How EM-ONE used Odyssey to pick the 150 most economically viable sites out of 1,200 presented
How can you be sure that all the investments that go into a DRE project yield the desired results – whether they be financial returns, electrification goals or emissions reductions goals? One answer is to conduct a thorough feasibility study to fully understand the potential of a project before you break ground.
Odyssey’s planning and finance platform guides project developers through the process, from collecting the necessary data through on-site surveys and power design optimization to employing a financial model that returns clear metrics around projected IRR, projected payback time, levelized cost of electricity (LCOE), operating margins and more.
This case study examines how EM-ONE, a mini-grid developer in Nigeria, worked with Odyssey’s Planning and Finance team and platform to select the 150 best sites out of 1200 proposed for a health center electrification project funded by a large American development agency. The north star of the health electrification project is to ensure that the mini-grids generate enough revenue that they can pay for their own ongoing operations and maintenance costs, without needing additional donor funds to keep them running. The first step toward ensuring the project sticks to its north star is a robust feasibility analysis.
EM-ONE is an engineering and technology firm focused on accelerating Africa’s energy transition through sustainable energy solutions. A large part of their portfolio has focused on providing affordable, reliable and sustainable power to health facilities across the continent. Their powering health portfolio includes over 300 mini-grids totaling 12MW of capacity. In response to COVID, a major US development agency wanted to boost health care access and in 2021, EM-ONE won a bid from them to develop 150 mini-grids across Nigeria to power healthcare facilities and their surrounding communities through a sustainable business model. EM-ONE found 1,200 possible sites and needed robust financial modeling to determine which 150 would see the highest returns. Odyssey worked with EM-ONE to do an in-depth feasibility study to narrow in on the most impactful and economically viable projects.
Overview of project:
Odyssey guided EM-ONE through each core step of the feasibility study:
- A geospatial analysis
- Community surveys
- Customer surveys
- Healthcare center surveys
- A techno-economic analysis
- Investment prospectus
- Regulatory review
- Development impact assessment guide
- Equipment procurement recommendations
- An implementation plan
- A final report
Getting from zero to one
The first half of the feasibility study, steps one through five, are focused on ingesting as much relevant data as possible and feeding that into a model that will return key metrics for site evaluation. The first step, to conduct a geospatial analysis, was conducted by Fraym to determine the 300 sites that the Odyssey team would look into further. Fraym analyzed 1,200 sites from the pre-selected list of healthcare centers, provided by USAID’s Integrated Health Program. Fraym used existing survey data from previous studies and satellite imagery to determine the 300 sites that the feasibility study should pursue.
Next came a series of site assessments, conducted via surveys with community members, health centers, and commercial interests who would be the consumers of the power produced in excess of what the health centers need. We partnered with Brook Edge, an in-country site assessment team to implement these surveys at each site. The goal of these surveys was to understand the capacity and equipment at health care centers, energy demand across the community, and a preliminary assessment of willingness and ability to pay. Information from the site assessments was used to make detailed, 24-hour load profiles in the Odyssey platform, which projected electricity demand for each site.
Getting to the most cost effective design
Along the way, Odyssey partnered with EM-ONE to input their system design costs into the Odyssey platform to determine the hybrid-PV system sizing. Odyssey integrates with HOMER, a tool that specializes in detailed power generation and mini-grid design optimization. Based on data provided by EM-ONE, the Odyssey platform ingests details like lifetime of components, CAPEX and OPEX costs, excess electricity, load met, and renewable energy fraction, and ultimately shares the most cost effective system design. Additionally, Odyssey estimated costs for the distribution design using its proprietary distribution design application and added information for any remaining CAPEX and annual OPEX costs that were provided by the EM-ONE team.
Odyssey used LCOE values calculated by HOMER to find optimal tariff rates for each future customer. These tariffs are added to the Odyssey platform to fully construct a revenue model over the lifetime of each project.
With all the data finalized, the Odyssey platform ran its proprietary financial model to determine financial performance data like IRR, payback period, project CAPEX, average revenue per user, operating margin, and more. With this data in hand, Odyssey and EM-ONE were able to easily choose the sites with the most promising economic outputs, and demonstrated a sustainable model to power health facilities in Nigeria.
The next step: from screen to scale
The next phase of the project focused on getting the project beyond the planning software and into execution mode.
Odyssey has relationships with dozens of financiers who specialize in investing in distributed renewable energy projects. We worked with EM-ONE to write an investment teaser to circulate with potential investors and initiate conversations with different investors to finance these projects.
Odyssey ensured EM-ONE’s project would comply with current regulations by writing a regulatory review report, which included a checklist of steps to ensure full compliance. One of these regulatory requirements is the submission of Environmental and Social Management Plans (ESMPs). Odyssey also worked with Brook Edge to complete ESMPs for the 300 sites. Brook Edge’s knowledge of and experience with Nigerian regulators made them well suited to complete the ESMP reports and submit them to the Federal Ministry of the Environment.
To understand the environmental, health and socioeconomic benefits of the mini-grids, Odyssey created a development impact assessment, which outlined key performance indicators to measure the success of this project. These indicators can be used by EM-ONE to conduct surveys of their sites after they are constructed to clarify the benefits of energy access. Indicators included number of households electrified and mini-grid operator profit, and indicators relating to the healthcare centers, such as number of deliveries per month and vaccine storage availability.
Odyssey works with solar equipment manufacturers to make equipment available quickly and at the best price to renewable energy companies across Africa. Based on our in-depth knowledge of the EM-ONE project sites, we recommended OEMs who would be interested in supplying equipment for all the 150 mini-grid sites. Through Odyssey’s procurement platform, Odyssey Procure, EM-ONE also has the option for more affordable options for components across all the selected sites.
As the build phase begins, the EM-ONE team can follow the implementation plan developed by Odyssey. This is a step-by-step timeline with specific tasks that each team follows to execute tasks. Odyssey will also build out analytics dashboards to monitor the build, payments and consumption, appliance financing, and more. When each site is completed in the future, Odyssey also offers its suite of remote monitoring and control devices.
EM-ONE is well on their way to breaking ground on this ground-breaking project. These 150 sites are the largest portfolio built by a single developer directly addressing the challenge of sustainably powering healthcare in Nigeria. Odyssey is glad to have played a role from the start and looks forward to continuing to support the project as it progresses.
This case study details a very thorough feasibility study that Odyssey implemented for EM-ONE. Many of these tools are available, free of cost, to renewable energy companies anywhere in the world. Want to learn more about our planning and finance platform? Get in touch firstname.lastname@example.org