Co-Authored by Vrinda Manglik
There is no more innovative market than off-grid solar. From pay-as-you-go solutions to M2M technology, entrepreneurs are developing solutions tailored to the energy needs of the 1.3 billion people living in energy poverty around the world. Now, thanks to support from US Agency for International Development (USAID), Elephant Energy and divi, Inc can add yet another innovation to this exciting space -- solar in a bottle.
Every day, 1.3 billion people (20 percent of the world's population) that lack access to electricity pay the price in the form of compromised health, well-being, education, and livelihoods. The most glaring example of that is the fact that consumption of Kerosene and other forms of fuel-based energy can compromise upwards of 30 percent of a poor household's energy budget in Africa. These households keep buying Kerosene because it has a low upfront cost and they can buy it in incremental amounts that reflect their small and unpredictable cashflow.
Solar is an appropriate technology for meeting many of the basic energy needs kerosene currently serves -- such as light for studying or cooking, and electricity for charging mobile phones. But its upfront costs have often made it prohibitively expensive for many of those most in need of energy solutions. Were an entrepreneur able to "bottle solar energy" -- thereby making it just like Kerosene -- the poor could and would pay for this far superior form of energy.
Enter Elephant Energy and divi, Inc. Elephant Energy is a Denver-based non-profit organization which operates market-based distribution networks in Namibia, Zambia, and the Navajo Nation. The organization works with known entrepreneurs and businesspeople in the local areas to deliver solar energy products in rural communities, in addition to providing sales and marketing training to these agents.
Near the end of 2013, they were awarded $500,000 in a second stage funding grant from USAID's Development Innovation Ventures program, to support their Creating Digital Kerosene Project. This project uses a pay-to-own system of credit to make energy products (such as solar lamps and cell phone charging devices) affordable by payment through weekly installments. The goal is to provide light to 16,000 homes in the next two years.
Their unique innovation is a Bluetooth chip that allows specific solar devices to talk to other devices (M2M technology). For rural communities, this means that sales agents can "unlock" solar lamps when customers pay their bills (and "lock" them when they don't). Once the customer has paid the installments adding up to the full cost of the light, their light becomes permanently unlocked.
This pay as you go technology isn't entirely new -- we've covered it before here. What is new is that divi provides the ability for customers to swap credits through M2M technology. It's like a neighbor having the ability to 'borrow or sell' kerosene depending on their cash flow. This is a truly exciting innovation that makes solar energy a fungible commodity; in essence, it bottles solar energy.
Given how advanced digital kerosene is, it's no surprise that Elephant Energy is already exploiting financial innovations that are unlocking much needed capital for these markets. The organization has already taken advantage of solar crowdfunding using Kiva and GlobalGiving platforms. Which is just another example of the importance of crowdfunding in laying the financial foundations of this market.
But when all is said and done, it's the $500,000 from USAID that helped unlock this innovation. It's a great example of what targeted support for off-grid clean energy access interventions can do. With the Electrify Africa act moving through congress, these types of success stories may have more support in the future. But that's only if the legislation changes course and prioritizes mini-grid and off-grid interventions to energy poverty.
The International Energy Agency (IEA) suggests the majority of investment flow to these solutions but current investment from Power Africa institutions, as well as the World Bank, overwhelmingly support centralized power projects at the expense of distributed renewable energy technologies organizations like Elephant Energy are pioneering. It's time more institutions followed USAID's lead and unlocked innovation and energy, for the world's poor.