Solar power: cheap electricity for world’s poor

Nor, for the record, do the electrified middle class pay for electricity up front. When I moved into my house in San Francisco, I did not get a bill for my share of the power plants and transmission grid that give me power each month. I pay as I go, based on how many kwh’s I use that month.

So lighting the lives of 1.2 billion people with off-grid renewable electricity requires three ingredients: 

• Capital to pay for solar or other renewable electrical generation for 400 million households that depend on kerosene;
• Business models for those households to pay for the electricity they use, at the price it really costs, which is a lot less than kerosene;
• Financing, public policy, and partnerships to create the supply chains and distribution networks capable of getting distributed electrical systems to every household that needs them. (These needs might require $6 billion in credits and loan guarantees.)

The money is on the table. It’s just on the wrong plates. Purchase and finance of solar power for 1.2 billion people would cost about $10 billion a year over a decade. The 11 countries with the largest number of households without electricity spent $80 billion each year subsidizing fossil fuel – only 17 percent of which benefits the poor. In 2010, the World Bank spent $8 billion on coal-fired power plants, few of which provided meaningful energy access to the poor. The UN’s Clean Development Mechanism is proposing to give $4 billion a year to anything-but-clean coal plants. So there is already far more capital in the system than is needed.

Even five years ago the business models did not exist to enable the poor to afford solar. Solar was much more expensive. The only alternative to buying a solar system with cash was a bank or micro-credit loan for which most of the poor could not qualify.

But the combination of dirt-cheap solar, the cell-phone revolution, and mobile phone banking has changed everything. There are almost 600 million cell-phone customers without electricity – using their phones very little, still spending $10 billion to charge them in town. There are hundreds of thousands of rural, off-grid cell towers powered by diesel – at a price of about $0.70/kilowatt hour. All over the world cell-phone towers are being converted from diesel to hybrid renewable power sources. So cell phone companies have a powerful motivation to get renewable power into rural areas, to get electricity to their customers, and to charge for electricity through their mobile phone payment systems.

At least three commercial models have been launched in the last several months. India’s Simpa Networks – in partnership with SELCO in India and DT-Power in Ghana, India, and Kenya – are testing models in which solar distributors can allow customers to pay for electricity through mobile banking “pay as you go” plans.

Zimbabwe’s Econet Power has launched an even more intriguing model, in which it provides its cell-phone customers with solar power as a customer benefit, charging them only $1 week to use a home solar system provided by Econet, with the bills tied to the customer’s cell phone account.

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