During the television news in Zambia on the state-owned channel ZNBC, a sponsored advert from government owned electricity provider ZESCO precedes the sport section. It implores people to use less electricity when the power comes back on following the eight hour power outages (known as ‘load-shedding’) that happens every day as a result of the demand for electricity exceeding supply of power from its hydropower dams (which make up 96% of the country’s electricity supply). After decades of poor forward planning by ZESCO causing the shortage that has now lasted for two years in Zambia, to announce it is the customer’s fault is a position that can only be taken by a company with a guaranteed monopoly.
This energy shortage only tells half the story of the crisis currently gripping Zambia and most other Sub-Saharan African nations. Rural electrification rates are shockingly low, with 96% of Zambia not having access to reliable power. Lack of access to energy is one of the biggest brakes on development and growth, as highlighted by Bill and Melinda Gates in their latest annual letter.
But there is a renewed hope that a lasting solution to this problem has been found. It comes from one of Africa’s most underutilised resources: the sun. African countries are leapfrogging access to the grid and going straight to solar energy due to innovative companies who are helping increase standards of living through market mechanisms.
Seeing the opportunity provided by poor state providers and a grid system that is not economically viable for a continent as wide-spanning as Africa, a number of companies offering small solar home systems that are now affordable to households and businesses regardless of size and income have rushed to fill the gap. The biggest success has been M-KOPA, the Kenyan based company that developed a Pay-As-You-Go Solar system at a tiny fraction of the cost of the outright purchase value that opened up the technology to millions more people. For just an initial deposit and a 45 cents a day payment for a year, households can receive power to charge mobile phones, listen to the radio and most importantly have lighting. As of January 2016, M-KOPA had connected 300,000 households in three countries, currently adding 600 customers a day. Off-Grid Electric has also grown quickly in Tanzania using a similar model, and Vitalite are beginning to make considerable impact in Zambia with their solar PAYGO systems.
The difference between now and previous attempts to electrify Sub-Saharan Africa is that these are strictly for profit companies, serving a market demand. They have been highly capitalised too: Off-Grid Electric have recently received $45m in debt funding from the likes of SolarCity and other big hitters in the venture capital and solar industries. The model appears to be reaching more people, more quickly. The tentacles of the distribution networks continue to stretch to evermore remote villages in the search for new markets, reaching people who have never had access to the grid and are therefore leapfrogging the grid straight to solar power.
Companies are working to not just provide simple lighting to customers, but to offer new products and services that will further improve the standard of living of customers. Solar-powered TVs will be a widespread product offering from these companies on a pay-as-you-go system within the next 12 months, and solar-powered refrigerators will follow quickly. The rate of innovation within the market remains quick, due to the high levels of competition that have been missing previously under state owned monopolies. Helping individuals climb the ‘energy ladder’ remains a central development push for many of the renewable energy companies engaged in the market.
Institutional and policy concerns continue to linger as a threat to cull off the industry. So far, governments have been broadly supportive of the solar industry that is offering a market based solution to an issue central to their constituents. But with increasing market share, the solar industry may become seen as a competitive threat to the status quo of on-grid suppliers. With the extent of government power in many nations, this could stop this progress in its tracks. The current battles in the United States regarding policy direction present a fearful look into the potential future.
The TV advert from ZESCO finished with a recommendation of utilising solar power to help solve the energy crisis and take pressure off the grid. At the rate of expansion by the solar industry, this may not be seen as a friendly alternative for much longer.