123Fab #55

1 topic, 2 key figures, 3 startups to draw inspiration from

Last week Ola Electric — the electric vehicle arm of ride-hailing giant Ola — raised $100 million in debt from the Bank of Baroda. The money will be used towards closing the first phase of development of its 500-acre factory, which is expected to manufacture 10 million electric two-wheelers a year at full capacity and 15% of the world’s e-scooters by 2022.

Other two-wheeler manufacturers have made important announcements regarding their move into the electric segment. Harley-Davidson earlier this month introduced the first e-motorcycle under its new LiveWire brand. The company is entering the EV arena in the face of competition from several e-motorcycle startups that are attempting to convert gas riders to electric. One of the leaders is California-based startup Zero Motorcycles, which has 200 dealers worldwide. Meanwhile, Lime added a new member to its electric vehicle family in January: e-mopeds. Currently being piloted in Paris and Washington DC, these mopeds are manufactured by NIU, a Chinese company that also supplies mopeds to New York City-based mobility company Revel.

Before we proceed with our analysis, a note on terminology. Some people refer to e-mopeds as e-scooters or vice versa. For others, the term e-moped is used interchangeably with e-motorcycle. For clarity, at Aster Fab, we define e-motorcycles as electric vehicles with an engine size greater than 150cc, e-mopeds with an engine size smaller than 150cc. E-scooters have a floorboard that one can stand on and do not exceed a speed of 15mph.

As the electrification of the automotive industry advances, the electrification of two-wheelers is slowly following the same path, but with less enthusiasm. After the proliferation of e-scooters, the first e-mopeds and e-motorcycles are beginning to hit the market. While BMW has led the electrification efforts in the motorcycle market so far, the momentum for e-motorcycles is gradually building among major manufacturers. Relatively silent on the subject in recent years, Yamaha last month announced its commitment to achieving full lifecycle carbon neutrality for its products by 2050. The company sees itself selling 90% of electric motorbikes by 2050. Honda has also begun filing its first patents. E-motorcycles have less growth potential than e-mopeds, but this electrification revolution is driven by a combination of forces:

• Climate regulations and incentives — two-wheel EVs (E2Ws) and three-wheel EVs (E3Ws) are driven by government regulations and incentives to reduce carbon emissions. In China, internal combustion engine (ICE) engines were banned in 2011. More recently, e-motorcycles and e-mopeds will be exempt from paid parking as of January 2022 in Paris.
• Falling battery prices and lower total costs of ownership — over the next few years, the price of batteries is expected to drop from $200-$280 per kilowatt-hour to $90-$130. This is expected to decrease the cost of ownership and potentially propel demand.
• The emergence of innovative go-to-market models — battery-as-a-service is an example of an innovative model. By decoupling the battery from the sale of the vehicle, as well as greatly improving convenience through express refueling, this model reduces up-front acquisition costs.
• The desire for high-end connectivity — for some consumers, electric two-wheelers are more appealing than standard ICE vehicles because of their higher connectivity.

Despite government incentives, electric two-wheelers are facing the same barriers to adoption as the automotive market. Primary concerns are battery life, limited charging infrastructure and lack of models. For e-motorcycles, additional impediments include the range requirements of consumers (250 miles or more), lack of consumer acceptance (no sound, vibration or engine heat) and ultimately the lack of participation of major manufacturers. Thus, battery swapping will play a key role in accelerating electric two-wheeler adoption. Honda, Yamaha, KTM and Piaggio pushed further into this space in March by announcing their intention to create a swappable battery standard. Indeed, battery swap business models reduce or eliminate market barriers around extended charging times, range anxiety, high upfront costs and battery reliability because riders easily can carry and switch out batteries on the go. Quintessentially a two-wheeler country, India is an exception leading the way with its government incentives and its entrepreneurship (driven by Hero Electric, Ather Energy, Ampere, Okinawa and many more). Just like in China, Vietnam, Indonesia, Thailand, the Philippines, the high urban density rates and high percentages of households that own two-wheelers make these countries best suited for electric two-wheelers. In fact, more than 2 million electric rickshaws are currently running on Indian roads.

Globally the landscape is highly fragmented with many players competing intensely for market share. New entrants even dominate the market in some regions, preventing traditional OEMs from having the same market share as with ICE vehicles. At the same time, other players are tapping into the emerging opportunities associated with electric two-wheelers. Energy companies and utilities,  such as Tata Power in India, are acquiring EV-charging infrastructure and capturing upstream value by expanding their offer to battery management systems. While Tier-1 suppliers are moving into new product segments such as electric power trains and retrofit kits. Thus electrification, along with vehicle automation and many other disruptions, is reshaping the traditional value pool. 

In conclusion, it is undeniable that the two-wheeler market is gaining momentum worldwide (especially in emerging markets) and that well-established OEMs and startups are tapping into the opportunity to capture new value. Although adoption in the e-motorcycle segment is much lower than for e-mopeds, both markets are expected to grow in the near future, despite the widespread charging infrastructure required. Given the intimate link between electrification and autonomy, the unanswered question is whether it will be traditional OEMs or new entrants with strong software capabilities (such as Tesla in the automotive industry) that will lead the two-wheeler electrification revolution. For e-mopeds, pure players appear to be in a strong position given the low connectivity requirements, while the high battery requirements for e-motorcycles will likely force traditional OEMs to invest heavily in battery swapping technologies and join forces with software companies.

2 Key Figures

190 electric two-wheeler startups

registered by Traxcn

The electric two-wheel market is expected to reach $11.3bn by 2025

The global electric scooter, moped & motorcycle market was estimated at $5.8 billion in 2020 and is expected to reach $11.3 billion by 2025, at a CAGR of 14.2%

3 startups to draw inspiration from

This week, we identified three startups that we can draw inspiration from: Zero Motorcycles, Gogoro and Noil.

Zero Motorycles

Founded in 2006, Zero Motorcycles is a California-based manufacturer of electric motorcycles. Earlier this month, Zero Motorcycles launched its all new FXE model.

Gogoro

Founded in 2011, Gogoro is a Taiwan-based startup that developed a battery swapping refueling platform for urban electric two-wheel scooters, mopeds and motorcycles.

Noil

Founded in 2019, Noil is a France-based startup that retrofits thermal mopeds to electric in under 48 hours.

123Fab #54

1 topic, 2 key figures, 3 startups to draw inspiration from

On July 2nd 2021, Storegga and Carbon Engineering announced the creation of Europe’s first large-scale carbon dioxide (CO2) direct air capture (DAC) facility in the north east of Scotland. The facility plans to remove between 0.5M and 1M tons of CO2 from the atmosphere each year to help achieve the critical target of zero net emissions by 2050. Players will benefit from Scotland’s extensive offshore storage sites to permanently store CO2 deep below the seabed. This project is largely funded  by the UK Department for Business, Energy, and Industrial Strategy to meet the government’s climate goals.

CCUS stands for Carbon Capture, Utilization, and Storage. It is the process of capturing carbon emissions for permanent storage in deep geological formations or for use in the production of fuels, chemicals, building materials, and other products containing CO2. Direct Air Capture is one of the carbon capture technologies that involves capturing CO2 directly from the atmosphere and not from industrial processes like the other methods. It is expected to play a key role in the transition to a net-zero energy system, as it can offset hard-to-abate emissions (aviation, heavy industries) and facilitate a faster transition. There are currently 15 direct air capture plants in operation worldwide, capturing over 9,000 tCO2/year. The main benefits of direct air capture as a carbon removal option are its limited land and water footprint and the possibility of locating plants close to suitable storage or utilization sites, thus eliminating the need to transport CO2 over long distances. However, the major challenge is to identify who is accountable and should pay for it, as the emissions captured are not linked to any precise site. Thus, to cover their costs, DAC companies have to sell the by-product, the CO2, or convert it into various valuable purposes.

Today, two technological approaches are used to capture CO2 from the air:

1. Liquid DAC systems pass the air through a chemical solution, such as a hydroxide solution, that removes the CO2 while returning the remaining air to the environment
2. Solid DAC systems use sorbent filters that chemically bind to CO2. When the filters are heated, they release the concentrated CO2, which can be captured for storage or use.

Both solid and liquid capture technologies can be powered by renewable energy sources (such as geothermal, solar PV, and wind). Solid DAC can also be powered by recovering waste heat, which signficantly reduces lifecycle emissions. Emissions from the DAC process must be taken into account when measuring the total CO2 impact of the process. A clean energy source is therefore essential to enable both negative emissions and low-carbon fuels.

DAC technologies have improved very rapidly in recently years with increasing financial support. Many public and private players are becoming aware of the need to reverse climate change and are investing in R&D and startups. In August 2020, the leader Climeworks raised $110M from private investors, the largest ever investment in DAC. There are also incentives such as Elon Musk’s XPrize Carbon Removal that challenge designers to develop machines to extract large amounts of CO2 directly from the atmosphere or oceans for $100 million. In terms of government support, the U.S. Department of Energy (DOE) announced in June $12 million in federal funding for six R&D projects that aadvance DAC technology. They are creating tools that will increase the amount of CO2 captured by DAC, lower the cost of materials, and improve the energy efficiency of carbon removal operations.

However, all the support goes to a limited number of players, as the market is very concentrated. Only a dozen or so startups benefit from it and concentrate breakthroughs and partnerships with key players or corporates. A very recent innovative start-up is Co2Rail which seeks to enhance DAC by using train-loaded modules to help improve airflow and thus capture CO2. Their systems are fitted to trains already in regular service. Co2Rail uses the significant amount of wasted energy produced by the dynamic braking system of freight trains to power their direct air capture systems. This unique approach can enable gigaton-scale CO2 capture in an energy-efficient manner, making it affordable for downstream CO2 users to make economical use of the captured CO2. Climeworks has signed agreements with both Carbfix, a pioneer carbon storage start-up, and ON Power, the Icelandic geothermal energy provider, to lay the foundation for a new plant that will significantly scale up carbon removal and storage in Iceland. The new plant will be able to permanently remove 4,000 tons of CO2 from the air per year, safely stored through natural underground mineralization.

Unlike on-site CO2 emission capture, large corporations rely heavily on these startups, rather than developing technologies in-house. They often join forces with them to secure access to this crucial technology. For instance, United Airlines said last December that they would invest in DAC start-up 1PointFive. Occidental Petroleum has signed a partnership with Carbon Engineering to build a plant that will capture up to 1 MtCO2 each year, used in enhanced oil recovery, to be operational in 2023.

However, there are still many challenges and obstacles to overcome in order to implement large-scale DAC facilities. Several large-scale demonstrations are still needed to refine the technology and reduce capture costs. Indeed, DAC is the most expensive carbon capture approach because the CO2 in the atmosphere is highly diluted, which contributes to higher energy needs. Costs and energy needs vary according to the type of technology (solid or liquid) and whether the captured CO2 is  to be stored  geologically (where it has to be compressed at very high pressure) or used immediately at low pressure. The future cost of direct air capture is uncertain,  typically ranging anywhere from $100/tCO2 to 1,000/tCO2, while industrial CO2 capture  is more likely to range between $35/tCO2 and $60/tCO2.

In the near term, large-scale demonstration of DAC technologies will require targeted government support, including grants, tax credits, and public procurement of CO2 offsets. Technology deployment may also benefit from corporate sector initiatives and pledges to become carbon-negative, such as Microsoft’s announcement of a $1 Bn climate innovation fund for carbon reduction, capture and removal technologies. Longer-term deployment opportunities will be closely linked to robust CO2 pricing mechanisms and accounting frameworks that recognize and value the negative emissions associated with storing CO2 captured from the atmosphere.

To conclude, carbon removal technologies such as direct air capture are not an alternative to cutting emissions or an excuse to delay action, but they can be an important part of the suite of technology options used to achieve climate goals. For this reason, direct air capture needs to be demonstrated at scale, as soon as possible, to reduce uncertainties about deployment potential and costs, and to ensure that these technologies can be made available to support the transition to net-zero emissions and beyond.

2 Key Figures

18 DAC startups

registered by Pitchbook

DAC market expected to reach 833 million MtCO2 by 2050

The global DAC market was estimated at 6,370 MtCO2 in 2020 and is expected to reach 833 million MtCO2 by 2050, at a CAGR of 240%

3 startups to draw inspiration from

This week, we identified three startups that we can draw inspiration from: Carbon Engineering, Global Thermostat, and Heirloom.

Carbon Engineering

Founded in 2009, Carbon Engineering is a Canadian-based clean energy start-up that uses direct air capture technology at a large scale so it can be permanently and safely stored deep underground or turned into ultra-low carbon synthetic fuels, enabling clients to address their carbon footprint and achieve critical net-zero targets by providing a tool to deliver climate-relevant quantities of permanent carbon removal, and delivering clean, affordable energy to the world.

Global Thermostat

Global Thermostat is a US-based start-up focused on developing technology solutions for direct air carbon capture. It has a patented technology working with CO2 directly from air or from industry smokestacks. The technology uses residual heat to capture more CO2 than power plants or industrial facilities emit. The captured CO2 has multiple applications such as carbonating beverages.

Heirloom

Heirloom Carbon Technologies is an American start-up that aims to remove 1 billion tons of carbon dioxide using carbon mineralization for a cost-effective direct air capture system. The company’s system deploys carbon dioxide removal at a gigaton-scale that captures and processes atmospheric CO2 and minimizes second-order impacts and reduces extraction, thereby helping in restoring the atmosphere using natural processes.

123Fab #53

1 topic, 2 key figures, 3 startups to draw inspiration from

On July 2nd 2021, a fire on the surface of the Gulf of Mexico erupted after a gas leak from an underwater pipeline sparked a blaze. Although the fire was extinguished 5 hours later by state-owned oil company Pemex and the company claims that there was no leak, hundreds of such industrial accidents occur every year worldwide.

In recent years, the reliability of the power grid has often been put in the spotlight. Grid operators are faced with 4 main challenges:

1. The aging infrastructure: the vast majority of energy transmission and distribution lines, as well as oil & gas pipelines, were built in the second half of the 20th century with approximately a 50-year life expectancy. The network is therefore aging and many lines have exceeded their intended lifespan. According to Black & Veatch, 60% of electric distribution lines in the US have surpassed their 50-year expectancy.
2. The severe weather events: aside from aging, the grid was not originally engineered for severe weather events. According to a study carried out by the EU, annual spending in Europe to fix climate change-related damage to energy infrastructure was estimated at €500 million in 2018. This figure was set to grow exponentially by 400% by 2020, by 860% by 2050 and by 1,600% by 2080.
3. The increasing demand: global demand for energy is increasing rapidly, because of population and economic growth. The US Energy Information Administration (EIA) projects a 48% increase in global energy consumption between now and 2040. New infrastructure will need to be built to absorb future energy demand, especially in remote areas.
4. The integration of renewables: the transition from traditional fuel to renewable energy sources is putting the grid under further strain. Firstly because most renewable sources are located remotely requiring additional long-distance, high‐capacity transmission to match supply with demand. Secondly, renewables complicate the management of the grid because they are variable – they depend on the weather.

In other words, traditional power grids are not designed to meet today’s emerging trends, such as the greater penetration of distributed generation resources, the need for greater resilience and renewable intermittency. Thus, there is a real need for utilities and developers to make substantial investments to replace, upgrade and expand new and existing transmission and distribution (T&D) infrastructure.

New technologies are emerging to transition to a new type of grid, a modern one, with the potential of addressing today’s grid challenges. These include dynamically optimizing grid operations and resources, detecting and mitigating disturbances, integrating diverse generation sources, providing strong protection against physical and cyber risks, etc. Among the segments of the value chain, the greater focus of the smart grid is on distribution. Transmission systems are already equipped with extensive sensing and control, which are enhanced by newer technologies (synchrophasors, associated controls, decision-support systems, etc), whereas distribution needs emphasis.

Some innovations have already begun to change the landscape. In the electric grid, technology has moved from electromechanical meters to automated meter reading (AMR) to advanced metering infrastructure (AMI). These smart meters are capable of sensing energy, voltage, power quality and more. AMI meters allow utilities to perform actions at a level unforeseen in the past, so much that the scope for innovation in the data space remains huge. Energy storage has also opened up opportunities to store energy when it is cheap and discharge it when it is expensive. RTE, France’s transmission system operator, is running a pilot to automate storage and injection orders via a smart grid platform controlled by an intelligent robot. In the oil & gas industry, pipeline leakage technologies have emerged. In September 2020, BP announced a $5m investment into Sateltyics, which uses machine learning and spectral imaging to predict and counteract dangerous pipeline leakages. On the flip side, the multitude of sensors and connected devices has resulted in many points that can now be hacked. The ransomware attack on Colonial Pipeline Co. two months ago ignited concerns about cybersecurity in Europe, where lawmakers are drafting laws to improve the way energy companies protect themselves against hackers.

The innovations brought to market by startups are mainly software. In fact, experts say that much of the value to be captured by smart grids lies in the data and software improving operations and maintenance. Startups using software and new materials to compensate aging infrastructure include:

• AiDash uses machine learning algorithms to analyze satellite images and infer the encroachment of vegetation on power lines to avoid outages
• Grid4C uses AI to detect, diagnose and predict malfunction and inefficiencies for assets on the grid, without the installation of expensive hardware
• Depsys develops power-grid modular systems designed to help grid operators to seamlessly integrate the increasing amount of renewable energy sources
• ALD Technical Solutions repairs, retrofits and upgrades offshore and onshore infrastructures using high quality and high-performance composite materials

Microgrids are another alternative to the aging energy grid. Fed by distributed sources, such as solar panels or diesel generators, this resilient alternative can keep a local network powered when the main grid is down – whether due to a cyberattack, a natural disaster or even a breakdown. Microgrids helped Australia get power back after the bushfires last year.

To conclude, the aging of energy infrastruction opens the way for more systemic thinking. Rather than replacing the existing infrastructure, a national reflection is underway to redesign an entirely new system capable of meeting the challenge of renewable energies grid integration. Given the high investment new infrastructure represents, budget prioritization upstream and selection of the technologies to be implemented will be crucial.

2 Key Figures

780 smart grid startups

registered by Tracxn

Smart grid market expected to reach $92.1 Bn by 2026

The smart grid market is estimated at $29.3 Bn in 2019 and is expected to reach $92.1 Bn by 2026, at a CAGR of 17.8%

3 startups to draw inspiration from

This week, we identified three startups that we can draw inspiration from: Grid4C, Envelio, and Scale Microgrid Solutions.

Grid4C

Grid4C’s solutions use smart meter and IoT data to predict, detect, and diagnose faults and inefficiencies for grid assets and home appliances, without the need for hardware or sensor installations.

Envelio

Envelio’s platform helps network providers integrate renewable sources and electromobility by offering a digital assistance system for technical planning and operations processes.

Scale Microgrid Solutions

Scale Microgrid Solutions delivers sustainable and reliable power to commercial and industrial customers by deploying unique, fully-financed microgrids and distributed energy solutions.

123Fab #49

1 topic, 2 key figures, 3 startups to draw inspiration from

In May 2021, Barbara Pompili, the French Minister of the Ecological Transition, announced the selection of 215 startups and SMEs for the GreenTech Innovation label, among which 45 are solutions for more sustainable buildings and better energy efficiency. These startups will be supported by the government for their development and commercialization. This is one example out of many government initiatives to boost the building energy efficiency and renovation market.

The International Energy Agency estimates that the building sector is responsible for 42% of global electricity consumption. Energy efficiency is about performing the same tasks with less energy.  Buildings can go down to net-zero energy consumption which means that the total amount of energy used equals the amount of renewable energy created on-site or by off-site renewable sources. As most of the energy used in buildings is for maintaining a comfortable temperature (heating or cooling) and good ventilation, effective thermal insulation has a major impact on energy consumption. Thus, in the context of global efforts to reduce energy consumption and reach the 2050 net-zero target, buildings’ energy efficiency is more than necessary. To achieve it, most of the efforts need to focus on renovating and retrofitting existing buildings, rather than new performant ones, as they will represent more than 90% of 2050’s properties. It has ecological and economic benefits as it reduces the amount of energy consumed (and associated GHG emissions) while lowering the energy bill for the occupants. The top priority are the « thermal strainers » which are the buildings with the worst energy efficiency, where cold enters in the winter and heat enters in the summer. In France, they correspond to the buildings with an energy consumption above 330 kWh /sqm /year, which are ranked F or G. There are three main thermal losses. The surfaces (roof, walls, windows, ground floor) between the interior and exterior account for up to 80% of energy loss. Then, the controlled mechanical ventilation and ventilation grilles, which ensure the renewal of indoor air, make up to 20% to 25% of energy loss. Finally, the thermal bridges, which are points in construction where the insulation barrier is interrupted, contribute to 5% to 10% of heat loss. Thus, efforts should be put on external cladding and filling the thermal bridges to retrofit the existing buildings.

Different types of innovative solutions exist to improve buildings’ energy efficiency:

1. Measure: Many sensors and IoT technologies have been developed to compute more accurately buildings’ energy consumption. French start-up Smart Impulse, for instance, has developed a smart meter to measure the electricity consumption of buildings by usage (lighting, IT, heating, etc.) which gives insights on potential energy savings.
2. Retrofit: Picking the right materials highly contributes to buildings’ efficiency. New technologies have been developed to avoid energy loss, such as the thermal reflective resin for roofs of the start-up Cool Roof. Their solution aims to return roughly 90% of the solar heat. It protects the roof from physical damage while maintaining a comfortable temperature inside the building. Moreover, the Dutch EnergieSprong approach is being deployed in France, UK, and Germany for a quick and affordable retrofit of the existing buildings into zero-energy ones.
3. Optimize: There are more and more integrated energy management systems that measure and autonomously regulate energy consumption. Thanks to numerous sensors and IoT devices, the American start-up Budderfly provides a solution optimizing entire buildings’ energy consumption.

Although these solutions are very promising, some challenges still have to be overcome. First, renovation takes time obtaining the required permits for structural renovations, finding the right partners, and performing it. Then, even if some startups and companies are offering affordable solutions, it remains costly and often requires important initial investments. All the more so as energy-efficiency goals are often secondary to economic considerations and are not taken into account in the property’s life-cycle costs. Another barrier is the fragmentation of the construction industry, which involves many different actors and stakeholders who have varied interests. Finally, the diversity of the social and regulatory contexts – within the EU for instance – makes it hard to scale solutions.

However, most countries are addressing this issue and implementing associated regulations, incentives, and climate change targets. In France, the government has put in place financial support for buildings renovation but also biding policies like the interdiction from 2028 to rent a flat or house with an energy performance rated F or G. In 2021, the French government announced 6.6 million euros for buildings’ energy renovation over 2 years in their economic recovery plan. Another example of an efficient policy in California where homes and buildings are relatively energy-efficient today. Since 1975, the California Public Utility Commission has directed the investor-owned utilities to commit over $US 5 billion to energy efficiency programs, 85% of which has been targeted at retrofit energy efficiency investments in existing buildings. For instance, Netflix has equipped its headquarters in Los Gatos with View dynamic glass, which controls how much light gets in and contributes to saving up to 20% of energy costs.

To conclude, there are a lot of startups that have spotted an opportunity in improving buildings’ energy efficiency, whether it is with hardware and high-tech materials or smart software. The market is far from being addressed, and governments are multiplying incentives to do so, which is very promising as soon as people are willing to make the investment.

2 Key Figures

637 building energy efficiency & management startups

registered by Tracxn

Global efficient building market expected to reach $253 Bn by 2027

The global efficient building market was estimated at $146 Bn in 2020 and is expected to reach $253 Bn by 2027, at a CAGR of 8.15%.

3 startups to draw inspiration from

This week, we identified three startups that we can draw inspiration from: Sensor Flow, View, and 75 Fahrenheit.

SensorFlox

SensorFlow is a Singapore-based start-up that develops room automation and energy management systems focussed on the hospitality sector. Its solution helps automate a building to optimize energy consumption. It includes occupancy sensors, smart thermostats, door sensors, and split unit thermostats.

View

View is a Californian start-up that has created a glass solution that increases and optimizes the amount of natural light in buildings while simultaneously improving energy efficiency, and advancing smart and connected buildings.

75 Fahrenheit

75F is a US-based start-up making smart building automation affordable and easy to deploy. 75F leverages IoT, Cloud Computing and Machine Learning for data-driven building intelligence and controls for HVAC, lighting and energy optimization.

123Fab #45

1 topic, 2 key figures, 3 startups to draw inspiration from

According to Bloomberg NEF’s 2020 Climatescope findings, for the first time, renewables accounted for the majority of new capacity added (127 GW) in emerging markets (excluding mainland China and India). Indeed, many emerging countries are now embracing renewables for their environmental benefits but also their decentralized model, better suited to their situation.

Despite all the progress made, there are still 770 million people who do not have access to electricity, mostly in emerging countries. The rise of renewable energy in these countries has been made possible thanks to global financial support. Funding in these regions reached $21.3 billion in 2017, nearly double the 2010 level, according to the UN. It also coincides with a decline in the price of renewables. Some would even argue that it is now cheaper to invest in solar than coal in many jurisdictions (no climate risk, stable price, growing demand). In addition, emerging countries have a high natural potential for renewables. Ethiopia, for instance, is starting to tap into its strong hydropower capacity and has added 254 MW in 2019. With a total of 4,000 MW, it is the leading African country in terms of installed hydropower capacity today. In Kenya, the solar potential is rather high given its insolation rates, with an average of 5-7 peak sunshine hours and average daily insolation of 4-6 kWh/m2.

Therefore, in emerging countries where the infrastructure network is not yet mature and has a low coverage rate, distributed renewable energy systems are often a good alternative to connecting to a centralized grid or to relying on fossil fuels for electricity. These systems are either connected to community-level or micro-grid systems or are isolated household-level devices and systems for heating, cooking, and productive uses. The advantages of more distributed models include applicability to small and remote areas, reduced transmission and distribution losses, the allowance for direct and local private investment, local employment, and in some cases, improvements in reliability, speed of deployment, and local spill-over costs. Of the 26 million households relying on such renewable decentralized systems, there are primarily 20 million relying on Solar Home Systems (small-scale solar PV), 5 million households through renewable mini-grids; often powered by hydro energy, and the remainder through small-scale wind turbines and biomass digesters.

Thus, in emerging countries, decentralized renewable energy infrastructure is installed in place of the centralized electricity network in developed countries, as they do not have the same requirements in terms of maintenance and expected return on investment. The business models have also been adapted to the countries’ economic situation. Payment methods, for instance, are adapted to the low bank penetration rate and small payment amounts. In many countries, it is possible to pay with mobile credits or to pay-as-you-go (PAYG). Under PAYG schemes, customers typically pay a small initial fee for a solar charger kit, a portable system, and a control unit, and then pay for the energy they need, either in advance or on a regular basis according to their consumption. This payment method has spread at an average annual growth rate of 140% since 2013 – East Africa has accounted for most of this growth, thanks to a strong mobile money ecosystem. Startup BBOOX, for example,installs solar panels in households that can power up to five lights, a television, radio, torch, or a 12V battery, paid with PAYG mobile money. This is also what the subsidiary of ENGIE Fenix International offers. It provides access to energy via PAYG solar home systems to more than 500,000 customers in Africa. Additionally, with ENGIE PowerCorner, ENGIE supplies electricity to rural populations in villages across Tanzania and Zambia through smart mini-grids powered by solar energy and battery storage, used by households, local businesses, and public services. All these services are enabled by digital financial solutions such as mobile money and PAYG technologies. Finally, startup Offgridbox has developed and installed modular, compact units that provide renewable energy from solar panels on the roof and purified water in off-grid areas. 400 households can come and pay-as-they-go for drinking water and electricity.

The deployment of renewable energy in emerging countries has also benefitted from government and international organization support. It is clear that these countries do not have a sufficient national electricity network, thus governments, through regulation and financial support, participate. For instance, Kenya, Rwanda, and Tanzania all removed the VAT on solar products in 2014–2015. Another great example is the UN-supported international program Daunekhola micro-hydro system in Nepal. This micro-hydro system provides electricity and generates additional revenues for 116 households, and increases agricultural productivity thanks to the water flowing out from the system.

However, these new distributed renewable electricity models still face major challenges, which include high financing costs, lack of access to finance and long-term capital, and insufficient technical know-how for the operation and maintenance of renewable energy technologies. The Covid crisis also put a stop to this deployment, as fossil fuels and traditional industries received the majority of sovereign pandemic support. Moreover, to be sustainable in the long-term, there is still a lack of end-of-life management of these energy devices. A secondary market for small-scale renewable systems – such as PV panels – could benefit both producers and households.

To conclude, the diffusion of renewable energy in emerging countries is highly localized. Although its adoption is still scattered and dependent on regional incomes, it is best suited to local needs and does not rely on a costly and sclerotic infrastructure network. This market is surging and all actors, from local startups to Western corporations, are addressing it.

2 Key Figures

618 renewable energy in emerging countries startups

– excluding China – registered by Tracxn

Renewable energy market expected to reach $1,512 Bn by 2025

The renewable energy market was estimated at $928 Bn in 2017 and is expected to reach $1,512 Bn by 2025, at a CAGR of 6.1%

3 startups to draw inspiration from

This week, we identified three startups that we can draw inspiration from: Kingo, SunCulture, and Sistema.

Kingo

Kingo is a Guatemalan start-up. It provides pre-paid solar power based solutions to rural communities without access to an electricity grid. The users of their prepaid product can connect 3 light bulbs and 1 cell phone to the system at any one time. Additionally their technology is designed and manufactured to withstand rural living conditions where dust, heat, insects, rodents and moisture are all factors in need of consideration.

SunCulture

SunCulture is a Kenyan start-up that develops and offers solar-powered irrigation systems. It combines solar-powered water pumping with low-pressure drip irrigation systems. The system delivers water directly to crop roots. They also offer a Pay-As-You-Grow option that allows you to pay in small monthly installments.

Sistema Bio

Sistema is a Kenyan start-up that provides biodigester to produce biogas from organic waste. The biogas can be used for residential and farming activities. They are operating in India, Kenya, Colombia, Mexico, and Nicaragua. They also offer pay-as-you-go payments.

123Fab #24

1 topic, 2 key figures, 3 startups to draw inspiration from

Over the years, the French government has boosted the financial incentives offered to the biomethane industry to reduce the costs associated with the production and operation of units. Whereas the exemption from the domestic consumption tax on natural gas (TICGN) previously applied to biomethane, the French government has just announced that it will no longer apply from January 2021. France Biométhane, a green gas think-tank, deplores this decision which, according to them, discredits biomethane and favors fossil fuels.

Biomethane, defined as a renewable natural gas with properties close to those of natural gas, may well play a major role in building a sustainable energy future according to the International Energy Agency (IEA). Indeed, there is no need to change the transmission and distribution infrastructures or end-user equipment. Consequently, it can be injected into the natural gas distribution network very easily or used as fuel for vehicles (bio-CNG, bio-LNG). It is also comparable to renewable energy since it emits 10 times less carbon than natural gas, can be stored and offers a solution to the intermittent use of solar and wind energy. Finally, it reduces the pressure on landfills and fits into the circular economy. Therefore, there are reasons to believe that biomethane could become more firmly established in the future. How about its economic viability and technical feasibility?

To date biomethane can be produced in 3 ways:

• The biogas road – which uses wet biowaste. It uses the means of anaerobic digestion to convert the biowaste into biogas. The biogas is then purified to remove the CO2 and other contaminants to produce biomethane.
• The syngas road – which uses dry or semi-dry biowaste. It uses the means of pyro-gasification to convert the biowaste into syngas. The syngas is then cleaned and methanised to convert the hydrogen, carbon monoxide and dioxide into methane.
• The hydrogen road – which uses electricity. It uses the means of electrolysis (or power-to-gas) to convert electricity into hydrogen. The hydrogen is then cleaned and methanised to convert it into methane.

In short, there are three main methods for producing biomethane: anaerobic digestion, pyro-gasification and electrolysis. To date, approximately 90% of the biomethane produced comes from anaerobic digestion and the upgrading of biogas. Among the purifying and upgrading technologies, we can find water scrubbing, adsorption, cryogenic separation, membrane technology, etc.

Waga Energy, a landfill gas-to-energy technology firm, is one of the large players in this segment. In 2018 they notably joined forces with environmental services giant Veolia. Since then, Veolia has been using Waga Energy’s Wagabox® technology to produce biomethane using biogas, which is injected directly into the natural gas grid operated by GRDF. In early October, the two players signed a contract to install a purification unit at the waste storage center in Claye-Souilly. This facility, which should be commissioned by February 2022, will produce biomethane from waste and supply 20,000 households in the Paris region with renewable gas.

Last year, France set an objective of injecting 10% of biomethane (21 TWH) into the country’s gas network by 2030, like Denmark is already doing. Numerous biomethane injection sites have seen the light of the day. To date, 133 biomethane injection sites are producing 2.3 TWH per year. With an average annual growth rate of more than 60% over the last 3-4 years, the French goal seems feasible.

However, production costs remain high when taking into account the cost of input supply, the cost of transformation (into biogas/syngas and then into biomethane), and the cost of injection (connection to the energy grid). The price to produce biomethane reaches €95 compared to €20 for natural gas. This is why the development of biomethane will ultimately depend on the policy framework and if the market conditions remain attractive for the project leaders (green gas feed-in tariffs, stability, or reduction of construction and gas connection costs).

Overall, the optimal uses of biomethane are in the end-sectors where there are fewer low-carbon alternatives (high-temperature heating, petrochemical feedstocks, heavy-duty transport, shipping, etc.). There are also other motivations such as rural development (household digesters), energy security (complementing wind and solar PV or substituting imported natural gas) and urban air quality.

2 Key Figures

330 Biomethane startups

registered by Crunchbase

Market size expected to reach $3.4bn by 2027

The global biomethane market accounted for $1.8 billion in 2019 and is expected to reach $3.4 billion by 2027 growing at a CAGR of 8.3% during the forecast period.

3 startups to draw inspiration from

This week, we identified three startups that we can draw inspiration from: CPD-Swiss, Nexus Fuels, and Pyrowave.

Waga Energy

Waga Energy develops, designs, invests and operates WAGABOX® units that recover biogas from landfill sites to transform it into biomethane. Waga Energy uses two upgrading processes: membrane filtration and cryogenic distillation.

Enosis

Enosis develops a biomethanation reactor that converts biogas, syngas and CO2 into methane and provides flexibility services to the electrical grid.

Electrochaea

Electrochaea’s proprietary power-to-gas (P2G) process converts renewable energy and carbon dioxide into grid-quality renewable methane for storage and distribution.

123Fab #41

1 topic, 2 key figures, 3 startups to draw inspiration from

In 2020, in addition to $650 million in private investment in Africa’s mini-grid sector, the African Development Bank announced a $7 million grant to help this African industry. Mini-grids can be defined as sets of electricity generators (10 kW to 10MW) – and possibly energy storage systems – interconnected to a distribution network that supplies electricity to a localized group of customers.

Different technologies can power mini-grids. The most common types are solar mini-grids, hydro mini-grids, and hybrid mini-grids that couple renewable energy with non-renewable sources, such as solar-diesel or solar-biomass systems. Mini-grids can be connected to the national electricity network, but they can also operate autonomously without being connected to a centralized grid. In the first case, the mini-grid is designed to interconnect with the central grid, which means that it operates under normal conditions, disconnecting only in case of a central grid failure or demand peak. In the other case, the mini-grid is designed to operate autonomously in a remote location with the option to connect to a central grid when grid extension occurs. Thus, mini-grids address a wide range of uses, from access to energy in remote and off-grid areas in emerging countries to electricity generation in eco-districts in more developed regions. The three main use cases are the following:

• Remote areas where households lack access to electricity (40%): The State of the global mini-grid market Report of 2020 estimated that 238 million households could be connected to mini-grids in Sub-Saharan Africa, Asia and island nations by 2030. As a result, large corporations and startups are addressing this surging market. In Africa, ENGIE inaugurated its first PowerCorner mini-grid in Zambia in April 2019 and aims to develop 2,000 mini-grids by 2025. In Asia, India’s Tata Power has a similar project in its home country. Startups are also addressing this market. A great example is Nuru, a mini-grid owner and operator using solar-hybrid systems in DRC, in a country where the national electrification rate is only 7%.
• Remote commercial and industrial sites (16%): For off-grid and hybrid power plants, where connection to the national grid is more expensive, hybrid mini-grids can be installed. This is what eLUM does, providing solar-diesel solutions to factories and power plants, such as for a food processing factory in Ghana.
• Eco-district and city for better energy efficiency (10%): The city of Feldheim, Germany, owns and operates a local renewable mini-grid system consisting of solar, wind, and biomass power generation sources, as well as a battery storage system. It has managed to reduce the cost of electricity for residents by 30%.

Mini-grids are a strong trend, that should be embraced rather than questioned. Indeed, up to one-third of the losses associated with distributed energy resources could be recovered if utilities tapped into the mini-grid opportunity. The integration and development of mini-grids are made possible by several technology innovations:

1. Plug-and-play energy management systems using artificial intelligence: Thanks to the developments in optimization model software, connection to the main grid can be efficiently done and AI can be used to forecast demand and energy generation from renewable sources, to accurately match supply with demand. For instance, research institutes CSIRO (Australia) and NREL (USA) are working together to simplify the integration of renewable mini-grid systems by creating a plug-and-play controller that can maximize the use of solar energy.
2. Low-cost battery storage technology: Battery storage systems are crucial in balancing the variability of PV and wind and in shifting the electricity generated at times when supply exceeds demand, to times when demand exceeds supply. While historically renewable mini-grid systems have used lead-acid batteries due to their lower cost, technological advances and large-scale manufacturing of lithium-ion batteries now make them a competitive solution.
3. Advanced metering infrastructure: Smart meters can enable remote monitoring of consumption and support the implementation of various pricing schemes, such as time-of-use tariffs. In the case of off-grid systems, renewable mini-grid operators can implement prepaid or pay-as-you-go models using mobile payment systems and smart meters – to remotely switch on and off customers’ electricity supply.

All of these innovations have not only enabled mini-grids to become a relevant source of electricity supply, but they have also helped generate undeniable economic, ecological, and social impacts. First, mini-grids are often the only economically viable option for electrifying rural communities. Hybrid mini-grids also increase the reliability of the electricity supply. When it comes to their carbon emissions, they are limited as they often incorporate 75%-99% renewable supply. Finally, the implementation of mini-grids has proven to have a positive social impact by fostering and improving the local governance structure through community involvement.

Despite these benefits and market attractiveness, mini-grid penetration remains low in most developing countries due to technical difficulties and economic challenges. The main technical issue is lack of maintenance or use of poor-quality technology, which could be due to a lack of sufficient funding or a shortage of local skills for maintenance. Then, the major economic challenges are the need for regulations to protect mini-grid asset cash flows (e.g., protecting isolated mini-grids if the main grid arrives), and the need to solve customers’ ability to pay, as their irregular income streams pose significant risks to revenue collection.

To conclude, mini-grids have a strong future with short-term uncertainties. While the mini-grid market is estimated to grow at least at a double-digit rate over the next six years, the growth is limited by technical and financial issues. New component technologies (e.g., batteries) and new integration models appear to be the main drivers to solve these issues today (e.g., AI, smart meters).

2 Key Figures

389 mini-grid startups

registered by Tracxn

The mini-grid market expected to reach $30 Bn by 2025

The global mini-grid market was estimated at $11.4 Bn in 2019 and is expected to reach $30 Bn by 2025, at a CAGR of 14.75%.

3 startups to draw inspiration from

This week, we identified three startups that we can draw inspiration from: SolarKiosk, Kemiwatt, and SOLshare.

SolarKiosk

SolarKiosk is a German start-up that provides clean and sustainable energy services intended to help resource-scarce and off-grid areas gain easy access to electricity through energy hubs. The company designs, manufactures, implements and operates solar mini-grids which can be deployed in the most remote areas.

KemiWatt

Kemiwatt is a French start-up that develops innovative redox flow battery technology for stationary energy storage. A typical application is the storage of renewable energy (solar, wind), either off-grid for micro grid, or mini-grid services (load-shifting, peak-shaving,…).

SOLshare

SOLshare is a Bangladi stat-up that is the developer of an electricity trading platform designed to manage local electricity for households and small businesses in densely populated off-grid villages. The company’s peer-to-peer platform enables users to monetize excess solar energy, and create a network by sharing electricity.

123Fab #36

1 topic, 2 key figures, 3 startups to draw inspiration from

On the one hand, heating and cooling applications are among the largest energy consumers (about half of the total energy consumption). On the other hand, some of the renewable electricity produced is lost due to non-immediate use, and this will continue to accelerate as renewable energy facilities are being developed faster than batteries and storage solutions. The reconciliation of these two issues, converting electrical energy into heat (or cold), is called Power-to-Heat (PtH). Thermal energy is produced by heat pump technologies or electric boilers. In the context of growing environmental awareness, industrials are increasingly looking for technologies that will enable them to shift from fossil-based industrial heating to electrically-based, power-to-heat processes. These industrial heating applications account for almost 20% of global energy consumption.

These renewable power-to-heat technologies help industries to reduce their CO2 emissions and offer higher flexibility in the power system when equipped with smart load management. Industrial application technologies are already mature and commercially available. However, they have yet to be integrated into hybrid heating systems (e.g. with natural gas).

How does it work? The first step is the delivery of electricity from renewable sources to power stations (which may be large centralized heating production stations or decentralized entities). Infrastructures can be equipped with thermal storage systems, such as those of Form Energy, to enable consumers to use the stored heat and thus reduce the demand on the power grid during peak electricity demand periods. Afterwards, there are two technologies to convert electric power into heat: electric boilers and heat pumps. Electric boilers use electricity to heat water, which is then circulated through pipes to provide space heating or stored in hot water tanks for later use. Heat pumps, on the other hand, transfer heat from the surrounding heat sources to buildings and infrastructures. They can fulfill both heating and cooling requirements — typically using between 66% and 80% of the energy contained in the ambient air, water, or ground, and between 20% and 33% electricity to drive the process.

Where is it used?  These technologies are applied in different industries, for several uses. The first example is the food & beverage industry, where heat plants are used in Japan for brewing sake and beer. The Suntory production plants, for instance, use a cogeneration system (combined heat and power) that recovers the heat generated from in-house generation and uses it as a heat source for brewing beer and extracting coffee and tea, increasing energy efficiency to 70-80% and reducing CO2 emissions by 20-30%. Another example is the container washing plant in Spain that uses solar thermal heat. 22% of their hot water (80°C) demand is covered by a solar thermal system based on flat plate collectors, and the remainder is covered by a conventional boiler using natural gas. District heating is also a common application of power-to-heat. In Hamburg, Vattenfall operates an electric boiler that uses excess wind generation, thus avoiding wind power curtailment, to generate district heat in Berlin. The units use electricity from renewable energy sources to heat water, which transmit heat to residences and commercial buildings.

More generally, power-to-heat innovations contribute to the transformation of the power sector in 5 ways:

• Reduction of renewable energy curtailment: the excess of energy is used to address heating needs.
• Increased flexibility through load-shifting: heat pumps can offer demand-side flexibility by switching their electricity consumption from high-demand time intervals to low-demand time intervals to convert electric power into stored heat or cold.
• Large-scale energy storage: the surplus heat (resp. cold) produced with renewable energy in summer (resp. winter) can be stored in thermal reservoirs (mainly aquifers), which then can be used to meet the winter (resp. summer) heating demand, thereby reducing the need for non-renewable heat sources during peak times. The most common solution is the use of Phase-Change Materials (PCM), which are efficient against energy loss and leakage and are substances that release or absorb enough energy to maintain a regulated temperature. A great example of such a process is the Canadian project Drake Landing, which uses solar thermal energy and seasonal underground thermal energy storage for a district heating scheme. It supplies a residential community of 52 households that have seen their greenhouse gas emissions cut down by more than 5.5 times per year.
• Grid services provided by aggregators: new “smart” storage heating solutions are designed to take advantage of variations in electricity prices throughout the day and can be remotely controlled by aggregators to both optimize heating costs for consumers and provide grid balancing services to the national grid.
• Increased self-consumption through renewable local generation: consumers with solar rooftop systems can use the locally generated electricity to power heat pumps.

Ultimately, having understood how power-to-heat systems work and what their benefits are, it can be useful to bear in mind the drivers behind their adoption and the regulations that are put in place. Incentives to decarbonize the heating sector are leading to the deployment of heat pumps at a steady pace. On average, the operating costs of using electricity to generate heat are comparable to those of using fossil fuel-based sources. High-performance heat pumps can generate more than 4–5 kWh of useful heat for every 1 kWh of electricity consumed. Furthermore, regulations are being implemented in pioneer countries, like in Germany, where the Renewable Energy Heating Act bans the use of oil burners to heat new buildings and requires all new buildings to use energy generated from renewable energy sources for space and water heating. Similarly, in 2017, Norway’s Ministry of Climate and Environment passed a law banning the use of oils and paraffin from 2020 in heating applications.

To conclude, now that power-to-heat technologies are mature and up-and-running, more incentives should be brought forwards to increase the use of renewable energy in heating and cooling. Domestic and industrial consumers will need to make upfront investments to shift to renewable energy for heating and cooling applications, and schemes that reduce the economic burden on consumers will encourage faster adoption of renewable energy in heating and cooling. However, these schemes need to be tailored to the needs of different consumer segments, types of buildings (residential vs. industrial), and types of heating system (centralized vs. decentralized), as well as to other external factors, such as the climate zone.

2 Key Figures

177 power-to-heat startups

registered by PitchBook, including 100 “thermal energy storage” startups

Market size expected to reach $369M by 2025

The market size of thermal energy storage is expected to reach $369M by 2025, at a CAGR of over 14.4% from 2020.

3 startups to draw inspiration from

This week, we identified three startups that we can draw inspiration from: Malta Inc, Enerstorage, and Heaten

Malta Inc

The US-based startup Malta Inc builds an electro-thermal energy storage system that converts electricity to thermal energy for storage. It later converts the thermal energy back into electrical energy whenever required

Enerstorage

The German startup Enerstorage sells power-to-heat plants for industries that require a lot of heat. The PtH systems provide an important link between the heat supply and the power grid, regulate the power grids, and thus lead to a successful energy transition.

Heaten

Heaten is an industrial startup that provides heat-to-power and power-to-heat machines. Their very high-temperature heat pumps are based on an innovative piston machine technology, which provides an output temperature up to 165°C, which covers 30% of the energy demand of all industrial heating processes.