Imagine a future where a restauranteur in rural Nigeria flips on her shop lights and pulls cold beers from the fridge as the evening crowd trickles in. Her old diesel generator sits dormant — today, power comes from a solar minigrid, and it is cheaper and available 24/7. Outside, an electric motorcycle soundlessly whirs in with today’s order of plantains from the market in the next community over. The EV pulls away, fumeless, to return to its charging station as customers enjoy a football match broadcast in the quiet, clear evening air. As this scene repeats throughout the country, electrifying small vehicles and charging them on a cleaner grid reduces pollutants and the associated human health impacts.
A new report from RMI, Factor[e], and UK-charity Shell Foundation shows that this future is within reach. A growing renewable minigrid industry and a booming market for two- and three-wheeled electric vehicles opens the door for minigrid-powered EVs to become the option of first resort for families and businesses with the ability to invest in motorized transport.
The study concludes that small-format EVs available today can compete with fossil-fueled alternatives at a wide range of energy prices. In turn, daytime EV charging loads could improve economics for solar-hybrid minigrids. But high vehicle utilization is critical to realizing these benefits for EV operators and rural electricity systems. As companies and investors seek to raise the utilization of EVs in rural areas, they will need business models that understand and prioritize the transport needs of rural users.
In two pilots that deployed EVs at minigrids in India and Nigeria, electric two- and three-wheelers whisked customers and goods to and from community centers, while battery charging revenues went to local energy providers instead of accruing up the fossil fuel supply chain. In Nigeria, mobility company MAX leased electric two-wheelers to certified local drivers at the Rubitec Solar-operated minigrid in Gbamu Gbamu, Ogun State. Drivers used the vehicles to travel between hubs within a 20-kilometer (km) radius, consuming about one kilowatt-hour of minigrid electricity per daily rental. MAX considers the pilot program a success and is expanding rural operations as well as establishing domestic EV manufacturing capabilities.
In India, social enterprise SMV Green Solutions leased lithium-ion batteries to local drivers who already owned and operated electric three-wheelers using lead-acid batteries. These vehicle owners were initially skeptical of the monthly battery subscription model. Although participating local drivers reported better range and lower costs compared with the lead-acid batteries they were using previously, many ultimately sidestepped the minigrid charging process by topping up their leased batteries at grid connections near the local market where demand for ride-hailing was highest. These factors combined with the high cost of maintaining rural operations led SMV to discontinue the pilot.
Additional technoeconomic modeling based on data from these pilots showed that small-format electric vehicles such as the two- and three-wheelers studied here can compete with gasoline alternatives on total-cost-of-ownership basis, at a wide range of energy prices.
The total cost of ownership of both the gas and electric vehicles was especially sensitive to changes in up-front vehicle cost, vehicle efficiency, and average daily mileage. A $1,300 electric two-wheeler costs about $400 more than its gas alternative, and fleets using a battery swap approach to charging required an additional $500 per vehicle to acquire enough batteries to maintain a ratio of 1.5 batteries per vehicle. These higher up-front costs pay off quicker the more the vehicles are used, as the operating cost advantage of lightweight EVs shines through even at the electricity prices required to sustain isolated rural minigrids.
In the Nigeria pilot, the battery swap charging model concentrated charging loads during daylight hours, which correlated well with surplus solar electricity generated by the minigrid system. Modeling showed that the increased electricity demand from charging a fleet of 5 two-wheeled EVs, driven at the pilot’s daily mileage (12 km/vehicle/day), generated enough electricity sales to reduce the price of electricity by 1 percent. This additional revenue is about the same as adding a typical small business customer to the minigrid. Doubling the number of vehicles to 10, and driving each vehicle 19 km a day, generated enough electricity sales to reduce the tariff for all customers by 6 percent.
Increasing EV utilization is key
In an EV or EV battery leasing business model, high vehicle utilization is the key to strong revenues and to realizing EVs’ operating cost advantage over fossil-fueled vehicles. Further, high EV utilization raises electricity consumption and allows minigrid operators to sell more power, which may motivate the minigrids to negotiate with the EV operators on price. Customer research, on both local drivers and the people who hire them, can help EV operators adapt their mobility offerings to local needs and improve competitiveness with other modes of transport.
EVs may not yet be commonplace in rural communities, and generators still whine relentlessly while customers wait for minigrids to arrive. But potentially transformative change is within reach through electrification that includes minigrid-powered mobility. This study shows that small-format EVs are a logical place to start with expanding rural e-mobility as part of a broader demand-side strategy, which can simultaneously promote both new electricity access and use in off-grid areas. To successfully deploy EVs at rural minigrids, EV companies must work with rural customers to meet their specific transportation needs. Investment can also be targeted to markets where motorized transport demand and reliable minigrids are already present. Successful subsequent investments stand to unlock market-driven progress in electrification and e-mobility toward a more sustainable, economically just future.
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