Millions in Africa could really do with PV but cannot afford it. Now a company in the UK reckons it has found a way to help them buy it, one dollar at a time.
Could a bunch of people who cannot even afford electric lighting become an important market for the PV industry? Let Simon Bransfield-Garth, chief executive of off-grid solar developer Eight19, do the sums for you.
“Something like 22% of the world’s population doesn’t have access to electricity,” he says.
“People sometimes think of this as a niche market, but if you just add up the current spend on mobile charging and kerosene for lighting you come up with $50 billion, which is two and a half times the global PV market. It’s a substantial opportunity.”
The only problem with it is that these people rarely have $50 or thereabouts in ready cash to spend on PV panels. But Eight19 is aiming to get around that problem with some nifty technology and a novel business model.
In September it launched IndiGo, billed as “a pay-as-you-go personal solar electricity system for the developing world.” Essentially, IndiGo is a basic polycrystalline solar cell powering a battery endowed with an electronic ‘lock’ and which can be charged in three to four hours.
To get power from the system, the user has to unlock it with a one-time-only code on a scratch-card that is validated with a mobile phone text. Once unlocked, the system provides power for a week before another code is needed. Each weekly top-up costs roughly $1.
The system comes with a phone battery charger and a high-efficiency light emitting diode lamp for lighting, and carries an upfront cost of $10.
“What we’ve done is to create a technology where we sell solar as a service,” says Bransfield-Garth, noting that the company made a conscious decision to sell power on a per-week rather than per-watt basis to emulate broadband internet’s all-you-can-eat model.
“The user simply makes a substitution from what they were spending on kerosene to what they spend on solar.”
In Kenya, where the system is being piloted with a few tens of users, families typically spend around $10 a week on kerosene for lighting, not to mention the travel costs involved in getting to places where they can recharge mobile handsets for services such as mobile banking.
On that basis, a $1 fee for a week’s solar power starts to look like a pretty good deal. What is more, after two years Bransfield-Garth plans to swap out the systems and replace them with newer, more powerful technology.
“These customers typically don’t have electricity, but they do have aspirations,” he says. In time, he hopes they will rely on off-grid solar to power a growing range of home devices and appliances, taking the heat off Africa’s already stretched grid resources.
As demand for energy grows across Africa, he says: “It is all they can do to service existing customers. But there’s an argument that they don’t even have to try.”
Brett Prior, GTM Research senior analyst, says: “I get that in large parts of the world even small upfront costs for PV could be prohibitive. It’s one of the things people get excited about with solar. There are huge chunks of the world that have no money, but a need for energy.
“They pay the equivalent of around $4 a kilowatt-hour to get their phones charged. If you can sell them the charger for $10 then there’s a model there.”
However, he worries that canny customers might just hack into the system and get power for free. Bransfield-Garth counters that IndiGo has a couple of cryptographic links that will disable it if anyone tampers with it, and that the scrap value of the unit is less that then $10 upfront cost.
Plus, he says: “The customer gets an economic benefit from keeping it working. If they break it they’d have to go back to using kerosene.”
Another concern is that, even with the plummeting cost of solar panels, it may be difficult to build a sustainable business model around the pay-as-you-go concept.
Eight19 reckons it can make a decent return on the technology over the expected two-year lifespan of each system, though. The company is planning to open manufacturing centres first in Kenya and then in Malawi and Zambia.
“We’re optimistic it is going to grow pretty fast,” says Bransfield-Garth, adding that he expects to reach tens of thousands of customers in the first year of operation.
So far, it has had the thumbs up from non-government organisations in Africa. Steve Andrews, chief executive of Solar Aid, which is involved in the Kenya trials, called it “a major breakthrough” in a press statement.
And users appreciate it, too, Bransfield-Garth says. “We thought people would just throw the lights over the rafters but we’ve been amazed at how much care people take to rig it up properly,” he relates. If his plans work out, many more in Africa could soon see the light in solar.
“We really believe that we cannot always predict innovation and we don't want to limit the community in our funds to only some sectors, both in the R&D space and the manufacturing space. By setting the economic targets, we let the community innovate.”--Lidija Sekaric
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