Report: In rural Nigerian communities, small electric vehicles powered by cost the same as fossil fuels and expand access to electricity
RMI, Factor[e] Ventures and the UK-charity Shell Foundation show scaling electric mobility with a growing minigrid industry is profitable for both minigrid and electric vehicle operators and improves community access to transportation
Abuja, Nigeria – April 21, 2022
Renewable energy minigrids can power two- and three-wheeled electric vehicles (EVs) for the same cost as fossil-fueled alternatives. This offers rural Nigerian communities the benefits of clean, affordable transport; bolsters electricity sales for the rural utility; and decreases electricity prices for all. In a new report, Powering Small-Format Electric Vehicles with Minigrids, RMI, Factor[e] Ventures and the UK-charity Shell Foundation draw on two pilot projects to show that these symbiotic energy-transport benefits are within reach for rural communities.
People living in rural areas throughout the world are held back by limited access to both affordable transportation and electricity. More than 70% of rural Africans are unable to reach jobs, education and health care due to inadequate transport. Three in four people living in rural sub-Saharan Africa also lack access to electricity.
“This study offers compelling evidence that minigrid-powered EVs can simultaneously support access to clean transportation and electricity,” said James Sherwood, principal, RMI Africa Energy Program. “By tailoring business models to customer needs and boosting vehicle utilization, further investment can pave the way to a future where electric mobility is the option of first resort for moving people and goods, all while strengthening local electricity demand and lowering tariffs for all.”
In many rural communities, minigrids powered by renewable energy are a better option than extending the national electricity grid. The report finds that integrating EVs provides even more benefits such as clean, affordable transport in addition to reliable electricity access. To maximize these benefits, results show that EV-minigrid business models must align EV and minigrid operator incentives while tailoring mobility offerings to the needs of rural customers.
“To make a quick return on investment, EVs must be literally covering a lot of ground, nearly every day. This rural mobility pilot was instructive for proving technical feasibility with minigrids, testing customer interest, and underscoring the need for high utilization and daytime charging. The strong use case in Nigeria for linking the rural community with an economic hub or transfer center suggests a future model in which E-Motos are the affordable mode of transport on predictable and highly trafficked routes,” said Amanda DelCore, director, Factor[e].
The study shows that:
- At the costs, rental revenues and vehicle utilization observed in the Nigeria pilot, investments in leased electric two-wheelers are expected to pay back within a 10-year vehicle life.
- The payback period for an electric two-wheeler used in a daily rental business model at a rural minigrid community ranged from three to ten years across model scenarios. The EV economics were strongest in scenarios where vehicles were rented more frequently than in the Nigeria pilot.
- Increasing vehicle utilization is key to maximizing EVs’ benefits to minigrids and EV cost competitiveness with fossil-fueled vehicles.
- Future investment can raise utilization and maximize the value of EVs by tailoring the business model and vehicle designs to the specific needs of rural mobility customers. Thorough customer research is a first step to understanding these needs and increasing EV use.
“Access to affordable renewable energy and clean transport is central to delivering the inclusive growth that serves low-income communities in sub-Saharan Africa,” said Richard Gomes, acting CEO, Shell Foundation. “By demonstrating the clear synergies between these two technology sectors — electric vehicles and minigrids — this report provides a path to scaling access and improving the health, education and earning potential of millions of people.”
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