The Mini-Grid Business

Mini-grid logistics - daring the impossible

• Nico Peterschmidt / INENSUS • Season 1 • Episode 12

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Every mini-grid construction is a high-stakes adventure, where the unexpected lurks at every turn. In this gripping podcast episode, my guests Chris Rollins and Davide Ceretti, take listeners on a thrilling journey into the heart of constructing solar mini-grids in Africa's most remote and challenging terrains. They reveal the daunting obstacles they face, from navigating harsh landscapes without proper machinery to the unpredictability of transportation. They present solutions to some of the largest challenges in mini-grid logistics and construction.

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Speaker 1:

Solar mini-grids have turned from small pilots to an electrification wave. We were there when mini-grid regulation was established, when financial transactions were closed. We saw new technology thrive and companies fail. This is where we tell the stories. This is where we discuss the future the mini-grid business Powered by Innsis.

Speaker 2:

Hello, this is Nico. Today we are talking about mini-grid logistics, daring the impossible. My guests are Chris Rollins and Davide Ciretti, both of whom are engineers with vast experience in constructing mini-grids in rural Africa and beyond. Chris Rollins is a registered professional engineer in Colorado and Alaska, usa, with two decades of experience designing and building technical infrastructure in rural sub-Saharan Africa. He is currently managing the Survey, gis, engineering, procurement, logistics and Construction of 22 Solar mini-grids in Tokana County in Northern Kenya for Kudura Power East Africa. Davide Ciretti is an energy enthusiast working around the globe since 2005. He is passionate about energy and sustainability and nowadays has a particular interest in energy transition strategies, green energy projects and management. Davide was Jumea's miscountry director during the mini-grid rollout phase and recently joined in green SCOO. Davide Chris welcome Chris. What components do mini-grids consist of and which of those are the most difficult to transport?

Speaker 3:

Alright. So for my grids not counting power plants I have about 27 different parts and I look at it according to the work breakdown structure which would divide the site into the fencing, the power plant, the LV reticulation and the home wiring. In my experience the heavy things are the hardest to transport and that's obviously poles. We are using 10-meter CCA-traded eucalyptus utility poles. They probably weigh about 300 each 300 kilos. They can weigh more A lot of times. They've recently been harvested and they aren't fully cured. It's a big problem for O&M as well, but getting them to site in a big lorry we transport as many as 120 at a time. We get stuck in the sand, we get stuck in the mud. Very difficult to maneuver the lorry where you want it and offloading with local villagers is problematic. It's very unsafe and not easy to do. We really need heavy equipment for that but we don't have it.

Speaker 2:

Yeah, and you don't bring that heavy equipment on site, right.

Speaker 3:

We can't. It's not available here. I see I can't get a crane truck, or even if I had a winch or something, I probably don't have a tree in the right location to attach to that, what they often do, though. If there is a tree, they'll just move the lorry backward and forward to remove the poles. But that's maybe a quarter or a third of my sites.

Speaker 2:

Yeah, Davide. What is so special about logistics in rural Africa compared to other parts of the world?

Speaker 5:

Well, I guess Chris really introduced the topic. I mean, you have many difficulties that come basically from the fact that you are in very rural areas with very poor infrastructures and it's in a world you can say that is quite unpredictable. You have to consider many things and many things change during the year and here after years. So, yeah, if you put everything together now, considering the poor infrastructures, considering the environment situation, that is what is making really challenging the logistics in Africa and, as I said, unpredictable.

Speaker 3:

I could add to that that one of my biggest problems really is that there's no set rate for anything and there's no consistency in the types of trucks available, whether it's a 5 ton or a 10 ton or a 20 ton, a single rear axle or dual rear axle. It's a random roll of the dice how much you're going to pay for something until you develop relationships, and that can take 3, 4, 5 months, and by that time your project is over. So this has been my biggest problem is how much is it worth to transport this 3 tons of equipment from point A to B? Is this a good price? Is it not a good price? Is this person able to do it? There's nothing. There's no base point to start from.

Speaker 2:

Yeah, and Chris, do I get you correctly that truck companies are not making long-term plans? Are they just picking up whatever they can get today and ship it to wherever they need to ship it tomorrow, and then they make new plans? So there's no scheduling.

Speaker 3:

Yes, in the center of the town, here in Lodewar, for example, all the trucks park and they just sit there until somebody comes up and they negotiate a deal, and that's how we started. Now, of course, if you're in the capital city, trucks are going to have long-term agreements with various companies moving from warehouse to warehouse or from warehouse to distribution center or whatever. But we're out in the bush and so I'm just trying to find a guy with the truck and see if he's available to move this stuff, if he's able to load it. That's a huge problem. Once something's offloaded, it can be very difficult to get it back on a truck again. And yeah, it's just ad hoc. There's no standard at all for anything.

Speaker 5:

There is something Chris mentioned that is quite important. Normally, when you are doing a mini grid project, you are trying to go as fast as possible to decrease the cost, and that is somehow problematic because, as Chris said, most of the relations are informal, which means that you really need to have a specific knowledge of the specific area to exactly understand the prices, the ways and how to interact with the available transporter. If you are not from that area and you are moving around, like me and Chris are, we are doing yeah, I mean you don't have time to create that experience. So you basically rely on the experience that you did in the past and you're trying to adapt yourself.

Speaker 2:

But trucks are not the only mode of transport, right, there are other modes of transport. Do you want to talk about that a little bit?

Speaker 5:

Let me take this. I mean we, together with you, nico, we had quite a challenge to transport materials on the Highland. There, of course, the trucks are not an option, or else might be part of the transport, but both are acquired. Hope is used especially to transport materials that are not too heavy. However, it's even more problematic if you have to transport on a lake or on a river, because if something happened, you might lose completely the equipment, which means that you need to pay extra attention and you have, unfortunately, to rely more often, even more, on formal transporter with logistical challenges. That changes If you have to transport on the road mud, sand, so rains, the seasons, something you have to consider while instead, if you are transporting on the rivers or on the lakes, you need to consider where the boats then have to unload and somehow sometimes it's not available any place where to unload. So, yeah, it's becoming even more interesting, if you want, yeah.

Speaker 3:

Christo, you want to add. Yeah, I can add to that, and this is an opportunity to segue into people versus stuff. So David has the experience of boats. I have the experience of Cessna caravans in South Sudan to get over conflict areas. But generally speaking, you've got trucks and you've got non-trucks, and the trucks are for heavy stuff that would be like cables or your conductors, the poles, the stay anchors. They're buried in the ground, they weigh about 25 kilos each and you might need 100 of them. Those can be five ton trucks, 10 ton, 20 ton and lorries, which here carry up to about 26 tons, and you often for me at least, because we have so much sand and mud you want a dual axle rear truck. So that's the 20 tons that's for carrying your stuff, and you want to do that one way. In other words, you want to take that from the factory and drop it right at your site, if you can. You don't want to offload it because then you can't reload it again. Then, conversely, you have the small stuff and the people, and that can be more easily moved around by motorbike.

Speaker 3:

Here we have Pro Boxes and Minibuses, pro Box being the ubiquitous station wagon from Japan, and then you have the Hilux or the Land Cruiser. A lot of people like the Hilux because it looks cool. This is a construction company, we need a Hilux. But I don't find them that useful because they can only carry about a ton and now I need to make multiple trips for the stay anchors or the pole dressing or whatever else. So if I had my druthers I would have for my project. I'd have one Pro Box and one five ton truck and you might have seen from my post on LinkedIn, I've got seven dudes on motorbikes and I have one myself and really that is the way to do stuff out here. I can get a TVS 150 for a little more than $1,000. It's incredibly cheap to operate and maintain. I can put two people on it. I can put a person plus 100 kilos of whatever I can carry tools. Motorbikes are the key that unlocks the mini-grid construction.

Speaker 3:

For me, you can't emphasize that enough.

Speaker 2:

Yeah, chris, earlier you mentioned offloading on site and that it's quite risky to do so and usually in a mini-grid site. You do that with labor, right. People 20 people, 30 people trying to offload the poles, trying to offload especially the cables, right, how do you offload cables like tons of aluminium on a big drum?

Speaker 3:

Offloading is easy. You just you stack up four to eight tires below the lorry, everybody stands back and then two guys push it off and it lands with a thud and rolls maybe a meter at least. Where we are in the sand, you've got to pick your spot. Reloading is problematic. Well, actually one of my guys, alex Muiti, has unlocked it and thankfully we were able to get cables in shorter lengths from the manufacturer. So all of our cable drums are below 500 kilos. And yeah, alex and my guys managed to load up some aluminium conductor the other day into the back of a Hilux from our office and just using a piece of wood which I thought was a terrible idea, but they did it without telling me, but I've now actually purchased a couple of C channels, so we're going to start doing it that way.

Speaker 3:

So again, if you strategically place the truck, roll the cable into position and then four people or six people or whatever, you can get it up onto a Hilux, but of course you would rather have dropped it in the right location the first time, which I often neglect to do.

Speaker 2:

Yeah, but 600 or 500 kilograms from six people, that is already a lot for one person to carry right, and if you imbalance a little bit, then one person can simply break down, do you think so?

Speaker 3:

Well, I wasn't there when they did it. I think we're going to do a more methodical thing now, like I said, with the C channels and using a round tube to push it up into position. Yeah With, some of these folks are used to heavy objects. You know my team from from Western Kenya is you know, undaunted with a 300 kilo utility pole.

Speaker 3:

But the Turkana folks, you know the local population, they're pastoralists, they're herders, you know they Watch goats and camels all day. They don't carry stuff, they don't dig, they don't, you know, have physical jobs. So for them it's, it's overwhelming, that's a big problem for us. I.

Speaker 5:

Think that whatever can roll it might be easier to be Moved like cables because, for example, for the medium voltage, lines normally have a much higher weight. But what the experience teach you is that you have really to look at the past. So you're starting again to consider lever how to park a car or truck in a way that can be Easier to push something on. I mean, you are starting really to think about small things and a very ancient Solution. But yes, you mentioned something very important, that is the safety. I mean, most of the time these guys that are working with people from the villages and so on are really Underestimating the danger that they are passing through. How do you guide?

Speaker 2:

those people, then they usually walk through the danger zones and you cannot protect them from any falling items, or so do you install fences before you Offload? Probably not, yeah exactly.

Speaker 5:

Normally you are trying to concentrate the most dangerous activities on a area or else, if not possible, you are trying to be there when you know that something potentially very dangerous is happening. This is what things are down from the truck. Most of the problems already passed. Now I'm thinking about how they are directing the poles. Chris, I guess you can. You can tell as many stories about these.

Speaker 3:

Well, yeah, for pole erection at least, I have my linesman team on site and they have experienced with tens of thousands of poles between them, and we have the right equipment. We're using PPE steel toad boots and helmets and gloves. But offloading, yeah, that's a different story and for me I've got 20 sites. I can't be it more than maybe two to five percent of my offloading events, and often my site overseers and my other staff can't be there either. And To compound that, you've got a truck driver who wants to get back to Nairobi or wherever he came from, so he wants to offload at one o'clock in the morning, and so we have very little control over that. Obviously, we have international investors that hold us to a very stringent health and safety criteria and you know I'll be honest, I I often require the offloading to be done by the vendor, so that it is not my fault if something happens. It's still my problem, but I'm not liable for it.

Speaker 3:

And you know, recently we did have a young man break his femur offloading in the middle of the night in a Controlled area that was fenced. We often offload poles in one spot and reload them onto a smaller truck to get them up the side of Lake Turkana, which is extremely sandy, but yeah, the vendor was responsible for that. They refused to pay the hospital bill, or let's say they went silent. Same thing, effectively. And you know I'm working that community where that guy is from, so I can't just let that Linguish. You know the guy's sitting in the hospital with an unpaid bill and he was taken care of at least. But yeah, health and safety and these Is off topic, but it's critical and you know the honest truth is you have very, very little control over yeah.

Speaker 2:

You said, chris, that the investors have the strictest health and safety rules usually, but what about the countries, labor laws and these kind of things that also have some health and safety related aspects in there?

Speaker 3:

Yeah, here in Kenya we have the occupational and safety and health act. Yeah, yeah, exactly, and it's very vague compared to something like the United States OSHA regulations. You know our biggest concern would be fall from heights, which they do define. I think it's, I don't know, two meters or something. You can't stand above other things. They're very vague. You know it's an undeveloped regulation.

Speaker 3:

I am not the health and safety person for this project, but the honest truth there is you try to make sure everybody's got a safety vest, a helmet and steel-toed boots in the photos, but the reality is, you know, you've got all these sites with all these villagers. We're paying them to excavate holes. Of course they want as much money to stay in the community as possible and I agree with that, but that really just comes down to digging and carrying stuff and you can provide PPE and then that labor Refuses to give it back at the end of the day and then he or she doesn't show up the next day, and so now you've lost a pair of boots and a helmet and a vest. You know like it's not a manageable thing and the investors are not in tune with that reality. You know they think that they can promote or enforce European level of health and safety, and you just can't. Even with a million dollars Budgeted, you can't. So, yeah, that's the reality for us.

Speaker 2:

We are for our audience, ppe means, oh, personal protective equipment.

Speaker 3:

Yeah, it's common term for a mini-grid site. That would mean helmets, steel-toed boots, gloves, overalls. They get quite scruffed up moving these poles around. And then of course there's a whole another list of equipment for electrical installations, but that's not really part of this topic.

Speaker 2:

Yeah, coming back to a different subjectivity that you mentioned earlier, sometimes Lories trucks got stuck in sand or mud. I guess there are many interesting stories, a lot of headache probably.

Speaker 5:

Yeah, man now, yeah, I mean, as I was saying, you're trying to Organize that plan in a way that you are as far as possible from the seasonality that will not allow you to move things. That's the reality is then transport, maybe from China or from wherever materials come from, get stuck in somewhere in a harbor or in the Customs, and then you have to deal with rain season, for example, and that things becomes really unpredictable. I mean, I work in the highlands in Tanzania where the rain season was quite heavy and Tracks simply stuck on the mountains and there's no way to get a kind of excavator or whatever else to push them, and so you are using, like I Don't know, hundred people, you know really, with a rope and you know, trying to put something under the wheels In a way that they are getting some creeper to move on. Yeah, it's something yeah fascinating, if you want. I mean there the manpower becomes again the main actor of the logistics. It seems to go back like Some centuries ago.

Speaker 2:

Yeah, and interestingly, if a truck gets stuck somewhere, it's not only the truck that gets stuck, but all the cars behind the truck also get stuck, because the roads are so narrow that you cannot pass. And it's really an issue because in some cases there's just this one road that goes to a certain Village or to a certain area and there's no other because there is forest all around or they're simply lake or more mud or more sand. And yeah, have you ever experienced a truck Getting stuck and you cannot move the truck until the rainy season?

Speaker 5:

or so, is over. No, that not. I mean, we always found a way out, but in some cases it took us like two, three days, you know, because the races is not constant, so you are waiting up to when it's stopping to rain and you are, you know, then go really really fast, yeah, to put the truck back on the road and move a beat ahead, it's least to reach a place in where you can maybe even unload a beat. Because, yeah, what we were saying before is that if you take something out from the truck, then it's very difficult to put it on again, but sometimes you don't have any chance to do differently.

Speaker 2:

Yeah, yeah, there's no option. Right, and you were talking about bringing equipment to islands in Lake Victoria. That automatically means that you have to handle each individual piece of equipment twice or three times or so. Put it on the truck, get it from the truck onto the ship or onto the boat. Sometimes in rare cases, I guess you can put the whole truck onto a ferry, but in many cases there are no ferries going to these islands. And what do?

Speaker 5:

you do, then yeah, you're right. I mean, many times you have to unpack and divide into Small pieces, and it is actually something that the designer of the mini grids should consider. Personally, the thing that I consider more difficult to be transported in the context are batteries. We are looking at mini grids that are built with quite big A lithium bass and that are particularly heavy. So now, if you don't have a way to Kind of divide it in smaller packages, it can become really a problem. Yeah, because you cannot carry on on a small boat, and which means that then you have to consider to have a more formal Transport, and if there's no ferry, you might even hire a ferry you know you rent for to transport around the highland, but then you need to build up even where the ferry have to stop on the island, and that is something that you have to consider.

Speaker 2:

So you kind of build a small harbor just for a little equipment, for a mini grid.

Speaker 5:

Exactly, you have to build the harbor for the highland, which is fine, interesting. But we did. We did in the past for a couple of things, that we had to build a kind of very small harbor where the ferry could Unload the heavier part of the equipment, some kind of wooden key or something exactly exactly Made by the wood.

Speaker 2:

Interesting, and is that one still standing or has it been dismantled after the Shipments?

Speaker 5:

well, now there's some year passed. I don't know. I guess if has not been maintained it is not any longer there, but if it was used it might be still there. I don't know. I honestly.

Speaker 1:

I never came back.

Speaker 2:

But I can ask yeah, we touched already upon the inter linkages between logistics, transport, installation, but also procurement and Planning of and designing of systems. Chris, do you want to guide us through these linkages a little bit and what they are and how these linkages play out afterwards, in the later stage of project delivery and implementation?

Speaker 3:

Yeah, sure. So Obviously there is a perfect sequence where you would have accurate survey data, you would do a design for that particular village, generate a bill of quantities, you know a list of all the materials and then you would start a procurement process whereby you know your pre-ordering poles and the dressing that attaches the cables and conductors, the poles, then the cables and conductors, the Ancillary stuff like the stays, and then little things meters, ready boards, home wiring, ground rods. My own experience is that these don't happen in the perfect sequence. You might get to a site and realize that your survey data is wrong and you need to redesign, or you might have people working and ready for the polls, but the polls are not actually available because they've been sold to the local utility company at a higher price and a much higher quantity. Of course there's the logistics nightmare of the truck stuck in the mud or the sand, though that's usually just a day or two. Yeah, the procurement best practice is to write a request for quotations, to float it for two or three weeks so that different vendors can review the material and give you an accurate price. Your tender would include the specifications and the quantities and delivery conditions and everything else. Though that is straightforward, you'll find people are not submitting all the required documents because they're used to just giving a price and being done with that. But your investors or your grant funders require a much more elaborate submission than getting the stuff fabricated Right now.

Speaker 3:

I've heard there's no aluminum available in Kenya, so cables and conductors are off the table for a few weeks. Luckily, we've already purchased most of what we need. But then there's payment. Some people will take 50% upfront and 50 on delivery. Others insist on 100% upfront and maybe your company refuses to do 100% upfront. Now you get into this week long back and forth about whether you can collect the materials for dispatch to your sites, going through that right now. So all the while you're trying to keep people busy and of course the sequence on a Magrids site is pegging the poll locations, excavating the polls and the stay locations, then placing the polls and the stays. We're doing it with dressing on it.

Speaker 3:

A lot of people wait on that because the dressing might get stolen, even if it's eight meters up. There's the cables on it, but right now, and many times previously, I would have a bunch of holes excavated and no polls available. So I say, okay, go peg and excavate another site, and then the holes start collapsing because of sand or child vandals or homeowners that don't want a hole in their front yard. You know Camel's going to step in that and break its leg. And so yeah for me, with the numerous sites I've had to move people back and forth constantly as the availability of materials changes. For example, we were going to start home wiring service lines and meter installations at a site called Makutano today, but we don't have any aerial bundled cable for the service lines because we didn't make the payment on Friday afternoon. And those guys are just sitting today, you know which. They need a break. They've been working straight for weeks, but they get paid a unit rate for installation. So they just want to work as hard as they can until Christmas and walk away with a bundle of cash, you know.

Speaker 3:

So maybe if you had one big project and you had a year to do it and you already had some good familiarity with the conditions in that country or that region, that area, then you could have a more favorable sequence of the works. But that has not been the case for me at all and I've had that problem other places too. Previous jobs, you know, with PowerHive, although they had a lot of stuff in storage at a warehouse, unlike you know. We're doing more of a just-in-time delivery type of approach here because we don't have a warehouse and we don't have the people or facilities to offload and reload like I described. Even when you have a warehouse full of stuff, you might not be organized enough to get all the material out to site on the day it's needed, and then the EPC contractor is enforcing penalties on you for that and of course they are not incentivized to remind you, because they get $150 a day to just sit there and wait for you to remember that you forgot to deliver the cable.

Speaker 3:

So, yeah, many levels of problem with that.

Speaker 2:

As a mini-grid company, you have various options. You can either do everything yourself, like do multi-sourcing purchase the PV panels here, purchase the poles there, purchase the cables there, purchase the battery from a different vendor and then bring everything into country. Or purchase it from within the country, bring it to site and install yourself. Or you could actually contract an EPC company that does everything for you, including the logistics, until everything is set up, and then you just well, basically get the key Turnkey, the turnkey exactly, and off you go. How much money do you think? Because also the EPC companies, they need to somehow calculate risk, and there is a lot of risk, as we've already discussed, in logistics in Africa, in construction in rural Africa. How much is the difference? If everything goes well, everything goes smoothly, how much money could you save by doing it yourself?

Speaker 5:

By doing it yourself, you can save normally 40 to 50% of the cost, sometimes even more, depending on the dimension of the project. Of course, the smaller is the project, the higher is the money that you can save. The percentage I mean because EPC contractor will charge a lot for the risks and, moreover, they will have to go as fast as possible, which means that they are trying to source whatever they need and you will pay for that. You might be in a area where you don't have excavator Allow me this example but if I am an EPC contractor that I have to go fast, I will take the excavator from wherever and then I will charge the cost for you. That will allow me to go faster, but you will cost you a lot. So, yeah, in my experience you can really decrease the price of 50%.

Speaker 2:

Yeah, which means that bringing an excavator in contrast to using local labor with shovels and spades. Of course the excavator accelerates things, but it also doesn't create local employment, at least for a certain time. If you do it yourself, if you're willing to work with the community, you can save cost, but you can also create some local employment, create some kind of bonding with the community, get to know the community better, and so on. As a mini-grid company, I think that has some value, don't you think so?

Speaker 5:

Exactly, and not only employment. For me, a mini-grid project need to be not only accepted by the community, but you need to create a kind of sense of ownership on their side, which means that they are working into, they are really understanding how this project is difficult and, most of everything, they really understand how to do it. Of course, not really a technical part, but you need to have some kind of capacity building, and working inside the project is the first step to create this capacity.

Speaker 3:

I could add some comments about costing. So I came up with a price estimate for these 20 mini-grids it started as 20, now we're at 22, which was around $600,000, and that was based on some work I did for PowerHive a couple of years ago during COVID lockdown and I think it was accurate. But when we first started getting submissions for fencing the first part of the project you want to secure a place that you can store things and eventually place the power plant we found costs coming in two to three times what I estimated. And there's a number of factors there unique geography up here, very far from the capital, 600 kilometers plus out of 300 to my most distant sites, from Lodewar, three of NGOs and the large S associated with that. People think, oh, this is an NGO needing a fence. I can charge them 20,000 euros for a 40 meter by 40 meter fence, whereas the materials are about 2002.5 and the labor would be another 500.

Speaker 3:

So we decided not to go the EPC route, assuming that that would come in well over a million euros. And now it looks like I'm going to do it for about 400. So let's say I'm saving about 33%, not the 50 that David mentioned. But you know, every circumstance is different and the way I'm doing that is by tendering and buying the lowest cost thing according to our donors and investors not the best choice, but it is what it is.

Speaker 3:

I have a very small team, lean and mean. I've worked with them before. I trust them. They know what to do. The quality is very high. We don't have to go back and redo things not often. We were saving quite a bit based on my EPC estimate. But my EPC estimate was probably off by roughly half or a third of what it would actually cost up in this part of Africa. So David is right. But also every situation is different according to geography or the scale of the project, the available materials, whatever. I mean South Sudan would be a completely different story from here in Northern Kenya or down in Northern Mozambique or whatever.

Speaker 2:

What's your recommendation to mini-grid companies? Nowadays Most of the mini-grid companies are set up as mini-grid operators so they are prepared to manage existing assets. Unless they also do C and I, solar and these kind of things, they do not have the capacity to manage logistics, to do the construction, the installation, the commissioning and so on. Do you recommend mini-grid companies to build that expertise or do you think they should actually hire an EPC company or hire a team on an ad hoc basis? Because most of the companies they don't build thousands of mini-grids, they build some tents and then they just operate for a period of time. And if they have an ongoing engagement with a construction team and they have to pay salaries on an ongoing basis, then it doesn't pay off for them, I guess. What is your recommendation here?

Speaker 5:

I would advise companies to hire a team, not an EPC contractor. I mean, there are well, probably we are not many, but there are persons like me, like Chris, that has this experience and that can help companies to exactly unpack and avoid the EPC contractor. I mean a standard one that gives you the mini-grid turnkey, because that will really cost too much, as before. It's a midway, you know. I mean the EPC to me is the most expensive and well depends the fans that you are using, but most probably will never pay off. Do it yourself as well. It's probably not the option if you are not looking at the CLI, but if you are not looking at that, then you should hire for a period I mean the rollout phase of people that is used to do that and will help you to manage all the procurement, the logistics and the installation phase and hands up when they deliver to you the project you pass into the O&M with the real stuff that you were considering for your business.

Speaker 3:

I don't see much advantage to hiring an EPC. Most of them are traditionally working for the local utilities, which can be very corrupt, systems Quality is quite low and prices are very high. And, fundamentally, you have less control over your project if you put that layer of some business between you and the materials and the workers and the final product. And furthermore, for some of these smaller projects, like we've emphasized repeatedly, it's not a big project for them, it's not the same as grid extension and entire county or something, and so they throw one or two workers at it. They're so-called project managers who don't have much experience, and then you end up in a position where you're saying what are these guys here for? Because I'm doing all the management. Conversely, if a developer hires a team for this kind of thing, they don't necessarily need to keep them employed after completion. They're going to do the same thing that the EPC would have done, which is start with some core project manager and a couple of highly trained electricians or linesmen and then hire some other electricians and linesmen under that group and at the end of it all, everybody goes home. This is all contract labor. You do need that core project manager. I'm, of course, proud to say that I am one.

Speaker 3:

David mentioned it as well, and there's a bunch of us around Africa and more every day is more people get experience with this. So really, I think that's the future of mini-grids. And of course, many of these companies do aspire to some kind of world domination, like, oh, we're going to have 10,000 mini-grid sites within 10 years, or whatever snappy little visionary comment they make like that. Many of these companies do want to manage many, many projects. And can you do that with EPCs in the manner required with the newer meters, the smart meters, the more stringent quality control, hse and general standards required by European and American investors? I don't see that you can. The whole industry needs an upgrade and I see that best accomplished internally by starting with a core team and building from there, and then eventually you have some kind of very large company, and if you are in fact managing 10,000 grids across the continent, then you are going to need a pretty substantive operations and maintenance group.

Speaker 2:

Now looking at logistics specifically, there are specialized companies like Bolloré and others that set themselves up specifically for logistics in Africa and also rural Africa. Would you hire such a company to avoid risks of transport and logistics? Or would you say, well, they do it the same way we do it, and well, after all, delays will anyway hit us if they are coming from their side or if we handle it ourselves. What is your recommendation here?

Speaker 3:

Yeah, I have not even thought of that for two reasons. The materials I'm buying from the vendors come on trucks that the vendors own or have normal relationship with and perhaps in some case that might be a big logistics company, but here in Africa, more often it's a guy that owns trucks. Conversely, up here in turcanic county I'm using the local trucks. You know guys that speak the turcanic language, the guys that know the best place to cross the dry river bed, the guys that know how to not get stuck and how to get unstuck when they do get stuck. You know that's not the nirobi crowd and so large logistics company. I got the feeling they wouldn't even return my phone call. Be honest.

Speaker 3:

Because you're too small, because it's too complicated yeah, they know that whatever price they would give me, I would just hang up the phone anyway and that's something I alluded to in a recent post as well that, like you know, I might think that my fifty thousand dollar purchase of poles or pole dressing or cables is a lot of money, but for these big companies, you know five million dollars is a lot of money, and so you know that trickles throughout the whole system, from the procurement to the logistics to everything.

Speaker 3:

You know, even though it's a lot to me and my small team of linesman and site overseers, you know to anybody else to like fifty thousand dollar job, like not interested, you know where's the profit in that, and so you know you end up with the what we call the mom and pop shops. You know the small companies that do find Some level of profit in that, but they're generally disorganized, informal, less dependable, very hard to determine rates. The rates can change. You know guys shows up with the truck and then Want some extra twenty percent after it's been loaded. You know now what do you do. So, yeah, we're in a very precarious price point in that regard in my experience yeah, price point is a good subject.

Speaker 2:

what do you need to calculate per kilometer of delivery of, I don't know, five tons or twenty tons, to pick a lead for a delivery from the harbor to decide. Do you want to pick this up?

Speaker 5:

Well, it's a very difficult question. It's not only depending on kilometers but even where the truck has to go. Normally if the area is very rural, when you do the long, bigger trips talking about, and then you're from the house alarm Up to the highlands, couple of thousands of kilometers, the company doesn't charge you only the transport cost but even the risk component. And risk comes from different sources like, for example, part of the trip is on the rough road, the risk of the major in the truck as something that come in and they're charging for it as well. If you're passing here he has, where the relation with the police it's a bit more complicated they are charging that cost. So you cannot really say to have a flat rate, the planning, the budget, a large amount of the budget should be considered for logistic. Now for the transport body, even for whatever the logistic and sales. Normally my experience you are always around twenty percent of the budget spent in logistic costs.

Speaker 5:

Coming back to the previous question, is it true that sometimes materials should be transported with kind of informal Transporter, so people that is, owning his own truck. But things changes when you have import or quite valuable items like batteries, panels I mean the things that are more valuable and even a bit more fragile. But most of everything, when they have passed through the custom, baller is and other big companies are always more able to discuss with custom authorities because they are custom agents and I know how to move around things. Otherwise you risk to stay stuck on the custom boundaries even without understanding why. No, and weeks pass and you have to pay all the fees are ready to that. The panel to space. You know that for me is a nightmare whenever I have to pass through the custom and I don't have a reliable agent. That for me, is really a nightmare.

Speaker 2:

Have you ever tried importing without an agent?

Speaker 5:

Honestly, only once, because I was pushed to do that. I mean with an agent, with our kind of informal one. No, I mean you always need an agent because you need someone that is Allowed to enter in the custom and to do so. But my experience was terrible, as I said, and to save some couple of thousand dollars, then I ended up to spend something like ten thousand more than using bull, because, of course, bull and these big companies, I mean they are not the only one, we are talking about them, because they are everywhere in Africa, in Asia, so everyone knows them, but there are many of these companies Very specialized and which cost you more, let's say, but it's indeed an investment, in that case, worldwide.

Speaker 5:

Please do the audience, don't do it by yourself. You will end up to become crazy and spend a lot of money, even if you have. The case I was mentioning before was a kind of easy one because everything was exempted. You know kind of donation from dioceses to another diocese is. So you know things that doesn't have to pay tax. Basically, you think I just have to the harbor take it to pick it up and take it out from the custom.

Speaker 5:

No, doesn't work like that Up to the gate someone can stop you and you will not know how to move again.

Speaker 2:

Yeah, yeah, okay. So if we want to import something, then these large logistics companies are definitely useful, but would you that also let them deliver the more expensive inverters or PV panels or so to site, or would you pick up the goods from the harbor and do the remainder of the logistics yourself?

Speaker 5:

If the infrastructure allows, I personally prefer them to ship.

Speaker 2:

For insurance purposes, to make sure that they are safe.

Speaker 5:

Exactly coming back to the Jume experience we had to transport on the highland and of course that is something that ballory will not even quote. I mean they will not do it. Yeah, one where we had this quarter. Then yes, because you have a thousand five hundred kilometers in where you are relatively safe.

Speaker 2:

Chris, we just had a discussion about how much does a kilometer of deliveries cost to rule Africa. Do you want to elaborate on that a bit?

Speaker 3:

Sure. So here in Kenya my most experience and most recent experience I'm finding that transport is about a euro fifty to two euros per kilometer and that would be round trip, because the truck cannot load something and return it to its destination, so they charge you both ways. So that could be the same for a lorry coming with forty drums of cable from Nairobi, a lorry coming with a hundred and fifteen poles from Eldorette. It could be the same for a local truck carrying ten drums of cable from Lodewar to a site two hundred kilometers away. The price seems to be about the same regardless of the size of the truck and the capacity and the destination, and of course there's variance within that. And maybe when this is all over, I'll go back and look at it more thoroughly and see if I can find a trend. But that's our general cost range.

Speaker 2:

And well, this means, after all, that trucks need to be properly loaded. If you have a half loaded truck, then you pay extra.

Speaker 3:

Yeah, then you have to hire two trucks. You have to do it again.

Speaker 2:

David, then maybe you want to talk about the risk of theft, and what do you do to prevent theft during transport, during storage, on site, even afterwards, after installation? Yeah, you're right.

Speaker 5:

That is definitely a problematic aspect, and I don't have straightforward answer. The only one that comes in my mind is something that we already touched previously, which is you need to have people engaged. I mean, they really need to have a sense of ownership on things. Otherwise it will be very difficult to protect, because everyone is trying to use anti-threat materials like bolts and whatever. But that is something that the day after you are leaving can be cut simply. People can even not care about that. Instead, it's people that is protecting their materials. If they understand the potentiality of the mini-grid and normally they do when you go in the operation phase then they will protect themselves. Of course, the most problematic part is before that day, when you have all the material there and all the equipment is basically easy to be taken. In that case, the collaboration with the local authorities becomes the main way to protect.

Speaker 2:

Yeah, and actually paying a guard to take care of the equipment is just part of the solution. The guard would potentially keep kits from throwing stones on the PV panels or playing around the equipment, but if somebody comes with a gun, then what should the guard do? He runs.

Speaker 5:

Exactly. I mean, take a panel or cable. The value is enormous compared to the local economies, so there's no proportionality. How can they protect that?

Speaker 2:

Yeah, but what equipment is most vulnerable in this regard? There is not a market for lithium-ion batteries. There's not a market for large PV inverters, or so there's probably not even a market for large PV panels in rural areas. You need to bring this stuff back to the cities to sell it.

Speaker 5:

True, but panels and cables are something that can have a value for sure everywhere, and even panels, because every village I mean I've been in very, very rural areas of Africa and everywhere you find a very small shop in a muddy construction with panels. So it means that people is understanding. Then you might use these 500 or above VAT peak panels, which has a 40-volt output and they will not be able to use for anything basically no, Because your voltage is too high.

Speaker 2:

They connected anyway Exactly.

Speaker 5:

We'll go back to the previous statement Bigger is better.

Speaker 3:

I mentioned before, I like the just-in-time delivery, which narrows the window for opportunistic theft. If the stuff's coming from a manufacturer in Nairobi directly to my site and it weighs 500 kilos and it gets locked inside a gate an hour after delivery, that part is taken care of. It's not sitting in a warehouse that could be broken into in the middle of the night with some guys with a 10-ton truck who walk away with 20 drums. I took a risk this year and we actually put the pole dressing on the poles before erection. That's unheard of in Kenya because in the more densely populated areas there's plenty of people with Linesman experience who have climbing gear that'll scooch right up there and grab that stuff and they can sell it in the local market. Here we don't have that level of expertise or equipment and the local market isn't going to buy it because there just isn't enough electrification up here. It's too sparsely populated.

Speaker 3:

I think you guys mentioned theft of cabling or conductors from the overhead lines. That's a huge problem in many places and for that reason a lot of people like to do a finish-to-finish schedule sequence so that the conductors in the power plant are completed at the same time and that stuff is energized immediately. That is perceived to be a disincentive to stealing conductors, but it still happens. We again have a pretty deep relationship with the community. We rent people's empty houses for storage. So all of our expensive stuff goes into somebody's house. That would be the copper-coated ground, rods, the meters, the ready boards, some of the other things or higher value. They might not be of any value to the local people but because it's a bright, shiny object they're more inclined to grab it.

Speaker 3:

You'll see, so far we haven't had a problem here because I think the distribution of the villages, the small size of the villages if somebody's from not around there, it's like they've got a big red arrow over their head and I've seen that on our villages on the highway. I'll say who's that guy? We don't know, he's not from here. They're very wary of theft themselves. So it hasn't been a problem here in Turkana, but in other counties Busea or Kisi theft is a huge deal. Of course your EPC can be in on it and that's another reason I think that was not really mentioned earlier. An EPC is typically more expensive but you also have less control at every level and you are more subject to some kind of overcharging, overbilling. They might say they bought 150 poles but there's only 110, and you don't find that out until you finally count them. A year later that has happened. It's been a big problem here in Kenya with various mini-grid companies that I'm personally familiar with.

Speaker 2:

David, let me start asking you the two final questions. I would like to get some insight from you on what is the biggest hassle of working in rural Africa and what is the greatest joy of working in rural Africa for you.

Speaker 5:

For me, the hassle comes mainly from bureaucracy. Sometimes you really have to fight again local government, national government, custom authorities. That is where you have the bigger problem. You can just try to adapt yourself and it's very difficult to find way out. Basically, it has a huge impact on the timeline of the project and the consequence costs and make everyone unhappy. Really, when you are on a very rural area when I was living there in most of these almost 20 years I've been in Africa, I was living in rural areas, not in capitals. When you live there, when you are able to create something well, this is wonderful. I would never change my job for another one.

Speaker 2:

Chris, what is the biggest hassle of working in rural Africa for you and what is the greatest joy?

Speaker 3:

I agree with David. The level of bureaucracy and the number of hands out for some kind of demand or other is ginormous, and I'll never get used to that. Quite simply though, my biggest problem is the flies. I have a constant battle with flies, something else I'll never get used to. Biggest joy for me is, quite frankly, just getting shit done in a difficult place where most folks don't even get out of the air conditioned Land Cruiser. I really savor my ability to assemble a team, train them, make things happen, have beer and chicken at the end of the day and, just like David said, seeing something accomplished. This is some of the hardest work I've ever done, and that's what it's all about for me.

Speaker 2:

All right, thank you both. That was very interesting and very insightful Thanks to you, Nico.

Speaker 3:

Well cool. I enjoyed this. Thanks for the opportunity and I look forward to hearing it.

Speaker 5:

It was a pleasure and thank you, chris, as well.

Speaker 4:

Hello, my name is Holger Peters, cto and co-founder of Inensys. I always try to be once in the field myself for most of our projects, as this is the only way to understand the local requirements in detail. I'm involved in the process of procurement, logistics and implementation of mini-grid infrastructures for more than 15 years now. As we've heard from Chris and David, both practically made very similar experience. The more you go, the less predictable transport conditions and business practices become. Details of the work and logistics requirements change from region to region and are available from an informal sector only.

Speaker 4:

There's a very strong benefit involving the locally available workforce for the construction.

Speaker 4:

This local involvement only brings a limited income to the community, but creates a valuable feeling of ownership regarding the installed assets, which is highly important for the latest success of operations.

Speaker 4:

The other option could be to bring everything from the capital abroad, with access to better trained workers, more machinery and of better quality, but this usually comes at much too high cost. The project cannot manage at the risk for lacking local experience as part of the budgeting. Both of whom that share their experience fully agree that the various risks involved in every stage of the project come at the specific cost Truck drivers and logistics companies charge for the risk of using bad or unsafe roads. The highest risk that needs to be paid for is when involving EPC contractors, which are to take the full and overall responsibility for engineering, procurement and construction to deliver a turnkey project within the agreed timeline. This may cost up to 50% additional compared to logistics and construction costs. When implementing the project at own risk and assuming to manage the unexpected problems cost efficiently, every project manager can only rely on own experience when taking the decision of involving external contractors with a lower or higher scope of responsibility for the contribution to the project.

Speaker 1:

This episode of the mini-grid business has been brought to you by Inensis, your one-stop shop for sustainable mini-grids. For more information on how to make mini-grids work, visit our website, inensiscom, or contact us through the links in the show notes. The mini-grid business powered by Inensis.

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