Energy in the developing world

Power to the people

Technology and development: A growing

number of initiatives are promoting bottomup ways to deliver energy to the worlds poor
Sep 2nd 2010 | From the print edition

AROUND 1.5 billion people, or more than a fifth of the world's population, have no access to
electricity, and a billion more have only an unreliable and intermittent supply. Of the people
without electricity, 85% live in rural areas or on the fringes of cities. Extending energy grids into
these areas is expensive: the United Nations estimates that an average of $35 billion-40 billion a
year needs to be invested until 2030 so everyone on the planet can cook, heat and light their
premises, and have energy for productive uses such as schooling. On current trends, however, the
number of energy poor people will barely budge, and 16% of the world's population will still
have no electricity by 2030, according to the International Energy Agency.
But why wait for top-down solutions? Providing energy in a bottom-up way instead has a lot to
recommend it. There is no need to wait for politicians or utilities to act. The technology in
question, from solar panels to low-energy light-emitting diodes (LEDs), is rapidly falling in

price. Local, bottom-up systems may be more sustainable and produce fewer carbon emissions
than centralised schemes. In the rich world, in fact, the trend is towards a more flexible system of
distributed, sustainable power sources. The developing world has an opportunity to leapfrog the
centralised model, just as it leapfrogged fixed-line telecoms and went straight to mobile phones.
But just as the spread of mobile phones was helped along by new business models, such as prepaid airtime cards and village telephone ladies, new approaches are now needed. We need to
reinvent how energy is delivered, says Simon Desjardins, who manages a programme at the
Shell Foundation that invests in for-profit ways to deliver energy to the poor. Companies need
to come up with innovative business models and technology. Fortunately, lots of people are
doing just that.
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Kenya
Massachusetts Institute of Technology
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Nairobi
International Energy Agency

Let there be light

Start with lighting, which prompted the establishment of the first electrical utilities in the rich
world. At the Lighting Africa conference in Nairobi in May, a World Bank project to
encourage private-sector solutions for the poor, 50 lighting firms displayed their wares, up from
just a handful last year. This illustrates both the growing interest in bottom-up solutions and
falling prices. Prices of solar cells have also fallen, so that the cost per kilowatt is half what it

was a decade ago. Solar cells can be used to power low-energy LEDs, which are both energyefficient and cheap: the cost of a set of LEDs to light a home has fallen by half in the past
decade, and is now below $25.
This could eliminate kerosene lighting in the next ten years, the way cellphones took off in
about 13 years, says Richenda Van Leeuwen of the Energy Access Initiative at the UN
Foundation in Washington, DC. That would have a number of benefits: families in the
developing world may spend as much as 30% of their income on kerosene, and kerosene lighting
causes indoor air pollution and fires.
But such systems are still beyond the reach of the very poorest. There are hundreds of millions
who can afford clean energy, but there is still a barrier for the billions who cannot, says Sam
Goldman, the chief executive of D.light. His firm has developed a range of solar-powered
systems that can provide up to 12 hours of light after charging in sunlight for one day. D.light's
most basic solar lantern costs $10. But the price would have to fall below $5 to make it
universally affordable, according to a study by the International Finance Corporation, an arm of
the World Bank. So there is scope for further improvement.
It is not just new technology that is needed, but new models. Much of the ferment in bottom-up
energy entrepreneurialism is focusing on South Asia, where 570m people in India, Pakistan and
Bangladesh, mostly in rural areas, have no access to electricity, according to the International
Energy Agency. One idea is to use locally available biomass as a feedstock to generate power for
a village-level micro-grid. Husk Power Systems, an Indian firm, uses second-world-war-era
diesel generators fitted with biomass gasifiers that can use rice husks, which are otherwise left to
rot, as a feedstock. Wires are strung on cheap, easy-to-repair bamboo poles to provide power to
around 600 families for each generator. Co-founded three years ago by a local electrical
engineer, Gyanesh Pandey, Husk has established five mini-grids in Bihar, India's poorest state,
where rice is a staple crop. It hopes to extend its coverage to 50 mini-grids during 2010.
Consumers pay door-to-door collectors upfront for power, and Husk collects a 30% government
subsidy for construction costs. Its pilot plants were profitable within six months, so its model is
sustainable.

Generating electricity from rice husks

Emergence BioEnergy takes this approach a step farther. Its aim is to provide many
entrepreneurial opportunities around energy production, says Iqbal Quadir, the firm's founder,
who is also director of the Legatum Centre for Development & Entrepreneurship at the
Massachusetts Institute of Technology (MIT). A cattle farmer in a small village in Bangladesh
might, for example, operate a one-kilowatt generator in his hut, powered by methane from cow
manure stored in his basement. He can then sell surplus electricity to his neighbours and use the
waste heat from the generator to run a refrigerator to chill milk. This preserves milk that
otherwise might be spoilt, offers new sources of income to the farmer (selling power and other
services, such as charging mobile phones or running an internet kiosk) and provides power to
others in his village.
The farmer funds all this with a microfinance loan. It is no coincidence that this is a similar
model to the telephone lady scheme, pioneered in Bangladesh a few years ago, in which
women use microloans to buy mobile phones and then sell access, by the call, to other villagers;
Mr Quadir helped establish Grameenphone, now the largest mobile operator in Bangladesh, and
hopes to repeat its success in energy. After a pilot project in two villages, Emergence BioEnergy
plans a broader roll-out in 2011 in conjunction with BRAC, a giant microfinance and
development NGO.

Another project, in India, aims to convert women from gathering wood, which denudes forests,
to using canisters of liquefied petroleum gas (LPG). India's four state-owned regional power
companies, including Bharat Petroleum Corporation, will build a national network of thousands
of LPG-powered community kitchens. Local entrepreneurs will then provide the LPG and charge
villagers to use the kitchens in 15-minute increments.
Harish Hande, managing director of Selco Solar, a social enterprise in India that promotes the
adoption of new energy technologies, says the important thing is not so much to deliver energy
to the poor, but to provide new ways to generate income. His firm has devised a solar-powered
sewing machine, for example. Last year Mr Hande started an incubation lab in rural Karnataka,
in southern India, to bring together local customers and engineering interns from MIT, Stanford
and Imperial College, London. The lab is currently piloting a hybrid banana dryer that runs on
biomass during wet spells and sunlight on dry days to make packets of dried bananaso that
farmers no longer have to rely on selling their crop immediately.
Making it pay
Even when new technology and models are available, the logistics of rolling them out can be
daunting. The two big challenges are providing the upfront investment for energy schemes, and
building and maintaining the necessary distribution systems to enable them to reach sufficient
scale. At the moment, most schemes are funded by angel investors, foundations and social
venture-capital funds. There is a vigorous debate about whether the private sector on its own can
make these models work as technology improves, or whether non-profit groups are needed to fill
the gaps in funding and distribution.
Microfinance institutions may seem the natural financial partners to help the poor pay for energy
systems, since they are the only organisations with millions of poor customers. But teething
problems are formidable and success stories are few, says Patrick Maloney of the Lemelson
Foundation, which invests in clean-energy technologies for the poor. A telephone lady could buy
a mobile phone for a relatively small sum, and would immediately have a source of income with
which to repay the loan. Although a household that buys a solar lamp saves money on kerosene,
the investment takes several months to pay for itself, and there is no actual income from the
lamp. For bigger energy projects, such as micro-generators, the loan required is much larger, and
therefore riskier, than the loan for a mobile phone.
Moreover, microfinance institutions may lack the funds to identify reliable energy suppliers,
educate loan officers about clean-energy technologies and build a support network for energy
schemes. One way to solve this problem, being pursued by MicroEnergy Credits, a social
enterprise, is to plug microfinance institutions into carbon markets. Projects can then be funded
by selling carbon credits when a microfinance customer switches from kerosene to solar lighting,
for example.
Distribution is also a problem, particularly in Africa and South Asia, where the majority of the
world's energy-poor live. Infrastructure and supply chains are poor or non-existent, particularly
in rural areas. Recruiting and training a sales force, and educating consumers of the benefits of
switching away from wood or kerosene, must be paid for somehow. Social enterprises are

innovating in this area, too. Solar Aid, a non-profit group, specialises in setting up
microfranchises to identify and train entrepreneurs. The organisation works with local authorities
to identify potential entrepreneurs, who must gather signatures from their local community
providing both the endorsement of their neighbours and a future customer base. They then
undergo five days of training with an exam at the end. Solar Aid is also testing a kiosk-based
system to help entrepreneurs distribute LED lighting in the Kibera district of the Kenyan capital,
Nairobi.
Some hurdles to bottom-up energy projects are more easily addressed. In particular, high import
duties on clean-energy products in many developing countries, notably in Africa, hamper their
adoption by the poor. Ethiopia, for example, imposes a 100% duty on imports of solar products,
while Malawi charges a 47.5% tax on LED lighting systems. Such taxes are sometimes defended
on the basis that only the rich can afford fancy technology. But the same was said about mobile
phones a decade agoand look at them now.
From the print edition: Technology Quarterly

Energy Dilemma
Cheap or green?

When poverty and greenery collide

Aug 7th 2008 | From the print edition

Reuters
THE Camp for Climate Actionan annual gathering of anarchists and environmentalistsis
fast becoming a summer fixture. Having protested outside Drax (a big coal-fired power plant) in
2006 and Heathrow airport in 2007, this year they are pitching tents in Kingsnorth, an industrial
bit of Kent that is the proposed site of what would be the first new coal power station to be built
in Britain for two decades.
The protesters point out that coal is the dirtiest fossil fuel and argue that, given official pledges to
cut carbon emissions, building new plants using it would be stupid. Their ambition is to shut
down the existing Kingsnorth station, which is also coal-fired, for a day. There have already been
several arrests and clashes with the police (whom protesters accuse of harassment); more seem
likely on August 9th, their officially designated day of mass action.

The government's energy policies are being attacked from all sides, by anti-poverty campaigners
and businesses as well as by greens. That is because it is caught on the horns of a nasty dilemma.
A plethora of coal and nuclear power stations are due to close over the coming decade and will
need to be replaced. At the same time, Britain has vowed to produce significant cuts in its
greenhouse-gas emissions.
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The cheapest way to prevent an electricity crunch is to allow new fossil-fuel stations to be built.
This is already happening: Kingsnorth, if constructed, would be only one of six new coal plants
planned, and there are gas-fired plants in the pipeline too. But encouraging new fossil stations
risks busting the government's array of green targets, which commit it to reducing carbon
emissions by a fifthcompared with 1990by 2010 and by three-fifths by 2050. (A separate
European target, to produce 15% of all energy, including heating and transport as well as
electricity, from renewable sources by 2020 can be politely described as ambitious.) For a
government that has called climate change the biggest threat facing mankind, that would be
intensely embarrassing.
The alternative, though, is no more attractive, for expensive energy is the likely price of meeting
green goals. Land-based wind turbines are reasonably cheap but function best in the sort of
windswept beauty spots that locals like to keep unblemished, so many have stalled in the
planning process. Ministers have instead placed their faith in offshore wind farms, but
waterproofing windmills makes them more expensive. Even coming close to the European
targets, say government advisers, would mean a sevenfold rise in onshore wind capacity and a

46-fold rise in offshore. Subsidies for renewables (634m in 2006-07) currently add only slightly
to bills, but a big expansion of renewable energy would mean higher prices.
The future of the other great green hopenuclear poweris equally uncertain. The government
insists that a European carbon-pricing scheme will allow the private sector to build reactors
without explicit state subsidies. It had hoped that a takeover of British Energy, a nuclear firm, by
EDF, a French giant, would kickstart private-sector interest. But EDF was abandoned at the altar
on August 1st, after two big British Energy shareholders decided that, in light of the likely future
price of power, its offer was too low.
A deal may still be possible, but even if investors can be found, nobody knows just how much
private nuclear electricity will cost. News from Finland (which is building a reactor similar to
those planned for Britain) is not good, with the project reportedly 1.5 billion (1.2 billion) over
budget.
Pricey power, fuelled by high oil prices, is already causing headaches, with MPs muttering about
windfall taxes on utility firms and talismanic pledges to reduce fuel poverty (defined as living in
a household that spends more than 10% of its income on heating) in tatters. Neither dirty
electricity nor expensive electricity holds much appeal. Energy efficiency and better home
insulation is one way out of the government's dilemma, but insulating Britain's notoriously
draughty housing stock would take years. In the meantime, Malcolm Wicks, the energy minister,
said on August 3rd that we are not going to sacrifice fuel poverty on the altar of climate
change. Climate campers should prepare for disappointment.
From the print edition: Britain