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Summary:

For cost-related reasons, developing countries have mostly skipped traditional telephone infrastructure and got their first communications via cellular. Similarly, countries that have not built out the power grid to much of their population completely skip the traditional power infrastructure and turn to distributed solar for power.

During my years as a reporter covering the wireless industry, there’s one story I kept revisiting in various ways: while developed nations slowly replaced landline telephones with cell phones, developing countries completely skipped traditional telephone infrastructure and got their first communications via cellular. The reason is pretty simple — the cost of connecting every home with a landline is a lot higher than dropping a cellular base station every couple of miles.

Now during my greentech reporting, the same idea keeps coming up, but this time for the power grid and distributed solar in developing countries. Will developing countries that have not yet built out the power grid to much of their population completely skip the traditional power infrastructure and turn directly to distributed solar for power generation? Several analysts and executives recently have told me “yes,” and it’ll happen sooner than we think.

I first started thinking about the idea after writing a profile about the startup Duron, which has developed a $130 solar panel, LED, and cell phone and radio charging device and is selling “several thousand” of these devices per month, according to co-founder and President John Howard. Duron is backed by investors Idealab and the Quercus Trust and Idealab board member Jack Rivkin recently raised this idea in a blog post in which he quoted a friend as saying:

India must skip the classic infrastructure build expected of them. They have to find another way. Otherwise they will never bring all the country up to developed world standards and achieve true participation in the 21st century. They did it with cellular phones. Why not with other basic systems?

Howard, who before founding Duron did a lot of telecom research work at McKinsey, agrees with Rivkin’s post, and told me in an email that “there are many interesting parallels between landlines/cell phones and grid/distributed generation.”

Building out the power grid can be prohibitively expensive, which is why in many countries, like Haiti, less than three quarters of the population have grid access. Pike Research’s Clint Wheelock says just for the transmission portion alone it can cost at least $500,000 per mile. And that’s without the distribution portion and any kind of the grid intelligence (smart grid) that is getting all of the investment this year.

Bloomberg New Energy Finance solar analyst Nathaniel Bullard, who called the distributed solar/cellular metaphor “apt,” said that according to the firm’s data some developing countries in Africa with very low grid access will be getting 50 percent of their power needs from distributed solar in the next decade. In addition, Bullard says that the cost of solar doesn’t necessarily have to come down in price for the market for distributed home solar in developing countries to grow. These home solar systems are replacing kerosene lighting and disposable batteries, which can be expensive and take up a disproportionate amount of a residents’ expenses, pointed out Bullard.

One of the biggest barriers to the growth of this market is residents’ access to capital. A $130 solar charging kit might not seem expensive in the developed world, but Duron is working on partnering with micro finance companies. Similarly the micro-lenders behind the Grameen Bank have helped install over 2,500 solar energy stations in shops in Bangledesh by loaning shop owners the money.

Once home solar installations reach a tipping point, residents will more easily see how the upfront capital can save them money in the long run and also be a game changer for how they use electricity on a daily basis. Cheap cell phones have reached that tipping point and done the same thing for communications.

And like cell phones in the developing world — Nokia has made a killing off of selling phones to millions of customers who live on less than $1 a day — distributed home solar also has the potential to be a huge market. Investors like Idealab and Quercus Trust wouldn’t be investing in companies like Duron if they didn’t think so.

Image courtesy of kiwanja’s photostream Flickr Creative Commons.

  1. ‘These home solar systems are replacing kerosene lighting and disposable batteries’
    Having lived in some remote villages in SE Asia, I did not see any evidence of kerosene lighting or significant use of batteries. However there were quite a few solar panels installed, paid for by government grants usually, which were almost exclusively used for powering refridgerators, fans and of course, mobile phones. Solar panels have enabled people to inhabit areas which were previously not attractive because of lack of electric grid, so more jungle is being hacked down and more human invasion of animal territory is taking place. Every positive has a consequence and we should be aware of the changes in behaviour caused by these advances.

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  2. [...] Building Out Power Grid Will Mirror Cell Phones. Will developing countries that have not yet built out the power grid to completely skip the [...]

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  3. Thanks Paul. Duron, EGG-Energy (http://earth2tech.com/2010/01/12/egg-energy-the-netflix-of-batteries-for-the-developing-world/) and also D-Light (http://earth2tech.com/2008/06/16/dlight-solar-powered-led-lights-for-the-worlds-neediest/), are all selling power products to replace kerosene that is widely used in rural areas of Africa and India. Perhaps it was a different story where you lived?

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  4. Aside from the cost of building and maintaining the infrastructure, another driving factor to help push these developing, and even developed, nations into a more sustainable form of electricity generation is the high cost of traditional forms of fuel sources. For example, look at Puerto Rico, Hawaii and many other island nations, who have a growing interest in solar and wind. They do in fact offer subsidies to help offset the costs of the installation of these systems, but the main reason is that there are no natural resources cheaply available to them to generate their own power locally. They must import the coal and oil in order to generate power, which burdens them with a high price to pay, so they have a vested economic interest in diving right into sustainable forms of energy.

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  5. The good news here is that micro technology and scalability is helping the most disadvantaged regions exist competitively and even succeed in spite of crushing poverty and otherwise hopeless environments. We should be able to bring the same emerging transformation in construction systems and transportation too making it possible for even the least economically capable populations to transcend historical barriers to a better standard of living and new opportunities to participate in global commerce.

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  6. Distributed solar for end users is just one side of the equation. Consider also the difficulties of providing commercial power to cellular towers in areas lacking powerlines. This problem is not confined to the developing world, either; aside from terrain and NIMBY issues, one of the key reasons why the Rocky Mountain West lacks coverage in mountainous areas is that it’s too expensive to deploy commercial power on mountaintops.

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  7. Katie, this is probably the best article that I have read in a long time. I come from Malawi, Southern Africa. And I grew up in a rural setting where when darkness falls, there is literally nothing production that people can do if they do not have kerosene.Alternatively, they would be chatting around the fire place where they inhale a lot of carbon dioxide. School going children can hardly do their studies.

    I have always appreciated the potential of solar technology in the developing world. But my friends who are specializing in that field have been telling me that solar panels are expensive for households. But the price of USD130, considering the fact they the people will not have to pay extra costs since the system is based on nature, I think this is affordable even in Malawi. I look forward to seeing these companies opening their branches in Malawi.If they want me to act as a link man, I am always available.

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  8. What I suspect would make these sorts of applications take off is ultracapacitor storage systems for close to the price of lead acid batteries.

    Having lived off the grid for a couple of decades the cost of replacing ones batteries every few years is a significant bite. And poorly maintained batteries (too deeply discharged, too often) can really shorten battery life.

    And if you’re running packs of multiple batteries they should all be changed out at one time. I don’t believe that’s the case with ultras. Someone could buy one now and add others later on without the oldest pulling down the performance of new newer ones as is the case with batteries.

    If someone can bring an affordable ultra to market that, along with rapidly dropping solar panel price, could work wonders.

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  9. [...] Why the Power Buildout Will Mirror Cell Phones in Developing Nations: Will developing countries that have not yet built out the power grid to much of their population completely skip the traditional power infrastructure and turn directly to distributed solar for power generation? Several analysts and executives recently have told me “yes,” and it’ll happen sooner than we think. [...]

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  10. Katie,

    Great article; you are absolutely right that much of the developing world will skip the central generation and transmission approach in favor of local, distributed generation. Solar is already a commercially proven technology well-suited to distributed generation in remote or off-grid areas. However, as @Clement notes, there is demand for power at night too. That will need the readiness, scale, affordability and multi-year reliability of solar to be matched by storage technology of some kind.

    Solar is still relatively expensive compared to other sources (although the cost is coming down.) The developing world will also be well-served by other technologies that lend themselves to distributed, small-scale local generation. Small wind for example, although it is also limited by intermittency and variability like solar.

    Where flowing water is available, e.g. from streams and rivers, new hydrokinetic power has promise, especially since it can run at night and when there is no wind. Several companies are developing products to meet this need, including Hydrovolts, about which you’ve posted earlier (http://earth2tech.com/2008/02/13/hydrovolts-harnessing-the-energy-of-currents/)

    The scope of the need is so broad, and the resource varies widely. All of these technologies will be needed to fully address energy demand.

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