Ideas to Action:

Independent research for global prosperity


Between 2000 and 2010, the number of mobile phone subscriptions in developing countries increased from 215 million to 4.1 billion.  From a luxury for the rich, the mobile has become a ubiquitous presence in rural and urban areas alike, even in some of the most fragile countries in the world.  Afghanistan saw 38 subscriptions per 100 people in 2010, an average of more than one phone per household.  And while ubiquity in Afghanistan is evidence enough that mobile phone access hardly guarantees quality of life or sustainable development, mobiles have proven themselves powerful tools to improve livelihoods –associated with higher prices paid to farmers, improved job seeking opportunities and (more recently) direct payments to those in need.   So what’s going to be the next mobile phone –the technology that spreads rapidly to improve the lives of even the poorest people in the developing world?  One possibility is solar power.

Much like phones were two decades ago, electricity remains a luxury, especially in rural areas.  Three hundred million people in India alone live without electricity.  But much like telecoms in the 1990s, the electricity industry in developing countries may be on the cusp of a revolution thanks to technology advance.  Take Mera Gao Power (MGP for short), which operates in Uttar Pradesh.  It puts solar panels on the roof of a house, batteries inside the building below and runs wires to other houses in the village to provide power.  Four panels are sufficient to provide an entire village of 100 households with two to four LED lights each and mobile phone charging.  And while stand-alone solar lanterns are becoming increasingly price-competitive with traditional lighting, the microgrid model has an even lower cost per household --as reported in a wonderful article on MGP by Anna daCosta, it is about eighty cents per house paid on installation plus fifty cents per week.

That compares very favorably to the prices villagers are paying for less convenient, lower quality services today.  One mobile charge in the local village costs twenty cents.  Unsubsidized kerosene costs about 64 cents a liter, or a little under 30 cents if villagers can find government subsidized supplies.   Use a liter of kerosene a week for lighting and the combined costs of mobile charging and kerosene fuel approximately equals MGP’s prices.  Three differences: you can charge you phone at home; the quality of lighting is considerably higher –so that work and study can continue after dark; and the risks are lower – about 2.5 million people are burned by overturned kerosene lamps each year, not to mention inhaling fumes from the lamp has about the same impact as smoking two packs of cigarettes a day.

Meanwhile, MGP hopes it can make back investment costs of about $2,100 per village within eighteen months of setup, with a return on investment of 15% over three years.  That suggests the supply side of an electricity access revolution may be settling into in place –private firms can make good money providing the service, like they have (hand over fist) in providing mobile telephony.

But there is another side to the story.   The MGP financial model depends on 70 percent household takeup at the village level.   That means strong demand is crucial to rollout.

Of course, given cost competitiveness with kerosene and the considerably higher quality of the product, you would have thought demand would be no issue.  But remember Esther Duflo’s work on vaccinations in Udaipur: even when a local NGO helped ensure free, regular and well-publicized visits by traveling immunization camps, full immunization only reached 18 percent of kids.   Offer a technological innovation for free that can have a massive impact on quality of life and, still, four out of five families may not take you up on it.   Mobile phones haven’t faced the same problem: in fact in the Philippines a survey of 135 communities found that mobile phone ownership led to a 20 percent decline in monthly tobacco consumption –people even gave up smoking to afford their talking and texting addiction.

What makes paying for a mobile so much more attractive than a free vaccination? The list is long but it would surely include instant gratification (rather than a crying baby you get to chat to your friend), obvious impact (maybe the kid wouldn’t have got sick anyway) and conspicuous consumption.  On those three counts, at least, light spilling out of your house at night on the day you are connected probably scores well.  Further evidence that people really like the volts: enterprise surveys frequently rank electricity access as one of their top concerns. So maybe lighting is cool enough to follow in the footsteps of the phone.

And what’s the role for donors?  USAID’s Development Innovation Ventures fund is already supporting the MGP with a $300,000 grant that will allow the firm to build out 40 village micro grid lighting facilities reaching 4,000 households.  As part of the financing, MGP will have to carry out quarterly assessments to measure the impact of MGP’s service on education, health, and income.  It would be great if other donors could provide (more) seed finance to similar models –and to their rigorous evaluation.  And as, or if, the projects scale, perhaps the IFC, OPIC and other private finance agencies could become as large investors in micro and small-grid electricity as they have been in mobile telecoms.

But the ICT revolution has an important lesson for aid agencies.  While private-sector financed mobile telephony was spreading faster perhaps than any other technology in history across the world, donor-funded public Internet kiosks or ‘telecenters’ were languishing largely unused.  A 2001 survey by the UNDP concluded starkly that “Although donor-funded centers are undertaken to service specific developmental objectives, none have proven to be sustainable to date.” (More recently, Kentaro Toyama, formerly of Microsoft research, wrote elegantly of his disillusionment with the telecenter movement in the Boston Review).  The lesson: start with the simple, cheap and robust technology in demand (the mobile) rather than trying to ‘leapfrog’ to unsustainable service delivery which people can’t or won’t use (Internet kiosks).

In this UN Year of Sustainable Energy for All, when the global community is pushing for universal access to modern energy services, that’s an important lesson to trumpet.   Because the International Energy Agency has defined ‘modern energy services’ to involve the average currently unconnected household gaining access to  800 kilowatt hours of electricity a year by 2030 --enough to run a fan, a refrigerator, a television and a computer along with the phone and lights.   It also throws in access to LPG or biomass stoves.  The IEA estimates that extending universal access to this level of modern energy services will cost $48 billion a year until 2030 –or more than five times current global investment in energy access, and more than a third of total global aid flows.

So, a plea to donors: remember the telecenter.  Start small.  Support simple, cheap and sustainable delivery models.   Evaluate and repeat.  Any other approach to universal electricity access would be shocking.

On which note, CGD will be hosting a brown-bag with Rachel Kleinfeld, president of the Truman National Security Project to talk about her new book Let There Be Light: Electrifying the Developing World With Markets and Distributed Energy on February 22nd at 12.00pm –it will be a great opportunity to push the discussion on micro-grids and the role of the private sector forward.