Solar Power for the Poor
By Chtmlar Henderson, Financial
Times
 Demand for electricity in developing countries is doubling every eight
years, and international power markets are awash with capital to meet it.
So far, most of the money has been directed to large-scale coal, oil,
and hydro-electric projects. But the more than 1.5bn rural poor worldwide,
who have no access to national grids, will hardly benefit at all.
Rather, says Christopher Flavin of the World Watch Institute, a US-based
environmental group, "both private banks and international aid agencies
seem more interested in financingprojects that increase dependence on fossil
fuels and damage the environment."
But advances in photovoltaics, or PV, the technology that turns sunlight
into electricity, make it more competitive with conventional sources of
power, especially those off-grid. What was a small, subsidy-dependent niche
could expand into a fully commercial market within a decade.
This, at least, is the intention of the World Bank Group, which comprises
the Bank itself, its private lending arm, the International Finance Corporation
(IFC), and the Global Environment Facility (GEF), a concessional funding
entity that aims to protect the global environment. The Bank and IFC, with
planned assistance from the GEF, are developing a Solar Development Corporation
( SDC) and a PV Market Transformation Initiative (PVMTI).
Women and children in poor rural areas would particularly benefit from
extensive PV deployment. Small PV arrays connected to batteries known as
solar home systems (SHS) would become common, generating between 20W and
100W-enough to power four energy-efficient light bulbs and a small black
and white TV for about five hours a day.
In many countries SHSs are already popular. In Kenya eight domestic
companies have, with little government or international assistance-and in
spite of high import tariffs-marketed, installed and maintained SHSs to
20,000 rural households.
Other private suppliers have appeared in Indonesia, South Africa, the
Dominican Republic, Sri Lanka, and elsewhere. The Solar Electric Light Fund
(Self), a US-based non-profit company, is setting up revolving credit funds
to finance SHSs in Vietnam, the Chinese province of Gansu, and the Indian
states of Karnataka and Andhra Pradesh.
Millions of families in the developing world could afford solar power
tomorrow, says Neville Williams, president of Self, "if they could
just get a loan." Self has established a commercial entity, Solar Electric
Light Company or Selco, which has already raised $2.5m (£1.5m) in
private equity from European investors to sell and service PV household
systems in developing countries on a global scale.
Another private group that will supply and service developing country
off-grid customers with PV-based electricity on a utility type basis is
SunLight Power International. It has raised $4.75m
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The bare necessities: in Cacimbas,
Ceara, Brazil, 50-watt, roof-top PV systems provide many homes with their
first electricity, for flourescent lighting.
from European insurance companies, which are attracted both by the economics
and the environmental potential.
The Bank and the GEF are also making available substantial amounts,
including $100m for 200,000 SHSs in three Indonesian provinces, and another
$55m in India, according to Richard Spencer of the Bank.
But barriers to widespread PV dissemination remain. Among the most serious,
says an IFC paper, "is not capital constraints on system purchases
or even the prices of the systems themselves: it is the hesitation of relatively
small industry players to commit to investing in and maintaining far-flung
sales, distribution and financing networks."
The PVMTI and SDC, which should be launched shortly after an extended
period of market research, will concentrate on different htmlects of the
problem. The $30m, GEF-funded PVMTI will make multiple investments from
$500,000 to $5m in existing and new consortiums in India, Morocco and Kenya
that can offer innovative packages and applications for both on- and off-grid
PV power.
But, says the IFC's Dana Younger, the initiative will, through its external
management agent, bring the conditions of the investment as close to commercial
terms as possible.
The SDC, by contrast, will finance only businesses and intermediaries
operating in rural markets and dealing mainly with SHS. It will target projects
in many countries in Africa, Latin America and Asia.
Initial capitalisation of around $50m would be allocated on a "quasi-commercial
basis," says Ms Younger, with a $35m finance window and a $15m business
advisory service.
PV shipments have been growing at 15 percent a year, are estimated to
grow by 30 percent this year, and at present rates will reach or exceed
an annual rate of 800MWp (Megawatts at peak) by 2010.
The resulting economies of scale would reduce the cost of PV-generated
electricity from up to 30 cents a kilowatt hour to about 15 cents. But the
IFC believes PVMTI could be an important contributor to speeding up the
growth of the market-to as much as 4,000MWp a year by 2010. That would allow
costs to fall to as little as eight cents a kWh. At prices this low, the
21st could truly be the solar century.
Reprinted with permission by Financial
Times, |
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The Sunny Side of India
The Economist
The north-west Indian state of
Rajasthan is said to receive more sunshine than anywhere else in the world.
If solar power can produce electricity at competitive prices, it should
be here. All the same, India has dithered for some ten years before committing
itself. Money has been one problem. Getting suitable technology is another.
Both seem now to have been solved. The World Bank has granted $45m through
one of its agencies, and a German development bank has provided a soft loan
of $149m. The technology is mainly American, developed in sunny California.
Robert Kelly, of Amoco-Enron, an American company involved in the project,
says it will establish India as a world leader in solar power.
Politically, there has been doubt about turning to solar power when
the country has plenty of coal. But coal is polluting and, anyway, India's
is of poor quality. The mines and the power stations they serve, mainly
in eastern India, cannot meet even India's present demand for electricity.
Looking to the future, the state government of Rajasthan and the central
government in Delhi have decided to go for cleaner solar power, even though,
on present figures, the electricity it produces costs three times as much
as that produced by coal.
Prabhat Dayal, the chief of the Rajasthan Energy Development Agency,
is optimistic about bringing down the cost of solar-generated electricity.
Eventually, he believes, it will be no dearer than that produced by a conventional
plant. The first plant is to be built in the desert region of Mathania,
near Jodhpur. Tenders are to be awarded by the end of this year and generation
is expected to begin in 2001. Mr Dayal reckons it will provide a total of
175MW, using various systems of harnessing the sun. India is unusual in
having a Ministry for Non-Conventional Energy Sources. Offering generous
tax breaks, it hopes to attract more investors to the desert. There is plenty
of room.
©1997 The Economist Newspaper Group,
Inc. Reprinted with permission. Further reproduction prohibited.
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Renewable Energy: Progress in
Brazil
continued
from page 17
It was so successful that it's been extended to five other Brazilian
states, including 310 villages in the Amazon jungle.
Feitosa said the Brazilian experience can be replicated in any area
without access to conventional power, regardless of climate or location.
Mixing several types of renewables is the key.
It sounds easy. But it means contending with politics, profits and traditional
energy interests that would rather make money the way they always have-without
risk or new investment.
Many of the Third World's rural poor have been left in the dark ages
by state-run utilities unable or unwilling to divert resources from voter-packed
cities. And ever since Bell Telephone Laboratories developed photovoltaic
cells in 1954, allowing the generation of electricity from solar energy,
business groups around the world have waged war against technologies that
they see as a threat to profits.
At U.N. climate conferences, oil giants such as Saudi Arabia, Venezuela,
and Nigeria fight to suppress declarations calling for restrictions on fossil
fuel emissions. Their fear: They will drive up the cost of using conventional
fuels and make renewables more attractive.
Many of the Third World's
rural poor have been left in the dark ages by state-run utilities unable
or unwilling to divert resources from voter-packed cities.
But technology and need may be on the side of renewables. Projects in
operation range from solar desalination of sea water in Cyprus and Jordan
to geothermal plants in Iceland, wind farms in China and India, and solar
cookers and refrigerators in Namibia and South Africa. Renewables account
for 18 percent of the world's commercial energy production, the U.N. Educational,
Scientific, and Cultural Organization says.
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That could reach 30 percent by 2050 if governments and investors finance
projects in 61 countries, as called for at a U.N. conference on solar energy
last September in Harare, Zimbabwe, UNESCO says.
Behind the urgency lies a tangle of problems. Unprecedented population
growth in the Third World is causing severe energy shortages, depleting
resources, and intensifying air and water pollution like never before.
Economic expansion is leading developing countries to follow the First
World's lead in burning more oil and coal, pumping out yet more of the "greenhouse"
gases that many scientists believe will cause global warming.
But technology is making renewables more attractive.
U.S. scientists are turning out low-cost, efficient wind turbines and
solar panels that produce electricity for less money and are cheaper to
install in isolated areas.
They provide some benefit in cities. But in "big generation arenas"-power
plants that feed major cities-conventional sources like coal still beat
renewables in cost and capacity.
Roger Taylor, a project manager at the U.S. National Renewable Energy
Laboratory who is working on the Brazil project, thinks it won't be long
before "wind farms"-fields of wind turbines-produce cheaper energy
than conventional fuels.
Wind farms produce electricity for 6 to 8 cents per kilowatt hour, he
said, compared to 5 to 8 cents for a coal-fired electric plant and 30 to
50 cents for a diesel generator.
"We're very close to a crossover in which fossil fuels become more
expensive than wind power," said Taylor.
Along with the Brazil project, Taylor's agency plans to replace diesel
generators with wind turbines in Russia's Bering Sea region, India, Indonesia,
South Africa, Chile, and Argentina.
The fastest growing market for wind energy is China, where more than
120 million people lack electricity. China's government has put up 100,000
wind turbines in Mongolia and more are coming.
"In the next decade, developing countries are going to bump up
against major energy shortages and rising oil prices," Taylor said.
"Without wind and solar power, their economies will sputter and the
bump will be pretty painful."
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