Aspirations of the Energy Poor are the Key for Solar to Thrive

| 3/14/2014 11:12:00 AM

1.3 billion people live without access to electricity. Of this, eighty percent reside in rural areas and are considered as individuals at the bottom of the pyramid (BoP). Day in and day out they rely on energy sources like kerosene, which is both expensive and harmful to use. They have been waiting for the electricity grid to arrive—and they’ll continue to wait for decades.

In the last five years, falling costs of solar technology have made solar economically viable without subsidies for off-grid communities. This market opportunity is driving entrepreneurs to quickly establish themselves in the space.  As they continue to improve their product offering, distribution and after-sales networks for solar products, market demand too is growing.  It’s becoming clearer every year that solar technology has the potential to leapfrog the electricity grid in many developing countries where electrification rates are still low.

How can businesses keep up with this potential solar growth? Hint: it’s all about the customer.

Solar Is Not Only About Lamps

The story of solar lights lighting up homes is popular because it’s powerful, easy to tell, and its impact simple to grasp. The price point for solar lights is also affordable for low-income communities and has one of the quickest payback periods for any investment. In a nutshell, it’s easy to only focus on solar lights when talking about solar for the energy poor.

But we have to recognize that solar lamps are just the starting point, and several years have gone by since the first wave of social enterprises selling solar lamps took off. In that time, affordable solar technology for off-grid communities has advanced far beyond just powering single LED lights at a minimum to providing homes with enough energy to switch on multiple lights, power a radio while also charging more than one phone, all at the same time. This is what a solar home system (SHS) does. While more expensive than a solar lamp, it becomes affordable with appropriate financing options in place. To illustrate, SHS sold by Uganda-based Fenix International costs $16 upfront for the unit, and then 40 cents a day to use. Those numbers are close to or maybe even under what the one billion plus living without electricity are already paying for kerosene, so switching to solar has truly become affordable for all.

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