Living without reliable electric lighting limits the productivity of nearly a quarter of the world’s population. Basic activities such as cleaning, reading, schoolwork, and household business cannot be done in the dark. Kerosene lamps are widely used for lighting in rural areas of Asia and Africa where electrical distribution is either not available, or too costly for widespread use. Yet using kerosene for lighting is extremely inefficient, dangerous and expensive, and it has extensive health and environmental drawbacks. The World Bank estimates that breathing kerosene fumes is the equivalent of smoking two packets of cigarettes a day. According to the Brookings Institution, the warming effect of these emissions is equivalent to about 240 million tonnes of CO2—about 4.5 percent of the United States’ CO2 emissions and 12 percent of India’s (policy Paper 2013-3).
The need and the market demand is huge and with new LED technology and more cost efficient solar panel technology, the electricity sector is being re-configured (think mobile versus fixed-line telephony). Through our equity investments in Off-Grid Electric (http://offgrid-electric.com) and OMC Power (http://www.omcpower.com), The World We Want Foundation hopes to increase the distribution of electricity to the “last mile”, with a cost efficient, environmentally smart, and scalable model.
Some people have seen the lack of electricity among the rural poor as a problem that would be best solved by charity. Off-Grid Electric and OMC Power see it differently: as one of the world’s most lucrative untapped markets, ripe for disruption. Providing electricity to these households is a rare opportunity to create returns, thereby promoting lasting change and scale, while also immeasurably improving the lives of over 1 billion people.
Burning oil for light is undoubtedly the world’s most uneconomic use of fossil fuel. $25 Billion worth of jet fuel (kerosene) annually goes up in smoke in oil lamps. New technology within solar technology produces a lumen of light for 335 times less total cost. In the face of these economics, why are people still burning oil for light? The answer is simple, but far from obvious.
The main barrier keeping solar from being adopted is risk. Risk of poor quality, lack of service infrastructure, expensive loan payments, risk of damage and lack of technical understanding all hinder the adoption of traditional solar energy systems. Lack of risk (due to pre-payment) is the reason why mobile phone adoption in Africa is approaching 100%, yet solar adoption remains stubbornly at 1%. Poor people are the world’s most risk-averse consumers. One bad financial decision can mean a hungry month for their family or their children lacking funds for school fees.
Although using different models best suited for the local market, both Off-Grid Electric’s and OMC Power’s solutions eliminate all of these risks: selling solar energy as a service, not as a product. This dramatically reduces cost (both upfront and lifetime) for the customer, but it also does something more remarkable: it eliminates customer risk. If the lights don’t work, the customer doesn’t have to keep paying: it is the company’s problem to keep the lights on. This motivates the company to invest in the most reliable possible technology and maintain a service network to respond to problems. In short, it aligns the customers’ interests with the company’s interests.