How to help business speed up electricity access for the poor

Thursday, 27 April 2017 10:00 GMT

Villager Mohan Bharwad poses next to a Compact Fluorescent Lamp (CFL) powered by solar energy, outside his house on the outskirts of Gandhinagar, India, June 25, 2015. REUTERS/Amit Dave

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Government policies make a big difference to the development of off-grid power markets in developing nations

Providing clean electricity to everyone in the world is one of the most daunting challenges facing our generation. A new report tracking country-by-country progress on sustainable energy trends make this crystal clear.

More than a billion people - nearly one of every seven people on the planet - are still living in darkness without electricity.

No matter how you cut it, the world is far from being on track to achieve UN Sustainable Development Goal 7: providing universal access to modern energy services, doubling energy efficiency improvements and doubling renewable energy mix, all by 2030, according to the recently released 2017 Global Tracking Framework report.

But progress can happen – and quicklyAmong the brightest spots is a rapid surge in decentralized renewable energy (DRE) - especially solar for home and business - in the world’s most remote, rural regions, where 80 percent of the world's unelectrified live.

Spurred by plummeting costs, innovative business models and a new class of ultra-efficient appliances, distributed solar systems are now providing energy services to an estimated 60 million Africans who live beyond the reach of electric grids. In Afghanistan, 58 percent of the country’s rural population is getting power from off-grid solar. Bangladesh and India are also transforming lives for tens of millions with decentralized solar systems.

So how can we turn these inspiring pockets of progress into transformational change across the entire globe? Some of the answers came at a recent sustainable energy forum in Brooklyn featuring many of the world’s best and brightest working on clean energy in emerging markets.

Business-friendly government policies are an essential factor that many companies are relying on.

A new report from DRE-focused coalition Power for All, released at the forum, for the first time identifies key national energy policies that were pivotal in helping countries like Kenya, Tanzania and Bangladesh unleash decentralized electricity. These include low import duties and tariffs on off-grid related products; more local financing support and setting clear energy access goals and timetables.

“We call them policy accelerators,” report co-author Rebekah Shirley told forum attendees, stressing however that "acceleration is only possible with political will and leadership".

The Power for All report includes specific recommendations for governments on how to best implement high-growth DRE policies, based on success in countries like Sierra Leone, Zimbabwe and Nigeria, including the integration of DRE into national energy planning, and creation of public-private implementation task forces.

An executive at M-Kopa Solar, a major solar provider in East Africa, says the report’s conclusions are dead-on, and she highlighted the case of Kenya where the company got its start seven years ago. 

“We were able to do a lot of innovative things without the government interfering,” said external affairs director Pauline Githugu, whose company has sold 450,000 solar systems across East Africa, most of them in Kenya.

Githugu praised the government for its national energy strategy which recognizes that decentralized renewable solutions are a quicker and more cost effective way to provide power in remote parts of the country where electricity grids do not exist.

Dozens of companies and funders who attended the forum are seeing promising success in Kenya, Tanzania and other sub-Saharan Africa countries where energy access is an especially pervasive problem. India and other south and southeast Asian countries were also well represented.

Many of the forum attendees were decentralized solar providers who are taking big advantage of ubiquitous mobile phones and mobile money in East Africa to sell their systems. The mobile money feature enables customers to finance their home solar systems with an up-front deposit and daily payments - all done on their cellphones.

“Mobile money is a key element for our business model,” said Thomas Duveau, head of business development at Mobisol, which has sold 75,000 solar systems in Tanzania and other part of East Africa.

So what will it take for these companies to branch out to other African countries?

A variety of positive factors, including market conditions, supportive policies, local staffing capacity and necessary capital, are all needed before expanding. Ethiopia, Africa’s second most populous country, is an enormous potential market, for example, but “it’s not very easy” to do business there, Githugu said, citing issues like worker visas and operational challenges.

Mobisol’s Duveau said he’s mostly focused on boosting sales in countries like Tanzania and Rwanda where their market penetration is still in the single digits. Additional expansions, he said, would more likely be done through licensing agreements with partners who better understand local conditions.

“I can’t learn about every country,” he said. “In my lifetime, I will not learn how to get a container out of Lagos (in Nigeria).”

Peyton Fleming is a senior director at Ceres, a sustainability nonprofit organization leading the most influential investors and companies to build leadership and drive solutions throughout the economy. Learn more at http://www.ceres.org or @PeytonCeres