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From Candles to Electric Light, Can Poor People Afford Solar Electricity?

 by Anders Arvidson,

 SEI Can rural households in scarcely populated areas in developing countries afford Solar Home Systems (SHS)?

    An assessment of the demand situation and economic purchasing power shows that between 5 and 15% could afford SHS and would actually make an immediate profit by substituting their non-cooking energy requirements with SHS. To further disseminate the technology, financial mechanisms such as long-term and low-interest rate loans need to be put in place. Electrification of remote and isolated areas in developing countries through grid extensions is seldom financially viable. Reasons for this are the costs which average US$10,000 per kilometre in combination with the usually low load characteristics of such areas.

    More financially viable solutions to provide energy for electric lighting and other selected loads are decentralised small-scale solutions such as stand-alone diesel generators or photovoltaic (PV) modules. Solar for low loads The choice of technology is to a great extent dependent on the load. In a community with a daily load of 100 kWh, the cost of diesel-generated electricity may range between 20 and 40 US cents per kWh. PV-generated electricity, on the other hand, costs between 50 and 150 US cents/kWh irrespective of load. At lower loads, diesel-generated electricity becomes more expensive and, when the need for electricity is down to 12 kWh, the prices of PV and diesel are the same. With the objective of increasing production in rural areas, utilities in developing countries have “prematurely” electrified areas that have a low electricity demand.

   Studies1 carried out by SEI and the Tanzania Electricity Supply Company Ltd. show that many diesel-supplied branches of the Tanzanian electricity utility are running at a loss and would benefit from having higher loads. On the other hand there is also the objective of giving equal access to electricity to the population of the whole country, including those living in rural areas. In this respect, using PVs may be a cost-efficient way of reaching both these goals. In time, when the demand has risen, other forms of electrification will probably be justified from an economic point of view.

Can the poor afford solar electricity?

  In areas far away from the main grid where loads are not large enough to motivate diesel generated electricity, PVs seem to be a good solution. But, can poor people afford solar-based electricity?

     According to studies carried out by GTZ2 the answer is yes. By looking at how much rural households spend on buying candles, kerosene, ordinary dry-cell batteries and car batteries for lighting, radios and for televisions, and comparing this cost with the alternative of using Solar Home Systems (SHS), these studies provide a quantitative argument in favour of solar energy. A SHS consists of a solar cell module, a charge controller, a battery, cabling and fluorescent lights.

  By using such a system to satisfy part of the energy needs, quite a number of rural households would make an immediate economic gain. Pay more for SHS?

    In view of all these advantages, a potential SHS buyer might be willing to pay more for solar-electric power than he/she has traditionally spent on conventional forms of energy for lighting and other household activities. 5-15 % of rural households willing and able to pay GTZ estimates that in most developing countries between 5 and 15% of the rural households would be willing and able to pay cash for a SHS. The percentage tends to be higher in Latin America and lower in Africa. In Morocco this percentage represents 170,000 households and in Namibia 20,000. This “upper-class” could help create a “PV-infrastructure and lower the distribution costs per unit that will be required to commercialise the technology and reach a larger part of the population.

    To further disseminate SHS, some form of financing mechanism is needed. In calculations made by GTZ, the majority of the rural households could substitute their non-cooking energy needs with SHS if there were loans with, for example, a 7% real interest rate that could be paid back over a twenty-year period. Unfortunately, no commercial lender would agree to such a long repayment period for such a small loan. Other benefits from PV There may be other direct economic benefits of changing one’s energy source from candles to electric light. The possibility of doing additional work in the evening through improved illumination also increases. A clod-cathode fluorescent lamp has a luminous efficacy (lm/W) which is 300 to 500 times greater than a kerosene lamp.

 

  In a pilot project initiated in 1991 by the Energy Affairs Division of the Ministry of Mineral Resources and Water Affairs in Botswana, 40 PV-systems were installed in a rural village. After two years, an evaluation revealed that 100% of the households that had not been PV-electrified would now like to be; 83% of the users did more reading; 50% of the teachers at school experienced that their pupils were performing better; and 30% of the households were earning extra incomes as a result of an increased number of light hours. Similar experiences were made in Kenitra, Morocco, where 120 households were PV-electrified. Examples of extra incomes came from weaving, carpet making and repairs of farming equipment during evening hours.

 

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