Selling energy as a service meets the poor’s needs and generates profits

Wednesday, May 14, 2014

A good starting point for a business is usually to target customers with money, and in places that are easy to reach. So it might not seem an obvious business opportunity to provide electricity to the 1.3 billion people in the world who currently lack access to grid electricity. Many of these people are very poor, living in remote areas with few roads or other infrastructure to connect them to the rest of the world.

But for-profit businesses are starting to do just this, and in increasingly creative ways, offering new hope of ending energy poverty, which stymies both human and economic development. Solar electric (photovoltaic) panels are the preferred technology for electricity generation, as you don’t need huge infrastructure – solar can power something as small as an individual reading lamp.

The good news is, the cost of solar systems has come down rapidly over the past decade, at the same time as quality has improved. A small, decent quality solar lamp now retails for around £6, a brighter lamp with a phone charger for £21, and a “plug-and-play” solar system that can be installed in a home to provide several lights and phone charging, for as little as £59.

Looking at what people currently spend on energy puts these costs in context. Using a single, dim kerosene lamp costs typically 12p a day in East Africa. Paying to have a mobile phone charged costs around the same – not taking into account the time to get the phone to somewhere with electricity. So the savings on kerosene and phone charging made over six months would more than cover the cost of a bright lamp and phone charger.

Source: The Guardian (link opens in a new window)

Base of the Pyramid, rural development