BARSANA, UTTAR PRADESH, INDIA — Sun-bleached brick and concrete houses dot the landscape. Cows and buffaloes compete with rickshaws, people and the occasional SUV on the only road into town. And when the sun goes down, life comes to a screeching halt. In other words, this rural village in India’s northern plains is an unlikely place for the beginning of a technological revolution.
Yet it is here, as I watch employees of one of the country’s many fast-growing clean energy startups install solar panels on a local villager’s roof — their sixth installation of the day — that I realize I am witnessing something transformational. It is a glimpse into the future of how the world’s rural poor could access electricity: off-grid, distributed, renewable, and most importantly, affordable. It’s happening all over rural India and in parts of sub-Saharan Africa, and is turning the entire narrative around energy and development on its head.
Watch a villager discuss the challenges presented by a lack of electricity:
Business As Usual Is Failing
More than a billion people throughout the world lack reliable access to electricity. Many live in sub-Saharan Africa and Asia. The costs — in terms of lost economic potential and of impacts to personal health — are staggering. Throughout the world, nearly four million people die prematurely each year due to pollution from dirty energy sources used for cooking and lighting. And the light from the most widely used sources, kerosene and candles, just isn’t very good. The dim orange glow is hard on the eyes, limiting the ability of children to study or of business owners to illuminate their stores. Not to mention the increased risks of fire from the open flame.
And of course, there is the impact of fossil-fuel consumption on climate change, which is already affecting the world’s most vulnerable populations through drought, sea-level rise and extreme weather.
It’s becoming increasingly clear that the status quo isn’t working for the world’s rural poor. In India, after decades of building out centralized, large-scale, heavily-polluting fossil-fuel power plants, nearly 400 million people are still without power (of course, after massive countrywide blackouts that left 800 million without power in 2012, some would argue the grid is failing urban populations as well). India’s new leadership called attention to this problem, with Prime Minister Narenda Modi’s government saying it wants every home to be able to run at least one light bulb by 2019 with the help of solar.
Despite calls by some in the international community to double down on a broken model, but the grid is not likely to deliver for those who need it most any time soon. The International Energy Agency (IEA), acknowledges that trying to solve the energy-access crisis through a business-as-usual approach will still leave a billion people without power by 2030.
Power From Above
The roof I am standing on belongs to Govind Singh, a tall man in his early 60s who has spent much of his life working in agriculture, about the only industry in town. Singh’s house, like many in rural India, is connected to power lines. But that hardly means he has power. During our brief two-hour visit, I count four outages.
Without light, one can’t do anything.
“In our area, there are too many problems with electricity, sometimes the electric poles break down and other such issues,” Singh said, as his daughter makes Indian chai in the next room.
That uncertainty takes its toll on the family’s daily life. Singh and his family never know if they will have power to light their home, charge a cell phone or plug in a fan. Many nights there is no electricity at all. “When there is a power cut, we have to light up candles and lanterns, which make the walls dirty [with smoke],” Singh said.
Singh recently heard from his neighbor about a new company that offers a way to help him keep the lights on. The company, Simpa Energy, the Indian subsidiary of the US-based Simpa Networks, offers an innovative pay-as-you-go model that allows even the world’s poorest citizens to buy chunks of clean, reliable energy, a few rupees at a time.
Customers use their cell phones (ubiquitous in India) to purchase an access code that they then punch into a small box connected to solar panels outside. A few seconds later, a bright LED light illuminates the room. The best part is, unlike kerosene and diesel, dirty and costly fuels that are not renewable, the customer eventually pays for the system outright and future power is free.
“Without light, one can’t do anything,” Singh told me.
Of course, renewables have long been seen as a solution to ending energy poverty. But for decades, the products were too expensive and too unreliable. All that has changed. In recent years, a new crop of entrepreneurs have taken advantage of cheap solar panels and advances in battery and LED lighting technology to create a growing industry that puts power generation directly in the hands of citizens rather than an unreliable energy grid. Many of these companies have flocked to Uttar Pradesh, India’s largest and one of its poorest states, to put their business models to the test.
Building The Future Of Energy
Simpa is only one of many success stories. Founded in 2011, the company has already doubled in size. According to Paul Needham, Simpa’s CEO, the company has nearly 2,000 customers (a customer is an entire Indian family, so the number of people gaining access to clean energy is much larger) and is growing by 20 to 30 percent each month. By the end of the year, Simpa expects to have 600 kilowatts of solar installed serving up to 75,000 people.
Another company we visited during our time in India, OMC Power, has seen a similar trajectory. OMC’s model is a bit different. The company builds mini solar power plants — about 36 kilowatts each — that charge everything from large cell phone towers to hundreds of small battery-powered LED lanterns. Each day, OMC employees deliver fully-charged lanterns to customers, and then return the following morning to pick up the lanterns for recharge. Compared to other lighting options, the lanterns are a good deal for customers for whom every rupee counts.
“We provide a lighting solution that is approximately 120 rupees ($2) a month. And kerosene costs [customers] approximately three to four dollars a month,” says Dinesh Gupta, OMC’s head of Rollout and Operations. And those figures don’t even take into account the savings from the health impacts of not burning dirty kerosene.
I keep my shop open for much longer, and I don’t have to spend money on the fuel for the generator.
In 2011, OMC had one plant running. By the end of 2012 they had ten throughout Uttar Pradesh. Gupta expects to hit 100 or more plants by the end of 2014.
Traveling around from village to village with these companies, I saw countless uses for the clean LED lights: Rural dairy farmers who use the lanterns to milk their cows before sunrise (one farmer says cows aren’t a fan of kerosene smoke and swears they now give better milk); a cohort of women sari weavers who can work longer hours to make extra money for themselves and their family; families with children who have a safe and clean way to study at night; and shopkeepers and other small business owners whose lights shine brighter than competitors. All were able to get reliable power without emitting one ounce of CO2 during usage.
Access to solar has transformed the lives of these dairy farmers:
“When I had to use [a] generator, I had to spend more money and incur more losses if customers didn’t come,” said Sarvesh Kumar Singh, who owns a small convenience store in a village 100 km from the majestic Taj Mahal. “But now I don’t face issues like that. I keep my shop open for much longer, and I don’t have to spend money on the fuel for the generator.”
Harish Hande, the co-founder of SELCO and recipient of the prestigious Magsaysay Award, often described as the Nobel Prize of Asia, says how villagers are purchasing the lights are just as revolutionary as the lights themselves. In many cases, the villagers had to take out a loan to finance the lights, which introduced them to a whole new world of banking and social entrepreneurship.
“As soon as people finish with a solar loan, they might take a loan for a sewing machine,” Hande said. “Had they had the grid, they would have not gone for a bank loan. And that’s the beauty of decentralized energy, that people are able to move up the social ladder multiple rungs.”
With the continued failure of the electric grid to reach India’s rural populations, demand for renewable energy is sure to rise.
Challenges — And Opportunities — Ahead
Thanks to impressive strides in recent years, analysts and companies alike are pointing to the potential for the distributed energy model to change the paradigm of how people receive and consume energy all over the world. Much like cellphones leapfrogged landlines for the rural poor — you can bet few Indian villagers have ever seen a rotary phone — in these rural areas, distributed solar will likely leapfrog the centralized grid.
In time, a large part of power generation in the developing world could happen on the local level. Households will power themselves, and local municipalities will build collective mini grids to power communal structures like government buildings, schools and water treatment plants, as well as to provide backup power to citizens. Governments won’t feel compelled to build new fossil fuel power plants, benefiting the climate and the health of their citizens. And much like some of the greatest innovations in cell phone technology came from the developing world (mobile payment systems, for example), energy innovations will trickle up to industrialized nations, as well.
Of course, to get there, incipient business models need to prove they have long-term viability. While industry growth has been impressive — since 2009, the market size has tripled worldwide — many of the entrepreneurs I talked to in India said that getting the financing they need to expand their operations remains a challenge. Bankers are notoriously conservative about lending to companies whose customer base consists almost exclusively of the poor, and many business owners say financiers perceive their technology to be new and untested.
We’re at a certain scale now that we require a different level of investment.
“We’re at a certain scale now that we require a different level of investment,” says Rupesh Shah, a vice president at Simpa. “We were able to get by in the first couple of years with grants and things like that, but now we need more commercial capital.”
To power the entire world by 2030, the International Energy Agency calls for an additional investment of $12 billion a year for mini-grid renewables and $7 billion a year for off-grid renewables. To put that in perspective, oil and gas companies receive $500 billion in government subsidies, and that doesn’t even take into account the billions they receive in private investment.
“What is desperately needed is public institutions to step in and provide loan guarantees and other forms of risk-taking capital that can help unlock the investment that’s required to really take this from a relatively distributed, small-scale approach to something that really takes on energy poverty and is able to eliminate this problem once and for all,” said Justin Guay, Associate Director of the Sierra Club’s International Climate Program.
The stakes couldn’t be higher. By 2035, global energy demand will increase by a third, with a staggering 90 percent of that growth coming from developing nations. The world is slowly recognizing the need to ensure the rural poor are not left behind. The Obama Administration’s Power Africa initiative, which aims to double access to power in sub-Saharan Africa, is a good start. But more needs to be done. And of course, for the sake of the planet, as much of that power as possible needs to be clean and renewable.
Back in that village in rural Uttar Pradesh, a storm brews on the horizon. Another power outage has plunged the town into impenetrable darkness, illuminated only by brief flashes of distant lightning. Inside Mr. Singh’s house, the Simpa employees work by flashlight to install the final components of his new LED lighting system. The entire family watches them work.
Finally, the lead technician asks Singh to punch his code into the newly-installed access panel. A smiley face lights up the panel’s LCD screen indicating the payment was successful, and Singh flips a switch. His small house is instantly bathed in clear, white light. A broad smile appears on his face. Next door, Singh’s neighbors are stuck in the past, waiting for the grid to come back on. But here, in this house, the future has arrived.