NextBillion - An Initiative of the William Davidson Institute at the University of Michigan

An unidentified Shell employee famously said, “The Stone Age didn’t end because we ran out of stones,” illustrating the revolutionary implications of design and creativity. While this Shell employee was hinting to oil’s fallibility with the advent of alternative energy sources, base of the pyramid (BoP) energy markets will also undergo a makeover: with increasingly available forms of alternative energy in conjunction with fresh technologies to deliver them, BoP markets have, in many ways, a more favorable outlook than the aforementioned oil company.

Renewable energies are pregnant with promise to eclipse the traditional energy market that is currently dependant on oil (a limited and depleting resource) and the restrictive electricity grid that previously fueled parts of the world (that if extended, could include a huge percentage of low-income customers that were previously left in the dark).

The most pertinent and oft-cited fact about energy and the BoP is that 1.6 billion people in the world lack access to electricity. But according to the BP World Energy Report, by the end of 2008, the Middle East and Africa had produced 754.1 and 125.6 billion barrels of oil respectively. Similarly, the Middle East produced 75.91 mil cubic meters of natural gas, and Africa produced 14.65, a significant piece of the global energy production pie. While most of this region is resource-rich, it’s downfall is that it is infrastructure-deficient.

The good news is that there are other sources of energy that can overcome a litany of infrastructure constraints: solar, wind, hydroelectricity and biomass are all viable ways to produce electricity, and potentially supplement conventional sources of fuel.

Although renewable generation of electricity addresses the issue of supply, and lessens the environmental damage, there are other problems to consider. These sources of energy are localized and limited by nature and her cycles. The sun’s rise and fall and the winds’ unpredictable gusts provide an intermittent supply of energy, inhibiting our economy from relying on these sources. Solely generating electricity is insufficient; its application and technology are both key. New and upcoming players in this sector must find ways to circumvent the aforementioned infrastructure issues. The result of success? With electricity at its disposal, low-income customers will have more hours to their day. This means more hours for education, more business hours for working, and more hours for cooking (as well as more safe and viable devices with which to cook).

The next few posts will be part of a series that by no means claims to be expert, rather hopes to be a descriptive review of companies and projects “extending the grid” for the BoP. The organizations and technologies featured in the upcoming posts are worth watching, based on their success thus far and their immense potential looking forward. This series will be broken up according to organizations that generate energy, and then those that render it useable. With an eye on the following organizations, and their eyes on innovation and market based solutions, we hope to extinguish the huge and debilitating void that currently exists at the BoP.