Electrification is one key to progress – yet the single hardest thing to achieve.
Millions of people in rural areas throughout the world are excluded from electricity supply, this is inspite the fact that electricity plays such a vital role in basic progress. There are many reasons why electrification in rural areas is lacking. In general, the infrastructure to produce, transmit and store electricity is expensive and the costs per connection with decreasing population density. On the other hand, financing electricity infrastructure by customer payments often faces the problem of collecting the many micro-payments from individual households manually. And although electricity is a basic need for progress, turning electricity into a productive asset requires additional investments for example into machines. The outcome is that millions of people are lacking basic electricity and thus are excluded from services such as artificial light (better: not oil based light), television and cell phones services, timely information and communication, education and ultimately progress.
To overcome these obstacles, today rural electrification is often in the hands of development aid organizations and NGOs that electrify a village with the help of donations. Most often, solar panels or water mills are used to produce the energy and each household is provided with a basic connection to light the home. However, this solution is itself not refinanced and thus hardly scalable as it relies on a rather steady inflow of donations and often does not spark additional progress.
How do you enable people to create more value from electricity to self-finance the infrastructure?
In order to scale electricity infrastructure, we have to make it self-sustaining. To achieve that, communities need to be able to easily create more value than currently out of the provided electricity. This additional value is a way towards paying for the infrastructure without the need to engage foreign aid or the government. To create additional value, one quick-win idea could be a bundled system of a solar panel (or any other renewable energy source), fridge with combined power sockets and battery storage that would allow for a plethora of new services to be sold in a community. This combination creates a lot of entrepreneurial opportunities to pay for the technical solution itself. The fridge space could be rented out in the community, the electricity can be sold at the spot to charge phones and at the same time people can enjoy a cold beverage, cooling-as-a-service could be sold to local hospitals or doctors for drugs that need to be stored cool, the system could be the central point to connect other homes to the grid, network provider could partner up with the entrepreneur, micro-payment services can be offered at the spot …. and ultimately the electrification of whole villages or areas can be driven from that central solution. Key to this idea is, that many new services or products are enabled as the electricity is transformed into a medium that creates more value and thus new business is created. Payments are not done for the electricity itself, but for the electricity-based service and the payment is collected by the owner of the fridge.
What’s in it for the players?
Entrepreneur profits: The bundled solution transforms the ‘product’ electricity in something more meaningful and applicable and she can offer a bouquet of services to the community. She can thus tap many revenue sources.
Community profits: The community gets access to a lot of new services and new jobs could be created. The solution can be the starting point for a self-sustained electrification of a village.
Private Sector profits: The bundled solution of solar panel, battery and fridge incl. power sockets itself is a market and new market possibilities are created.
Government profits: The self-financed solution reduces the need for governmental funding of rural electrification.
Is it the fridge?
It does not necessarily needs to be the fridge that creates these possibilities. Depending on the context it will be other things that easily transform electricity into a meaningful service in the context – however by building new bridges between players, rural electrification can be possible in a self-financed way!