Solar power to the people

LILONGWE, Malawi — When a nonprofit organization invited 49-year-old Edina Levitico to travel from her remote village in Malawi to rural India for a six-month course in solar technology engineering, she viewed it as a gift from God. In Malawi, 74% of the population lives on less than $1.90 per day. Levitico was forced out of school and married off young. She had nine children, but five died from HIV/AIDS and malaria. Left to care for her two orphaned grandchildren and an alcoholic husband, she was working as a farm laborer when she was contacted about the solar project. “Governments need to proactively understand that they don’t want to build a grid and build these services like they were built 100 years ago.” --— Matt Tilleard, co-managing partner, CrossBoundary “Food shortage is our usual problem, it’s like we are friends with it,” said the energetic grandmother, dressed in a brightly colored skirt wrap. “I have only harvested one bag of ground nuts. So, my worry is about how to take care of these orphans.” Access to reliable and affordable energy underpins Levitico’s challenges. Her village is off the government’s electricity grid. Without power for water pumps or sprinklers, she spends much of her time hand-pulling water from nearby wells to irrigate the crops. And without lights in her small hut, evening hours are unproductive. Nearly 1 billion people — 13% of the world’s population — live without electricity, mostly in rural areas. In Africa, 1 in 3 people resort to using kerosene or can only work during daylight hours. Even in urban areas, electricity is often unreliable or expensive. In cities from Togo’s Lomé to Lilongwe, Malawi, people cannot access the energy that flows through the power lines above their heads. Solar power is increasingly filling the gap — but across the continent, users often have a complex and diverse set of requirements. In response, new business models have evolved to serve different needs in different ways. Where government and the private sector cannot reach, NGOs and hybrid models are emerging. The need for nonprofit “Productive use” has become a buzzword in the solar industry. Definitions vary, but it generally refers to access to energy that can help generate new sources of income and improve lives. Research shows that off-grid solar products frequently help increase economic productivity. But for many in sub-Saharan Africa, high-quality productive-use assets — ranging from small lanterns and home-systems to large desalination units and solar-powered mills — remain unaffordable. Kyle Stephan, vice-president of operations at the GivePower Foundation, views this as an opportunity for nonprofit impact. GivePower provides solar-powered desalination technology to communities in northern Kenya that have nearly no access to drinking water. Communities don’t pay for the equipment but for the water as it is consumed. “There are places in the world where it is just not possible to create a sustainable [business] model [for solar]. They don’t even have half a cent ... for their drinking water,” Stephan told Devex. Instead, the plan is to “balance” projects in communities where there is greater purchasing power with those that need to be more heavily subsidized. There is also a role for nonprofits in innovation. Energy for Impact, an implementing partner that works with the World Bank and other global institutions, uses its funding to pilot creative solutions — including crowdfunding for energy projects, innovation prizes, and incubating climate-technology startups — to solve issues around access to off-grid energy. "In all markets at this stage of development there is always a need for innovation and this often needs to be funded without the demands of immediately having to turn a profit,” said Leo Blyth, an independent off-grid business development consultant. Where for-profit comes in But a nascent for-profit solar industry has also emerged across Africa, and ultimately believes it can support the sustainability and scalability of the market. “Our customers are going to vote on the relevance of our products with their wallets,” said Radhika Thakkar, director of corporate affairs at Greenlight Planet, a for-profit social enterprise that designs and distributes solar products for underserved populations. “We will know right away if we are not solving their needs ... because they would just stop buying them.” In 2010, M-KOPA Solar, a Nairobi-based company, piloted an innovative pay-as-you-go model to allow customers to pay in installments for solar assets. But the market is complex and difficult to navigate. “It’s very hard to reach scale serving the customers that this sector is trying to serve … We are closer than we’ve ever been, but it’s still often not profitable,” said Matt Tilleard, a co-managing partner at CrossBoundary, an international investment advisory firm that works on energy in Africa. In April, Berlin-based company Mobisol, once considered a pioneer in the solar energy space, filed for insolvency. The announcement shook the industry, but Jesse Moore, chief executive officer at M-KOPA, argued in a recent blog post that it reflects the natural ups and downs of operating in such a young market. “The fact that some of the pioneering firms have hit hard times should not come as a huge surprise, nor be interpreted as an indictment of the business model,” Moore wrote. “We should expect a first wave of industry consolidation in the months ahead. This will not spell the end of the sector: Rather it marks the start of the second decade for the industry, when larger, stronger and more profitable companies will emerge.” Meeting in the middle Levitico had never been on a plane, didn’t have a passport and couldn’t afford a suitcase. But for a semi-literate, older woman, the invitation to travel to India to learn new skills seemed too good to pass up. The “Solar Mamas” program that she joined was the result of a pilot partnership between Voluntary Services Overseas; Barefoot College, a social enterprise conducting technical training in India; and India’s Ministry of Interior. The project trains women from developing countries in solar installation and maintenance. The Solar Mamas return to their communities able to set up small solar home systems for their neighbors, perform regular maintenance, and fix glitches with the technology. To date, Malawi’s Solar Mamas have distributed nearly 200 home systems and 200 lanterns, paid for by Barefoot College, to families in eight villages. One recipient is 30-year-old Jennipher Ntonera. The mother of three still spends most of her daytime hours farming. But with power in her home, she can now turn on her sewing machine at night, using the extra income to pay her children's’ school fees. “I am very happy and if I had some clothing materials as capital, I would be a boss because I could have a lot of work to do,” said Ntonera, a bubbly woman with a brilliant smile. “I believe in the coming years … I will be self-reliant.” Community committees were set up to manage the projects. Recipients of the systems pay the committee a small, regular fee to cover the Solar Mamas’ work. In turn, families without equipment pay to use it in another family’s home. But sustainability has been a challenge. The payment system lacked an enforcement mechanism, and some clients started skipping out. Several months in, the committees declared that after four defaults, the equipment would be confiscated and given to another family. In practice, though, under pressure from villagers, they remained unwilling to confiscate assets. The money coming in was not enough to cover the salaries of the Solar Mamas. The glitches in the model have pushed the partners to consider a more commercial approach, attempting to better balance the challenges and opportunities of the NGO and private sector models. “It is hoped that the new business model, which includes selling and leasing lower-cost lanterns, will ensure the Solar Mamas have a more profitable business which can be expanded,” said Mtisunge Mngoni, VSO’s project manager. Other social enterprises are also working to create sustainable, scalable hybrid models. Solar Aid was founded in 2006 as a charity, but created a spin-off — Sunny Money — that uses a business model to sustain its activities, while Solar Aid subsidizes its operational costs. The solar products come from a variety of for-profit distributors, including Greenlight Planet. “People still pay for energy. They pay for the products,” said Brave Mhonie, Sunny Money’s general manager. “It’s only that going [to these areas] purely to make profits will not be possible.” For now, many say a combination of approaches is the way forward. “A hybrid of all of these models is needed to succeed,” said independent consultant Blyth. “That would demand existing players to take complementary roles, rather than focusing on all doing the same thing in different ways.” No matter the model, experts believe that African governments must take a key role in creating an ecosystem in which solar innovation can thrive. “Governments need to proactively understand that they don’t want to build a grid and build these services like they were built 100 years ago. The governments need to set clear rules that empower people to go and do the thing that the government wants to happen,” CrossBoundary’s Tilleard said. And working collaboratively with governments to integrate off-grid solar energy into national electrification strategies could help increase their capacity to deliver power to their citizens, Blyth added.