Climate Change: Off the Grid

In Elisabeth Rosenthal’s recent article, “African Huts Far From the Grid Glow With Renewable Power,” she describes the growing interest in Africa for off-grid means of power and fuel.  She first describes the story of a woman, Ms. Ruto, from a small village who wasted time and over $20 a month to charge her phone in the closest city with electricity.  This idea is inconceivable to the average American, who may or may not be able to separate from his or her phone for a few hours, let alone three days.  The woman’s benefit from having a cell phone, however, made this routine trip necessary.   When she discovered the power of a small solar unit that could fit onto her roof and provide her with the means to not only save money, but also charge her cell phone and provide her family with lights, she jumped at the opportunity.

The cost of such a system runs at about $80.  This initial investment was quickly recovered in savings from kerosene lamps and battery costs, as well as costs of transportation to the nearby city for a cell phone recharge.  She made up the monetary cost of this investment in less than three months.  The social benefit was also great: her children’s grades increased from having access to light later in the day, and unlike kerosene lamps, solar power doesn’t jeopardize the health of the home’s occupants.   Ms. Ruto also created her own battery-charging station at her home, charging village residents a mere $0.20 for its use.  This self-sufficiency helps the individual, and encourages the same type of behavior in other village members so that they can also derive a benefit from a similar system.  This creates a market for off-grid products, as well as increases the education level in the area.  In turn, off-grid systems have encouraged the growth of “home-scale renewable energy and for appliances that consume less energy” (Rosenthal 2010).  Technological increases in the home are often cheaper because they are environmentally friendly.  These long and short-term benefits are all created by the individual and non-governmental organizations that initiate these programs. 

The United Nations Development Program’s chief, Minoru Takada, states, “Off-grid is the answer for the poor” (Rosenthal 2010).  However, the greatest problem that these systems encounter is the reluctance of large firms to invest because it is high risk and there is no current business model to fall back on.  Additionally, the people who benefit most from these systems do not have the purchasing power to initiate this change on their own.  There is not enough knowledge or communication to dictate a distribution method, which diminishes the investors’ interests in funding the projects.  Rosenthal notes, “Investors are reluctant to pour money into products that serve a dispersed market of poor rural consumers because they see the risk as too high.”  She also mentions that even though the U.N. and U.S. spend huge amounts of money on cultivating green energy sources, it is much easier to finance and oversee a larger project than one benefiting individuals, who are difficult to keep tabs on.  In some cases, governments, such as that of Morocco, have taken it upon themselves to help off-grid citizens attain green technology that will improve the quality of their daily lives by subsidizing the initial cost.  The positive externalities seem worthwhile in the short run, but in the long run the cost is put upon the citizens in the form of taxes, which begs the question of fairness: should those who are on the grid be paying for the technology put in homes off-grid?

Another option that may be a beneficial solution to this type of situation would be bottom-up funding.  Due to the “rapidly decreasing price of environmentally friendly technology,” small, bottom-up investments may be easier for both investors and consumers.  The wide distribution of people makes a business model difficult, which is why investors are not keen to front costs for shaky business proposals.  If small scale investors could incite interest in new technology, and then build a model for its distribution in an area, many would benefit.  The greater the interest there is in the product, the more it will spread.  For example, the “cell phone women” in India cultivated a market for individuals to obtain cell phones.  This idea spread to such a point that most people now own one.  Such companies that have assisted with bottom-up models for cheaper, environmentally friendly technology are Hust Power Systems, Emergence BioEnergy, and SecoSolar.  Each of these companies utilizes a different strategy to ensure their systems cannot be paid for, and Emergence BioEnergy and SecoSolar strive to build entrepreneurial opportunities into the purchase of their products (Economist 2010).

The purchase of environmentally friendly technologies, especially in poorer areas, allows other markets to expand.  When one market starts doing well, the others follow suit, and this creates a reassurance in neighboring markets.  Even if the technology were to malfunction, the cost of replacing it is still far less than the anticipated $350 it would cost, not including monthly electricity, to get on the grid (Rosenthal 2010).  This technology gives value to peoples’ lives by providing them with a means to accomplish more with their daily lives.

In just the past few years, there have been some tremendous breakthroughs in sustainable technology intended to help poorer households that live without access to a power grid. For quotidian purposes, these technologies save rural poor on candles, charcoal, batteries, wood, and kerosene for cooking or lighting (Rosenthal 2010). Generally, the benefits of this progress are not limited to environmental preservation, but also enable poor rural populations to spend less money and time gathering fuels. With the time and money they save, they have the potential to participate and invest in income-generating activities, such as going to school.

A 2010 estimate stated that 1.4 billion people live without access to electricity, 85% of whom live in rural areas or on the peripheries of cities (IEA 2010, 17; Economist 2010). According to the International Energy Agency under the United Nations Industrial Development Organization, this number must decrease to around 1 billion in order to reach the Millennium Development Goal of eradicating abject poverty by 2015 (2010, 17).

In the absence of more conveniently obtained energy, a common cooking method in impoverished households is a “three-stone fire,” a technique that has been a very prevalent method in the developing world for generations. Because it is such a fixed tradition, many non-governmental organizations have found it difficult to provide poor communities with solar cookers or other sustainable technology that improve their economic situation, environmental impact, and health (Szulczewski 2006, 1). The reluctance of poor people to give up these traditional means also signifies the fact that solar powered cookers, for example, may disrupt the status quo, as well as undermine people’s sense of ability to provide for themselves and their families.

With this challenge, adopting solar technology and abandoning traditional energy sources may seem like a risk to many. It may appear that the social benefits outweigh the net private return, thereby reducing the incentive to invest. A $300 million national solar project is much cheaper to implement and monitor than 10 million individual solar systems in primitive houses across a continent. Very few corporations and lenders are willing to risk investing in expanding a government-maintained energy grid that would go to poor people.

The significance of remaining off the grid is that it empowers the poor to provide themselves with a better livelihood without being dependent on a national infrastructure project. The $350 cost to simply be connected to a power grid is an astronomical price to a person who lives without a dependable income, while some solar energy systems only cost $12 in comparison (Rosenthal 2010). The benefits of a large-scale government extension of a power grid often do not reach poor people, which then sustains the vicious cycle of poverty. Implementation of bottom-up, off-grid energy sources sidesteps this inattention by giving impoverished households the power to earn more income.

Moreover, this technology pays for itself in a relatively short amount of time, in both savings and by additional income generation. In Ms. Ruto’s experience, she saved $15 on kerosene and batteries every month and an additional $20 she would have spent on transportation to an electricity source, and she sells power to other families in her community (Rosenthal 2010). A Bangladeshi cattle rancher bought a one-kilowatt generator that ran off methane from his cow’s manure (Economist 2010). He has since been able to use the excess energy to run a refrigerator, and provide energy to other community members (Economist 2010). This refrigerator can keep his milk cold, allowing him to sell more at market when it would normally go bad (Economist 2010). This is a perfect example of how the benefits of sustainable off-grid technology multiply and give rural poor the opportunity to obtain a higher standard of living.

By Casey Custer and Desiree De Haven

Sources:

International Energy Agency, United Nations Development Program, United Nations Industrial Development Organization. “Energy Poverty: How to make modern energy access universal?” Early excerpt of the World Energy Outlook 2010 for the UN General Assembly on the Millenium Development Goals, Paris, 2010.

Rosenthal, Elisabeth. “African Huts Far From the Grid Glow With Renewable Power.” New York Times, December 24, 2010: A1.

Szulczewski, Melanie. Lasting Impacts of Solar Cooker Projects. Assessment, Solar Household Energy Inc., 2006.

The Economist. “Power to the People.” The Economist, September 4, 2010: 23-24.

 The United Nations Secretary General’s Advisory Group on Energy Climate Change. “Energy for a Sustainable 

Future.” Summary Report and Recommendations, New York, 2010.

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