Fastest path to universal energy? Let the market decide

Today at the World Economic Forum on Africa, participants are debating how Africa can overcome the paradox of being energy-resource rich and access poor. Globally, over 2 billion people are without access to reliable, affordable energy. As part of the decade of Sustainable Energy for All, the UN has prioritized energy access for the global population – meaning more than 8 billion people by 2030.

With all of the benefits that energy can bring, including more productivity, better health, and greater opportunity, universal access is one of the most important goals of the 21st century. Just as important is how we choose to supply this growing demand for energy. Market-based approaches that compete on price and succeed on customer value will provide the fastest, cleanest path to universal energy access.

With billions lacking power, a number of governments and traditional energy companies are seeking to provide the estimated 952 TWh of additional capacity needed to achieve universal access through steel-in-the-ground, grid-driven, non-renewable approaches. But is this what the market wants? And, given that 85% of customers without energy access are in rural areas, is this what the market needs? We think not.

After eight years and hundreds of hours in the field, we have developed deep market insight and a human-centered design process. As a result, our off-grid light and power solutions are among the most adopted in the world. And this is the core lesson of what we have learned: base-of-the-pyramid (BoP) customers want more than “business as usual” when it comes to energy access.

BoP customers want quality, flexibility and affordability. They appreciate small-scale, reliable solutions they can control. We have also found that these customers are savvy, demanding and selective, and they are willing to invest in an upgrade from the expensive, dim, noxious light powered by fossil fuels to the bright, safe light delivered from off-grid solar light and power products.

If we supply the rural energy markets in the developing world with the renewable, off-grid energy they prefer, can we achieve universal energy access? By our estimates, selling off-grid renewable solutions to the energy impoverished at the scale they want and price they can afford will deliver universal energy access at fraction of the nearly US$1 trillion cost predicted by the International Energy Agency.

When it comes to providing energy – one of the most important factors to lift people out of poverty – it is imperative to free the market and let it do what it does best: respond to consumer demand. Solar off-grid light and power is far more economical and effective than “steel-in-the-ground” in the markets most affected by energy poverty. Turns out the customer is always right.

Author: Donn Tice, Chairman and Chief Executive Officer, d.light design, USA. Co-founders Sam Goldman and Ned Tozun are d.light’s Chief Customer Officer and President, respectively. Ned Tozun is a panelist in the World Economic Forum on Africa session “Engaging in Energy.” d.light is a 2014 Schwab Foundation Social Enterprise of the Year.

Image: A vendor sits at a kiosk offering customers generator-powered electricity to charge mobile phones in the central market at the town of Nasir, southeastern Sudan, June 20, 2009. REUTERS/Finbarr O’Reilly