Why Solar Energy Is the Key to Solving Global Poverty
Every morning, students in Kunthur, a village outside Bangalore, India, leave home carrying a battery among their books. At Swamy Vivekananda High School, solar panels charge the batteries during the day so the stored energy can be used to power lanterns when the students return home.
With access to light—and the elimination of dirty and costly kerosene-powered lamps—families save $100 a year and children have more time for work and study, offering them a chance to rise out of poverty. Solar energy is emerging as a way to give power to the 1.3 billion people in the world with no reliable access to electricity without spending billions of dollars to build transmission lines.
Despite that potential, international organizations like the World Bank aren’t investing enough money in the right places to achieve universal electrification, according to a new Sierra Club report.
“The poorest people in the world pay 40 times more for the same energy services but get poor lighting and poor health outcomes,” said Justin Guay, associate director of Sierra Club’s International Climate Program and coauthor of the report. “Instead of building centralized power plants, we need a different approach to solve this problem.”
Guay said the World Bank and other international lenders should start funding projects that provide solar electricity, such as those offered by d.light, a company that develops and distributes products ranging from lanterns to home solar systems in off-grid communities around the world.
The report notes that the World Bank rarely invests in small energy projects, despite its goal of universal electrification by 2030. The bank also does not measure access to energy the right way, Guay said.
“Rather than measuring services provided and new access to energy for poor populations, they look at the supply of energy created and kilometers of energy transmission lines built,” he says. “Just because you build a coal plant doesn’t mean that access lines are extended to poor people and that they can service their needs and repair the grid lines—or that communities can afford the power.”
World Bank spokesperson Christopher Neal says the bank is supporting hydropower, natural gas, and renewable power sources that expand access to electricity. One such project is a rural home solar initiative in Bangladesh that has installed more than a million solar systems in less than a decade.
In recent months, investors have put $45 million into off-grid solar start-ups, including a $7 million round for Tanzania-based Off.Grid:Electric and $11 million for San Francisco’s d.light.
Is public money really even needed, given private investments in off-grid solar?
“Absolutely,” said Guay, who noted that the largest barrier to universal electrification is access to finance. “Most of the private finance has been in equity, which gives stakes in private companies and helps to build these companies. What the space needs now is cheap capital from public institutions that enables them to scale their operations.”
The report estimates that $500 million in public financing would spur a $12 billion off-grid solar market by 2030.
Neal points to the World Bank Group’s Multilateral Investment Guarantee Agency as an example of how it is working to leverage additional investments from the private sector. MIGA has offered $5.2 billion in guarantees to lower investor risks for non-commercial projects in Kenya, Nicaragua, China, and Rwanda.
There has been some change. The U.S. Agency for International Development, for instance, last year granted 11 entrepreneurs up to $1.5 million each to develop clean tech solutions in agriculture for the developing world. Many involve off-grid solar technology.
That’s just a start. For now, initiatives like the Solar Electric Light Company’s school program in Kunthur will show how to increase access to both clean electricity and education.
“Just providing a few hours of solar lighting alone improves the human condition,” Guay said.