Bill Gates once made the case for fossil fuels in low-income countries to tackle energy poverty – that is, until clean energy is cheap enough for everyone to afford it. Three years later, solar tariffs in India have hit a record low, falling below the average price of coal-based power last week.
As prices plunge around the world, Sustainable Development Goal (SDG) Seven – universal access to affordable, reliable and clean energy by 2030 – would seem more achievable each day. It’s a goal that in many ways is linked to every other sustainable development goal, including health, poverty, education and halting climate change. Yet, according to the World Bank’s latest State of Electricity Access report, “given current conditions, universal electricity access will not be met by 2030 unless urgent measures are taken.”
Poor and rural communities are not gaining access quickly enough to compensate for population growth. According to the report, the electricity access deficit is particularly concentrated in Sub-Saharan Africa, where 62.5 percent of the population lacks access, followed by 20 percent of South Asia.
Some, like researchers at the Massachusetts Institute of Technology, continue to preach the gospel of large-scale utility-controlled assets as the economic long-term solution. However, many organizations and private companies embedded in these poor and rural communities have thrown their efforts into small-scale distributed systems, such as rooftop solar panels, because a grid connection is far too costly and unreliable.
“The grid goes out seven or eight times a month, and it goes out for an average of seven or eight hours. So they’re paying a lot of money for a solution that doesn’t work,” Bill Lenihan, president and chief financial officer at Off-Grid Electric, told Humanosphere.
Off-Grid Electric – or Zola to its consumers – powers the homes of more than 50,000 people each month in Tanzania, Rwanda and Côte d’Ivoire using, as its name implies, completely off-grid solar panels and battery systems.
But in addition, the company provides extremely energy-efficient accessories, including televisions and lights. That way, that the panel and battery systems can remain affordable, while sufficiently powering the home.
Off-Grid Electric is in the business of distributed solar, but does Lenihan believe household systems are the best long-term solution to solving the world’s energy problem?
“I would never say it’s the best, but I would say it is one significant answer to the problem,” he said. “Grid, mini-grid and distributed – they all play a role. This is a massive issue, and it’s not getting solved by one solution.”
The World Bank report agreed with Lenihan: In developing countries, traditional grid supply should be the predominant approach for urban households, whose numbers will rise with rapid rural-to-urban migration. However, without mini-grid and off-grid supplies for remote households, the goal of universal access by 2030 will not be attainable.
It’s becoming clear that one approach does not fit all in the fight against energy poverty. For example, in India, Orb Energy also installs rooftop solar panels. But Orb instead focuses on small- and medium-sized enterprises, like schools, hospitals and agribusinesses, that are already connected to the grid.
“Because the cost of solar has come down so much in price, [and commercial energy is more expensive in India than residential], it makes sense for customers in India who have the grid to just put solar on their rooftop and use that to off-set the power that they would otherwise consume,” Orb’s CEO Damian Miller told Humanosphere.
The enterprises usually run when the sun is up as well, and because they are also connected to the grid, there’s no need for battery storage for off hours.
“Why distributed is so compelling is it allows the customer to own their energy independence in a very effective way, in a way that a grid just has not been able to do,” Lenihan added.
With the significant capital required, infrastructure needs, long lead times and government regulations, utility grids have been slow to cover poor regions like Sub-Saharan Africa, where the financial returns are not as great.
“If people feel that the grid is coming to these [poor communities], they need to dissuade themselves of that fact, because it’s not going to happen,” Lenihan recalled an executive from EDF Energy, one of the world’s largest utilities, saying. “It hasn’t happened over the last 20 or 30 years when the grid had no competition, and now that it does in the form of distributed and other technologies, why would the answer be any different?”
However, the World Bank report warned that even if large-scale utility grids aren’t the solution for everybody, governments must provide the political and financial support for private sector investments to thrive in their efforts to reach previously unserved communities.
India, for example, is aggressively pursuing solar energy, with a goal to reach 100 gigawatts (GW) of solar capacity by 2022. Of that, 60 GW is supposed to be ground-mounted solar farms, while 40 GW will be rooftop installations.
“I really think the 60GW ground-mounted is going to happen,” Miller said. “The challenge is the 40GW rooftop target because it’s just a very, very different business, where you have to set up financial mechanisms to help small- and medium-sized enterprises afford rooftop solar.”
If all these various solutions are aggressively pursued over the next decade by both private and public sectors, the 2030 goal may be within reach.
After all, “technology is developing in such a way that I’m not sure that ultimately this isn’t all one solution,” Lenihan said.