's going up in buffalo, these can have huge economic benefits to the region in allkinds of ways. now, in the early days of a market evolution,it's a little harder to weave in local manufacturing from the get go, especially when there isn'ta – sort of an industrial infrastructure. doesn't mean it can't happen as the rolloutmoves and gains volume. but the – you've got to remember as we've been all saying,one of the key themes is the dramatic decline in cost of storage, of solar, and the abilityto get these costs at parity with existing solutions. and a lot of that depends on verysophisticated manufacturing ecosystems. so while i can't say – of course you canalways have local assembly and have a role
for part of the kind of later stages of themanufacturing chain, but in the early days, you'd need to kind of rely on the cost productionthat's happened in other places on the globe, and then eventually you'll see, as you haveseen in batteries and solar in our country, roles for a local manufacturing space. the second part of the question was what? >> sean esterly: yeah, the second part wasasking about lighting. sorry, let me find it here. >> nancy pfund: just what's going on there?i mean, there's dramatic increases, efficiency, quality of light, cost per lumen. it's a verygood story there. and that's why it's so empowering
to see the developed world and the developingworld coming together on this. because a lot of the engineering talent that you have that'sbuilt up some of the companies we've been talking about are now able – those samepeople are now helping to get to the next level of cost performance optimization andtake that to parts of the world where they need an even lower price point. so i think you'll be seeing from companieslike the ones we've been talking about second and third generations of these products thatare even better at optimizing than we see now. >> sean esterly: great, thank you very much,nancy. and we had a number of questions come
in for mateo regarding the use of the lithiumion batteries and about their practical use for off-grid applications. so i'll try towrap up all these questions into one general question, but basically do you see – isthere any potential in the future, do you have a timeline for when possibly lithium– tesla lithium ion batteries can be used for off-grid applications to power homes? >> mateo jaramillo: yeah, we already havebatteries that are running in off-grid applications, essentially running microgrids unconnectedto any centralized grid, so they can be used today, to be clear. the – ultimately whichbatteries will be used is determined by cost, of course, and so we think that first of all,lithium ion as a category will be very, very
competitive. we think it's a winner, as imentioned, and in particular we think that the batteries that tesla's going to be supplyinginto the market will be the leader within that. so i think the answer is right now today thereis a fair amount of microgrid work that's happening in let's call them developed islands,those could be islands unconnected to the rest of the land from a grid perspective withina terrestrial application or they could be real islands in the middle of the ocean, andthen we'll continue to see that just be – continue to be more and more competitive in the restof the market. so it's today and just an increasing marketwith every _____ that we hit.
>> sean esterly: going to, thank you verymuch, mateo. this next question relates a little bit to nancy's presentation. they justnote that it was great to hear about some of the practical off-grid applications, especiallywith examples of companies providing relevant services. are there any examples of thosethat are using sustainable business models rather than depending on public-sector funding? >> nancy pfund: sure. well, i guess i wouldpoint out that most energy companies around the planet derive some public funding becauseit's such an important part of our economy that many countries and states and regionsdo support energy transitions and we've been doing that here in the united states sincethe country was started. so i guess in terms
of just level setting, it's important to realizethat the government plays a critical role in promoting energy transitions, and we justsaw a great example of profile and private sector attention to this in paris last month. so the notion that a sustainable businessmodel in energy is somehow divorced from the role of the public in supporting these transitionsis not one that is really relevant. having said that, predictably, as business modelsgrow, as mateo said, tesla's only 12 years old, solar city went public 3 years ago, sunrun went public last year. these are very young companies and the incumbents, of course,have had – had had federal and government support, in some cases for almost a century.
so as the companies grow, the idea is thatthere is less dependency on government incentives or government policies in the form of incentives.that actually hasn’t happened in fossil and nuclear, but it certainly will happen,i believe, in renewables because the cost curve is – and storage, the cost curvesare so compelling that over the next – that solar and storage are already at parity inmany parts of the globe and that will only increase as we develop scale and improve ourfinancing and technological innovations. >> r. van leeuwen: sean, if i could just weighin, richenda, just to add, as well, to nancy's excellent answer just a little bit more onthe energy access sector specifically, i mean, i would say that subsidy has not been an enemyto energy access companies already trying
to really help to take these solutions intomarkets that are already, from a sort of financing perspective, not even often considered emergingmarkets. they're pre-frontier markets in many senses,so there are existing emerging market risks associated with trying to build up companiesand solution sets there that can be somewhat offset, but that takes resources, it takesinvestment to be able to do that. but also in many cases, these are market pioneers reallybringing these solutions for the first time to communities. so you also have the costof acquiring customers, it's not as if that you've already got existing customers thatare oftentimes that are just sort of switching out, but you're actually having to educatethe consumers about whether it's a solar solution
or whether it's the service that you're providing,and there's additional costs associated with building that market as you're trying to rundown the road, as well, in building up your consumer base. and so we've actually seen a range of differenttypes of subsidy, some at the more systemic level in terms of nonprofit groups that havebeen helping to build new acquisition channels for consumers, as well as subsidy that hasbeen very helpful to some of the companies that are startups and don’t necessarilyhave the vcs behind them in a very meaningful way providing the opportunity for them toburn, so a lot of capital up front. so there's been a lot of boot strapping and particularlyi would say that additional financing in terms
of a variety of ranges of concessional financingtools has been very, very helpful. as nancy pointed out, as the market matures,that may well change, but to date it's been extremely useful. >> sean esterly: thank you, richenda and susan,or i'm sorry, nancy. and we do have a question for susan about ams. you mentioned a ten percentsavings in energy costs. what percentage saving is made on mains electricity used? >> susan kennedy: it depends on the type ofapplication that the battery's being used for. in some cases, depending on the utilityrate structure, it's on the demand charge, the heavy – the savings really comes fromdemand charge management. but where you have
time of use rate structure where shiftinga load away from the rates – away from the high-cost energy, then a big portion of itcan come from the energy shifting itself. our greatest savings come when you're integratingdistributed resources, including solar and fuel cells. those are the – some of theprojects we're working on today where we're seeing some of the best savings by shapingand firming those distributed resources in response to a particular rate structure. >> sean esterly: thank you, susan. next questionis for everybody. so whoever'd like to chime in. they're just asking for some general discussionon the life of storage assets, the general cost of replacement and therefore the returnof investment on the system, and then disposal
of storage assets. >> mateo jaramillo: i should probably jumpin on that one, first. but susan and nancy, of course feel free to chime in. so the lifeof the systems, tesla designs systems which are intended to operate maintenance free forten years in the field. however, of course, many utility assets are – tend to be longerlived than that, and so tesla has an approach to basically providing what we would callcapacity maintenance over much longer periods, however long is needed, so 20, 30 years. that may involve replacement of physical – physicalreplacement of goods, it may also just involve supplementing the existing installation tomake sure that the operation is as it was
rated in the beginning of life. so of coursethe battery performance profile is changing, there are improvements coming out every year.it's one of the reasons that we're so optimistic for the future of energy storage is, of course,that you do see costs coming down and with it performance improving. and so, of course, any market wants to beable to take advantage of that, and that's another advantage to the architecture thattesla has. it allows us to do that in a very cost-effective manner and really minimizesup-front investment. and so we can tailor our battery solutions to the term that maybe required for whatever the application is that’s desired.
as far as end-of-life disposition, batteriescan be recycled fully and in fact, there are some very good success stories in that regard,the lead acid batteries, at least in the developed world anyway, are recycled at more than a99 percent rate. and we see for lithium batteries, as well, something similar being able to beput in place. as a matter of fact, tesla at the giga factorywill have a very significant recycling operation, so we'll take back batteries at end of life,reprocess them and put them back into the material flow. so it's very much top of mindfor how we think about these things. we are talking about commodities, there is valuethere at the end of life of a battery as far as a chemical battery goes in the materialsthat are in there, and we very much intend
to take advantage of that. and we don’tthink we're going to be the only ones there, with the increase in global market for batteries,of course more and more people would see value to the constituent components there. >> susan kennedy: this is susan, i'll kickin, as well. yeah, mateo covered the return on investment from the system itself. froma project perspective, the replacement cost of the batteries is only one aspect of it.the – we believe that the residual value of a project and the return on that investmentis enormous when you consider that after you've equipped these buildings with the – notjust the energy storage systems but all the telemetry and the communications technologythat operates these and taps into those – the
value streams, you have a permanent revenuestructure built into those buildings. and so the – you have to look at a projectthat utilizes battery storage and the return on that investment in a way that capturesthe value of having a customer relationship that will span far – much longer than thelife of the battery itself. >> sean esterly: thank you, susan. >> nancy pfund: this is nancy, i would justadd, i mean, mateo and susan have covered this well. it does range in terms of thesevery small systems, rooftop systems in the developing world, what their lifetime is inthe five to ten years, and that will change over time, but certainly the notion of recyclingand it's important to view these assets as
something that will figure out, that willhave a recycled life as opposed to just a – being done when the lease time is over. >> sean esterly: thanks, everybody. we'llstick on the topic of batteries for just a moment. this question going back to mateo,what is the average price per kilowatt hour of tesla batteries and can that be competitivewith dominant lead acid batteries for these types of off-grid applications in developingcountries? >> mateo jaramillo: yeah, you typically needat least five different reference points to really understand what somebody means whenthey give you a price on batteries, so i'll sort of refrain from a specific dollar-per-kilowatt-hourfigure. i think in fact a better point of
comparison for any grid participation by batteriesis what's sort of commonly starting to become known as the levelized cost of energy, orlevelized cost of storage, depending on how you want to think about it. but basically how much energy you get outof a battery over its lifetime into the cost of that battery, again, the total cost ofthat battery over its life. and so that gives you a levelized cost of some sense per kilowatthour, i'd say. and so the short answer is absolutely we see our batteries being competitivein grid markets today. as a matter of fact, there's some projectsright now in the united states where it's competitive to have solar plus battery andthat total cost, the levelized cost of the
storage, plus the levelized cost of the solaris cheaper than the grid energy. and so we see that in certain markets today and we seethat – both those prices continuing to go down and being very, very competitive in thebroader buyer markets. the energy markets are where the – franklywhere the money is, and for electricity, it's not in power, it's in energy. and so that'swhat we're after. but certainly within the next couple of years and with the growth ofthe production out of giga factory, we see batteries plus renewables being competitivewith the delivered cost of energy in the vast majority of the market. >> nancy pfund: and i would just add thatthese small systems that off-grid and others
are offering, in terms of what they're competingagainst, their pricing, very, very low, sometimes eight to ten dollars a months. so you cansee there's a huge – from the powerwall, which of course is a whole different animalwith enormous capacity to these little systems, it's a pretty varied landscape, which is goodbecause there's need for all, at this point. >> sean esterly: great, thank you both. goingback now to susan, we have a question for you on the relationship between microgriddevelopers and utilities. do you envision co-ownership and co-development of microgridswith the utility inside of their service territory, or developing one – microgrid developersdeveloping them for utilities, such that it is owned by that utility after it's been implemented?
>> susan kennedy: i see both markets developingand it really depends on what the regulatory structure allows for in each utility servicearea. in california, they – it's not barred to own distributed resources. in some areasof the united states, utilities are simply not allowed to own those kind of distributed,customer-sided resources. so we're talking to a couple of utilities right now about exactlythe build-own transfer of essentially a microgrid project where they would tap into third partieslike us, developers, to design and build the project, and then over a period of time, theutility would take ownership of it and then we would stay on as asset managers. so i see a lot of collaboration. i think before– there's an interim step to either microgrid
or a non-microgrid. there's the interdependenceof areas that have island incapability, and i see that as being a more near-term projectstructure for where utilities are creating the ability to isolate problems in the gridand use energy storage and other distributed resources to be able to self repair or torepair, remotely repair problems with the grid. and a lot of these areas that are being – thatare capable of islanding tend to be either large campuses or geographically isolatedareas or districts such as ports or major transportation hubs and things like that.so i see an interdependence and then island incapability as being a near-term step towardsmicrogrid capability.
>> sean esterly: thank you, susan. going backnow to nancy and dbl, assuming that dbl invests in us dollars, who's taking the risk thatlocal currency, which customers in, say, tanzania, earn and pay under the solar home system rentalcontract, will depreciate? >> nancy pfund: in any international investment,in the developed and developing world, there – you do have a currency risk, you have– i mean, there is a – there are political risks, and that's the we've thought long andhard about and try to mitigate. there are hedging strategies, there's all kinds of waysthat you can approach this, but you're never going to just reduce your risk to zero, andthat's okay because that's kind of our job is to be out on the edge there, but do itin a prudent way. so you're right to call
it out as a risk, it goes with the territory,and we do feel that this is something we'll be managing actively, not only from a ventureperspective but the executives in the company, both here in the states and on the groundin tanzania are going to be looking at various ways to mitigate this risk. >> sean esterly: thanks again, nancy. andthis question, again, goes to susan, but i think anyone could speak to it, as well, ifthey want to chime in. they're wondering what the base load technologies are to addresslarge loads for buildings and are hydrogen fuel cells a viable future option. >> susan kennedy: i think the main sourcetoday for us is either grid, from the grid,
or co-generation is widely used here in californiafor base load. fuel cells, i think, are a very viable option and it – i think hydrogenfuel cells are one and also other chemistries, natural gas and other biogas fuel cells ithink are very viable base load technologies. and we're – i think it's really just aboutthe cost effectiveness of having what is essentially a redundant base load system when you are– when you have grid resources and the regulatory structure that promotes or provides a barrierto deploying those kind of base load technologies. in the united states, many utilities havealready purchased enough base load to cover their entire load and so there's usually anexit fee if you're going to put in a very large base load plant like a cogen or a fuelcell to take – to reduce your dependency
on the grid. os the cost effectiveness ofdeploying a base load is really sensitive to what the grid operator – what the marketis for those technologies through the grid operator. but i think the – right now idon't think there's much substitute for co-generation and i think fuel cells are the next one inline for base load. >> sean esterly: great, thank you susan. wehave time for one more question. so this one, again, is for everybody, and just try to keepthe responses brief if we can, as we're running out of time here. but it's – we had a numberof questions come in about political instability and just kind of the risk of dealing withgovernment bureaucracy. for energy access markets, political instability of the developingcountries presents major barriers to market
development, in particular private businessesin investment. does anyone have any thoughts on or recommendations on methods for overcomingthose barriers? >> nancy pfund: well, i – this is nancy,i'll just jump in and pass it on to the others. i did refer to it a minute ago in my answer,political risk is something that you need to evaluate and you need to – and that wasone of the reasons we really liked the oge team is that they were very sophisticatedabout it. their growth strategy into other nations besides tanzania has very rigorouspolitical risk analysis attached to it, and so that's what you need to do. it's not somethingyou can eliminate and it certainly is not a reason to say i'm not going to do anything.that's not how u change the world and that's
not how you create significant investmentopportunities. you've got to understand that there – theseare matters that will come up at one point or another. i will say that the developedworld, it's not that different. there are definitely all kinds of challenges going onin various states in the us right now in terms of moving to distributed generation. so itgoes with the territory, it's something that i believe that investors need to embrace andsort of get involved and help their management teams do this in an intelligent way. you'renot going to win every battle, of course, but you can win a lot of them and move theball forward towards a global clean energy economy that creates employment opportunitiesfor many folks.
>> r. van leeuwen: can i just add there, aswell, that i mean, i think there's two ways of looking at political risk, and nancy'stotally captured it correctly. but we've seen in the mobile telephone center that one person'spolitical risk is somebody else's business opportunity. i mean, there were those whosort of went to all of the markets where they said it couldn't be done and then built upvery substantial mobile telecoms companies being able to do that. i mean, i think there are ways that you canaddress it financially and certainly as you're looking at developing your business model,building out whether you need some kind of hedging mechanism and building these intoyour business model. but also recognize the
tools that are available now, again, dependingon the country, depending on the context, like the african development bank's work,like power africa, like some of these others that are focusing either at the individualtransaction level or are focusing at helping to ensure a stronger and regulatory environmentthat is actually going to give some additional supports and mechanisms to businesses. soi know, for example, that with support from power africa, we've seen some new initialtransactions with ppas, for example, in ethiopia that had never happened before. we – one of the ongoing challenges is thatthere is still a very strong regulatory grey area, particularly for microgrids in a lotof african countries. and to the extent that
on the policy side we can have a more normalizedoperating environment with more clarity around ipps and how they can operate, how does itwork, more support for those who are sort of presenting these groundbreaking transactions,then i think you can offset some margin of the risk. i think it's really looking at it both onthe financing side, but then also how can we, on the policy side, help to just createa more stable operating environment, which of course for business, they love the stability,so i'll end up with that. >> sean esterly: great, thank you everybody.and unfortunately that is all the time we have for this webinar, so we'll have to goahead and wrap up now. i know there's a number
of questions that we didn’t get to address.we will gather those together and e-mail them along to our panelists so that they can providebrief responses to those. i would like to move along now to our attendeesurvey, we have a few questions that we like to ask to help us evaluate how we did andimprove for the next webinar. so i'll display the first question, and you can respond directlyto the screen and just mark if you agree or disagree with the following statement. thewebinar content provided me with useful information and insight. and second question, the webinar's presenterswere effective. third question, overall the webinar met my expectations. and a yes orno question, do you anticipate using the information
presented in this webinar directly in yourwork and/or organization. and one final question for you, do you anticipate applying the informationpresented to develop or revise policies or programs in your country of focus. great, thank you everyone, we appreciate yourparticipation in the survey, and again, on behalf of the clean energy solutions center,i'd just like to thank each of our expert panelists for taking the time to join us todayand also to our attendees for participating in today's webinar. very much appreciate everyone'stime. i do invite everyone to check the solutionscenter website, particularly the training page. we have several of the presentationsposted already and we'll be posting the rest
of those within the next day or two. alsocheck back within the next couple days for a video recording of today's webinar and pleasefeel free to share that with those in your networks and organizations. also just a reminder about the clean energysolutions center ask an expert program, which is free to use. please check that out whileyou are on the site, as well. and with that, i hope everyone has a great rest of your dayand we look forward to seeing you at future clean energy solutions center events. thisconcludes our webinar.
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