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3 Things You Didn't Know About Solar In Developing Countries

6/9/2014 4:15:00 PM

Tags: solar power, solar financing, Cindy Nawilis

Kerosene lamp

1.3 billion people in the world lack access to electricity. They depend on mostly kerosene to use as light at night, which gets expensive over time and poses a lot of health risks at home (think toxic fumes and accidental fires). But there is a viable solution already available today: affordable solar energy. In the last 5 years, the cost of solar PV technology has dropped so drastically that companies are sprouting up all over the developing world to manufacture and distribute affordable solar products to light up unelectrified homes. These products range from basic torch lights to entire solar home systems that can power multiple lights, cellphone charging, radio, and even TV. So what's enabling the off-grid solar revolution? Here are the three main reasons:

End-User Financing That Makes Sense

While the cost of solar has gone down, many of the 1.3 billion off-grid population still find the price tag on most solar products prohibitively expensive. However, solar companies have coupled their solar products with financing plans that allow customers to purchase solar products according to their level of income. These plans include monthly installments or weekly installments that span from 3 to 18 months. Some companies even go further and sell solar energy as a service similar to how people in the developed world pay their electric bills. In those cases, each family pays to keep their solar powered electricity services on, and the service will be cut off if the family stops their payment.

Looking at examples of what people currently spend on energy will put these costs and financing plans in context. A typical rural Indian household spends Rs. 150 to Rs. 300 each month on kerosene lighting. If we include diesel generators the cost goes up more. They end up spending a significant part of their overall income, which leaves them with not much funds to do anything else. A micro-grid solar project that was funded on SunFunder's crowdfunding platform ends up costing each household Rs. 100 a month and it gives them clean, bright solar lighting and overnight cell phone charging. Solar is more affordable and better for the people's health. 

People Want Solar Energy to Charge Cellphones

Cellphones in rural Uttar pradesh

Of the 1.3 billion people that lack access to electricity, about 600 million use cellphones. The majority of these off-grid cellphone users have to charge their phones through inconvenient means, like walking for hours to the nearest station where they can plug their phones into a car battery. 

Almost all basic solar lights can now also charge cellphones, and this is largely because companies that design and manufacture solar lights realize that this is the main feature that will increase the sales of solar lights in off-grid communities. Not only that, but the cellphone charging feature presents a new source of income as well--many solar light customers who are also small shopkeepers now offer cellphone charging services in their shops.

Paying for Solar is Much Easier With Cellphones (After They're Charged)

A big challenge for companies that sell solar products with financing plans or as a service is how to get paid by households that live in remote areas. The administrative cost of traveling to remote villages and collecting payments is high and unsustainable for any business. However, many developing countries have robust mobile money platforms, like M-PESA in Kenya, that allow easy money transfers with cellphones. This keeps administrative costs for companies low, and it makes paying for solar as easy as sending a text message for the customers. Check out this video of Fenix International's ReadyPay solar kits to see just how easy mobile payments are.

ReadyPay

These three factors combined together are the main reasons why solar is poised to leapfrog the electricity grid in many developing countries and deliver sustainable energy access for all. And right now, you can support the off-grid solar companies that are making it happen on SunFunder. SunFunder is a solar investment platform for both private and crowd investors and it loans capital to help scale solar companies in emerging markets. I am part of the SunFunder team, and we are doing this because we think energy access is a human right.

Photo of ReadyPay by Fenix International



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