Originally published on GREENBIZ
More electricity is coming to the rural Global South, bit by bit, as renewable projects light up remote villages and hospitals, individual huts and large water treatment plants. There are 1.2 billion people estimated not long ago to live without electricity.
But electrification isn’t arriving in these rural swatch of the globe the way it did in the richer countries of the north. That playbook was thrown out, for the most part.
Instead, just as telephony spread to the far reaches of the globe because of adoption of untethered cell phones, electricity is arriving in remote areas often in the form of standalone micro-grids of solar or wind generating devices connected to inverters and storage.
Sometimes, it’s a single solar panel boxed with an inverter and strapped on the rooftop of a home, providing light to that home and enough power to charge a cell phone.
Investment in renewable energy projects in the developing world account for the majority of the $329 billion invested yearly in new renewable endeavors, according to Bloomberg New Energy Finance.
In some places, the business models used to bring electricity to rural and impoverished countries have a lot to teach the developed world as it struggles with its own electricity future.
For one: Renewable energy projects are generally cheaper than building a fossil fuel burning utility and stringing transmission lines across vast deserts and grasslands.
Two: Smart meters and Internet of Things technologies make it easy to connect electricity users with their power usage and offer payment options such as pay-as-you-go. The result is pricing that makes electricity more obtainable.
Below are key lessons from energy entrepreneurs.
Many more lessons about what off-grid countries can teach the developed world will be discussed at VERGE 16 this week in Santa Clara, California.
Engage and use local talent
When entrepreneur Sandra Kwak, founder of 10Power, set about to bring electricity and clean water to communities in Haiti, she started with due diligence of the market and visited lots of electrification projects.
Sadly she visited too many projects that sounded great on paper but that had stopped functioning because of a broken part or needed maintenance, with nobody local given the tools or training to do the repairs.
“There is a significant local skill base in Haiti and the projects that have been successful are the ones that utilized Haitian suppliers, Haitian installers and Haitian financers,” she said in an interview with GreenBiz.
10Power has completed two renewable power electricity projects on water sanitation plants that have brought not only clean water and electricity to thousands of residents but predictable sustained financial returns that allow 10Power to reinvest in new projects.
Her advice: When people on the ground have a stake in the success of a program it will keep going, with maintenance, engineering, customer engagement and delivery.
Use IoT and cloud-based data and communications connectivity
Andy Bogdan Bindea, founder of Sigora Solar and its Sigora Haiti subsidiary, has built a micro utility in Haiti.
He said he is following the old fashion utility business model except for two very important differences: First, he uses only clean solar energy. Next, he deployed smart grid, cloud-based Internet of Things connectivity to give customers exact information about their usage and allow the grid to have a precise demand response system of delivering only as much electricity as needed in a given area or by a given customer.
“Everybody has the belief that utility are big, slow, environmentally dirty, 100 years behind the time curve, basically 800-pound guerillas. Basically that is true. However, it doesn’t have to be that way,” he told GreenBiz.
“We’ve taken a very traditional business model of a private utility company — you create kilowatt hours of electricity and sell them — a model that worked for a century but we added modifications: We wanted all our energy to be generated from renewables and all our meters to be smart meters. They are prepaid, demand controllable that can move (energy load) up and down by community, customer or customer type.”
Negotiating to use the abandoned transmission lines from a formerly municipal-run electric system in Mole St. Nicolas, Sigora built a small utility that currently has 750 paying customers but can scale up. Bindea figures it is serving about 3,750 people. Over the next 12 months, it will also be building 2.2 MWp of wind and 1.2 MWp of solar in a project expected to serve 136,000 customers.
Two towns in the Mole St. Nicolas area have microgrids. “Each can function independently but we are interconnecting all of these towns with low-cost, effectively deployed distribution lines. That increases reliability and allows us to collocate all our generation infrastructure and reduce the price of our renewable power by 30 percent,” he claimed. Sigora Haiti’s new wind and solar project will reach through six townships.
The prepaid service allowed by smart meter connectivity with individual customers has provided an incentive for them to not miss payments: You stop paying, you stop getting power.
Neighbors are the best marketers
Greenlight Planet builds and sells small solar powered electric systems that light up a house and charge a phone. Its SunKing products have been sold to 6 million households in 54 countries, mostly in Africa and Asia. Greenlight Planet estimates it has brought power to 20 million people that had been living without electricity.
The keys to its success?
- A durable, unfailing product that gets high ratings among users.
- Pay as you go, financing that makes electricity as cheap as 15 cents a day.
- Neighbor to neighbor marketing.
“We started with the idea that the poorest peope in the world make the shrewdest financial decisions,” said Thakkar. And he believes they have proved their point.
“Our first customer was an old gentleman in a small village. Everyone in the village came out to listen to our presentation. He asked two or three questions and then went back in his hut and came out with 1,000 rupees, which was the equivalent of about $20. He said, ‘Great, give it to me,'” he recalled of the 2008 start of the company.
From that one man understanding the value of electricity — the value of having light at night so his kids can study, or to be able to charge up a cell phone and stay connected to the world including to nearby city markets for your crops and of being able to have a small TV or radio for entertainment and news — the village was convinced.
“People are wiling to spend a month of income up front because they understood,” Thakkar said. “For quality of life, electricity is pretty fantastic,” and people will pay for that.
Greenlight Planet has changed its model as it moved into poorer countries. In Uganda, Rwanda, Kenya and Senegal it offers pay as you go, “you pay something each day,” for electricity. “If you miss a payment, the lights go off, but you can pick it back up again” by paying. “We have found this has incredible impact on affordability for customers and adoption rates.”
Its product never fails — it gets top rating on Amazon by all its reviewers. But the biggest key to its sales? Local sales people.
“We sell through a network of village agents. We recruit someone from the village who becomes the first user or customer and then the go door to door and explain the benefits of a product and sell it to their neighbor,” Thakkar said.
“It is a powerful thing. When your neighbor says I’ve been using this lamp and it works so well my kids study by it and we don’t have smoke in our house anymore and I can change my phone by it, it give people permission to take that jump too.”
Is it a lesson for the already developed world in how to grow renewable use?
“I come back to my parents’ home in a suburb in New Jersey and someone there decided they’d put solar on their roof. The idea of spending $30,000 on solar equipment is scary until a neighbor does it. Now in the neighborhood — on the blocks around the house I grew up in — one in every five houses has solar panels.”
Bingo.