Many rural communities lack energy infrastructure and reliable power sources. Some businesses are determined to change that with new business models that offer clean energy so cheap that even the poorest families can turn on the lights at nighttime.
In the developed world, we oftentimes take power for granted. We push a button or plug in a device and voltages flow effortlessly and endlessly. However, many communities around the world do not enjoy this basic privilege. An estimated 1.2 billion people globally go about their everyday life with no access to electricity. Eighty percent of these live in rural areas, and progress to provide electricity to urban areas happens twice as fast as with non-urban areas.
Even though global electrification rates climb every year, rural communities are left in the dark with poor opportunities to cook, heat, read, and socialize. With electricity lacking, kerosene and coal often become the only energy options, which not only carry serious health risks but also damage our global climate.
We know the challenge ahead of us: we need to bring affordable, reliable, and predominantly clean power to the remaining 16 percent of the world’s current population and to an additional 1 billion by 2030, as put forward in the UN’s 2030 Agenda.
Remarkably, some of the solutions that will get us there are rolled out in the very places where energy is as scarce as water in the desert. Some businesses have made it their mission to provide renewable energy to rural communities. In particular, solar power is becoming popular in sub-Saharan Africa and developing Asia, which accounts for 95 percent of the world’s non-electrified population. These companies have established new, clever business models which cover even the poorest families.
DEMOCRATIZING THE SUN ONE GRID AT A TIME
It is actually quite simple: if you don’t have access to electricity, you don’t use electricity. If you cannot afford electricity, you find cheaper alternatives. Therefore, the primary challenge for energy businesses in rural communities is not only providing access to power but also selling it at a price competitive to that of kerosene and coal. Luckily, technological advancements and a growing global market have cut the cost of solar so heavily that it is able to compete with coal in many parts of the world and will be the cheapest power source globally within a decade.
Gram Power has made the most of this situation and established a business model that relies on small-sized centralized solar grids able to power whole villages. The company’s power stations provide energy to individual households, which are equipped with a smart metering device that prevents power theft, ensures correct billing, and enables wireless payments. Deployed in over 30 areas in rural India, this solution allows villages to source cheap power via community-based grids instead of turning to fossil fuels.
While a local grid can have its benefits, micro-grids are gaining even more traction in rural communities. For example, UK company Azuri has created the PayGo microgrid solar systems that are deployed in many parts of Africa and tailored for individual households and small businesses. Like Gram Power, Azuri combines solar and mobile technology to enable direct payment via phone. However, with the PayGo system, the customer can unlock the solar system for good after 18 months of payments or upgrade to a bigger system that provides more power. In essence, the business model allows the customer to slowly pay off the system and own it in the end – and consequently become energy self-sustaining.
Kenyan company M-KOPA represents a similar solution as it provides solar microgrids based on daily micro-payments of just half a dollar. After a year, the family owns the microgrid and has the opportunity of continuing to pay micropayments in exchange for additional devices such as TVs, radios, and cook stoves. Like Azuri’s, this business model allows even the poorest residents to become solar system owners by creating affordable financing models.
At the community level, solar power can also have a great impact after the sun has set. The Philips’ Community Light Centers is an example of this. The solar-powered centers measure around 1,000 m2, equivalent to the size of a small soccer pitch, and allow better and brighter social life during nighttime. The centers, which can be found throughout most parts of Africa, power up health care facilities, serve as reading light and give opportunities for evening soccer tournaments thanks to efficient battery storage.
Another initiative, SolarKiosk, also has an intrinsic focus on community with its solar-powered hubs. In these multifunctional micro-stores, locals can charge their phones, buy essential products and get internet access. The hub’s clever design even allows it to be expanded and rebuilt according to community needs. For example, locals with no construction training can easily turn a micro-store into a movie theatre, according to SolarKiosk. Recently, the German company teamed up with the Coca-Cola Company to build the EKOCENTER – a community center and general store run by local women which provides clean drinking water among other services. The centers can be in six African countries and in Vietnam and Cambodia.
MAKING HAY WHILE THE SUN SHINES
All of these solutions tackle multiple problems. Not only do they prevent and alleviate energy poverty and the numerous challenges associated with it – they also establish clean energy systems and provide rural communities with a head start in the journey towards a world powered by 100 percent renewables. Infants are born under solar lights and they grow up to become renewable natives, likely with a much more humble approach to energy than the one predominant in developed societies.
With 2.5 billion more people to power in 2030, solar energy will undoubtedly play a big role in the future, and clever solutions and business models such as the five presented will be a crucial part of getting us on the right track, both socially and environmentally.