Off-grid solar solutions bring electricity to rural areas

Large-scale power utilities were not obsolete, because they could still provide bulk solutions for cities and industry but would have to change the way they operated, John Gibbs, the head of PwC's infrastructure and government team in SA, said in the report.

According to the report, Electricity beyond the Grid, about 634-million people lack access to electricity in sub-Saharan Africa, compared with about 526-million in Asia. An estimated 80% of those without electricity live in rural areas, where it is expensive to build transmission because of distances, difficult terrain, and small numbers of customers.

Angeli Hoekstra, a PwC partner, said the cost of rolling out utility infrastructure to remote communities could range from 10,000-90,000 per kilometre.

Off-grid solar solutions, however, could be tailored for the needs of households with annual income of as little as $500 or less, up to those with between $2,000 and $5,000, she said.

The "pay as you go" solar power market, which is being served by companies such as M-Kopa and Mobisol, is benefiting from lack of regulation and mobile payment systems offered by companies including M-Pesa, Airtel, and MTN.

These solar home systems are designed to cost less than households' kerosene consumption, and can be paid for in cash, or over a period. As these companies build up relationships with their customers, who create a credit profile over time, they are able to offer them other services.

"The pay-as-you-go solar home system business model can become the starting point for a wider range of commercial relationships and activity, and will drive economic growth," the report said.

Mini-grids combining diesel and solar solutions are being rolled out to communities where there is an anchor customer, such as a hospital or mine. Mini-grids are more complex, requiring greater upfront investment and adherence to safety and other regulations.

PwC manager Georg Baecker said rural electrification could be accelerated by policymakers having an integrated energy plan, creating an enabling environment for off-grid solutions, promoting the growth of mobile payments, creating energy funds to promote off-grid power, and appointing a champion to drive results.

Source: Business Day