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Leonard Hyman & William Tilles

Leonard Hyman & William Tilles

Leonard S. Hyman is an economist and financial analyst specializing in the energy sector. He headed utility equity research at a major brokerage house and…

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Finnish Tech Giant Betting Big On Solar

Wärtsilä, the Finnish manufacturer of marine and small terrestrial engines, founded way back in 1834, recently announced its entry into the solar power and battery business. The company plans to couple its conventional small generators with solar and battery storage. This combination reduces fuel use, carbon emissions from the generator, and takes advantage of an internal combustion engine’s ability to ramp up quickly if solar production fades. The first facility will be located at a gold mine off the elec-tric grid in a remote region of Burkina Faso in West Africa.

Projects of this kind open the way for more consumers of electricity in remote regions to do without grid power. They also free up the local electric company to better serve customers in its densely popu-lated areas.

Years ago a noted economist attended a supposedly hush hush meeting between well-connected In-dian engineers and economists. Their goal? Figure out how to extend the Indian electricity system to the vast multitude of rural villages throughout the country that lacked access to electricity.

The local electricity companies could not afford to engage in a project of this magnitude. Apart from the vast capital expense, the revenue potential was modest. The prospective electricity customers, mainly farmers, were exempt from having to pay electric bills. And many other customers (including certain state electric companies) adopted a rather cavalier attitude towards bill paying in a timely fash-ion as well. Related: Westinghouse Bankruptcy Could Stall UK Nuclear Plans

The populace clearly was eager for electricity but erecting miles of transmission lines for mostly non-paying customers is seldom a winning business strategy. One participant in the meeting proposed a simple solution: install solar panels in these remote places and let the local populace operate them. Who needs transmission lines? It certainly made more sense. But it left the villagers in the dark at night. Needless to say, that was not the solution that India's power grid operators wanted to hear, alt-hough the economist liked it.

An integrated system of the sort proposed by Wärtsilä, could prove ideal for remote regions of Africa, India, Iraq or Pakistan for example. Any place the electric grid is unreliable and people have their own generators, these new solar plus batteries plus small internal combustion engine combos could reduce emissions and dependence on oil. And service to energy deprived consumers would markedly im-prove.

The concept of an integrated solar-battery-small generator electrical system is relatively new. At the moment it looks suited largely to isolated industrial projects. As for impact on the grid, it probably does not have any. Not yet, anyway.

Local utilities often lack the resources to expand to serve small, isolated, typically rural customers. Even when the far distant customer is a large manufacturing facility like a mine, the economics are not always favorable. This is an age old dilemma in the power business. Who pays for the uneconomic cus-tomer? Related: Is Haynesville About To Make A Comeback?

However, the idea could take hold in developed countries, too. And grid operators need only remem-ber the days of the qualifying facilities, those industrially sited power plants that fed electricity into the grid, usually at high prices. This modest proposal might find its market in isolated locations, but there is a good chance that an improved version could show up in the middle of grid-served territory if grid service does not meet reliability or price requirements.

Oil-burning small generators do not seem a promising start to an era of enhanced distributed re-sources. However, not too long ago a mobile phone was almost half the width of a shoe box and al-most too heavy to carry. But it opened the eyes of the public and look what followed.

By Leonard Hyman and Bill Tilles for Oilprice.com

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