Monday, December 27, 2010

Off-Grid Africa

Distributed Power is Growing All Over

Solar-powered yurt in western China
Yurt in western China with solar panel
Low-cost, small-scale, simple distributed power generation continues to make gains. It was part of the original business model for the Hydrovolts turbine, the genesis of Clarian Power, and the market power of Nokero light "bulbs."

Now general-purpose solar panels are going up in remote locations around the world, especially Africa, where the sprawling grids of centrally-generated power plants don't reach.

Providing even a small amount of electricity makes an enormous difference in the quality of life for people in the developing world. It provides lighting which allows students to read and study at night, improving education, a key precursor of upward economic mobility. It can replace unhealthful sources of illumination, cooking and heating, especially animal manure, charcoal, and wood, many of which are burned inefficiently and with limited attention to adequate ventilation.

The economics make sense. The cost of charging equipment (particularly cell phones) in both time and direct expense is rapidly recovered by the value of local generation capacity.

The biggest impediment to more distributed generation is the initial capital cost. Traditional lenders prefer large central projects because the due diligence is both familiar and easier--there is only one location to examine, and to subsequently monitor, over the course of the financing. Micro-lending could pick up the slack, but there still needs to be a business model that creates revenue to pay back the investment. While selling a goat may work for some, providing a local charging station may work for others. As remote villages gain dribs of electricity, however, more models will arise. Entrepreneurs exist in rural Africa too, and having a enabling platform technology like electricity opens the way to many kinds of businesses. As costs of solar panels continue to decline, and as other forms of distributed generation become available, the effect on rural areas of the developing world will be transformative.

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