Solar cells could help many African countries obtain cheap electricity, provide more jobs, and experience economic growth without impacting the global climate.
In sub-Saharan Africa, more than 600 million people lack electricity.
The majority live in rural areas, but an increasing number live in the outskirts of major cities. Common to all is that they do not have access to a central power grid.
The populations in these powerless areas often have a low or irregular income, which contributes to their low demand for electricity. In other words, these are not areas where households connect TVs, stoves, hairdryers, air-conditioning units or other consumer goods to the grid, nor do the areas host any power-consuming production companies.
There is therefore no burning platform or any good business case in implementing large-scale power stations and expanding the power grid to those dark areas.
This is now changing. In Kenya, a combination of small solar cell systems with batteries, a private company and the Kenyan counterpart to the Danish phone payment app MobilePay, M-Pesa, have brought electricity to hundreds of thousands of households.
Pay-as-you-go (PAYG) is the name of the new business model, which provides power for low-income groups in remote areas in Africa, says Ivan Nygaard, chief scientific advisor at the UNEP DTU Partnership (please see box).
“This is a new and innovative business model that started in 2011 in Kenya, and which is now also available in Tanzania and Uganda,” explains Ivan Nygaard, who has been researching and working with renewable energy in developing countries for decades. He recently also examined this new business model, and what it takes to disseminate it.
Power one day at a time
PAYG is based on micropayments via M-Pesa, meaning that the consumer only pays for electricity one day at a time.
Power is produced by a small solar cell panel on the consumer’s roof, which has an associated box with a battery and three USB outlets. The package also includes three LED lights.
In order to have the solar cell solution installed, the household must pay a small down payment of USD 30 to the company which sells and installs the systems, and the system is then paid back continuously along with the payment for the power consumption. Typically, the consumer will own their solar cell system after one year.
A phone SIM card in the system control box can report the power consumption to the company and also enables the company to turn off the power if payment is not made.
”The advantage of this solution is that consumers do not have to put down a huge amount to have a system installed. And when the system is running, they only have to pay for one day at a time. If they have a day with little or no income, they don’t need to spend their meagre funds on electricity. On a good day, they can pay to get power, and they can again enjoy light in their lamps and charging power for their mobile phone. The solution also ensures that a company in the country is making money and employing local staff,” says Ivan Nygaard.
Room for solar farms
He explains that because prices of solar cells have dropped heavily in recent years, solar cell technology has become a tremendous opportunity for Africa to obtain cheap and sustainable energy.
“This is an amazing development. Just 20 years ago, it was a fact that when we sent a solar system to Africa, we were providing the poorest people with the most expensive energy source by far. Now we’re close to break-even.”
Solar cell technology also has the potential to be used in larger solutions, providing electricity to not only individual households, but entire villages.
“Unlike Europe, Africa has areas with plenty of space, and land that is not occupied by agriculture nor densely populated. Here, provided that you can determine the ownership of the land, you can establish large solar power plants and include the power in mini-grids, i.e. smaller power systems able to supply power for an entire village. You can also integrate other forms of renewable energy, e.g. wind, in these mini-grids.”
Avoiding climate impact
One thing is that solar cells can provide millions of people with access to electricity from a renewable energy resource. But solar cell technology can also pave the way to more African jobs.
“Solar energy can potentially solve several problems at once in Africa. Instead of us—or the Chinese—flying into Africa with the best of intentions bearing solar cells, installing them and leaving again, the new business models where private businesses use African labour to sell, install, and maintain solar cell systems, can also boost employment in African countries. This way we solve more challenges than just the lack of cheap electricity. We also launch economic and social development in Africa,” says John M. Christensen, Director of UNEP DTU Partnership.
At the same time, the solar cells also form an important part of the renewable energy solutions which could ensure that the necessary development in Africa does not impact the global climate.
“I think everyone can agree that we need to see a positive economic development in Africa. For this to succeed, Africans must have access to cheap energy. If this continent can move forward in a sustainable way, with development being based on renewable energy rather than oil, gas and coal, Africa could more or less skip the fossil phase that the industrialized countries used to establish their welfare. Using solar cells and other renewable energy sources, Africa can be lifted without any negative consequences for the global climate,” concludes John M. Christensen.