In off-the-grid Africa, energy poverty is endemic and with national grid expansion lagging far behind market demand, Africans are looking to solar for innovative, affordable solutions for lighting and charging mobile devices, says Fortune in an in-depth story about how small, tech savvy companies are beginning to capitalize on Africa’s power needs.
Author Keith Proctor talks about how people use car batteries to charge mobile phones and kerosene is the most common source of lighting, despite its danger and polluting capacity.
Solar is still a complementary source in the continent’s energy mix but the growth it’s experienced shows how the region is shifting towards renewable energy, he says.
From $750 million in 2004, the solar market in Africa will grow to $57 billion by 2020, according to the U.N. The driving need for innovative solutions has attracted savvy but small players such as Fenix International to the African market. Silicon Valley-based Fenix developed the ReadySet, a battery recharger than taps the sun or bicycles to charge mobile phones. It also has USB and car cigarette lighter ports.
Fenix is starting small and has sold 3,000 units in Uganda but there is a widespread need for such solutions, given that the region has 500 million mobile phone users and is expected to grow by another 250 million in the next 5 years, according to GSMA, a mobile carrier trade association. Many of these mobile phone users are off the grid and without access to power for charging, they will have dead batteries. Fenix is looking to tap this vast mobile user market to grow its sales.
Following the advice of the late management guru C.K. Prahalad, who encouraged companies to develop products and services for the bottom of the pyramid, both as a goodwill measure and to tap new avenues for profits, innovative companies have begun creating affordable products for low-income consumers.
San Francisco-based solar lamp maker d.Light, whose CEO studied with Prahalad, sells about 400,000 affordable solar lamps each month worldwide that offers low-income consumers an alternative to kerosene dependence.
But affordability varies and can be a roadblock to growing the market for innovative solar products – for instance, for the average Ugandan, the $150 price tag for ReadySet battery charging is a high price to pay, so Fenix offers pay-as-you-go financing.
Distribution is another challenge in sub-Saharan Africa, since people in remote areas have little exposure to solar and are also hard to reach. That’s why non-profits like Solar Sister are tapping networks of female entrepreneurs to spread the message and help grow sales and distribution for solar products. Solar Sister draws lessons from the Avon direct sales method to build its distribution network.
The demand for off-the-grid solar makes the region ripe for large-scale expansion of alternative energy, Fortune concludes.
In March, First Distribution announced it will distribute Innovolt’s intelligent electronics management technology throughout South Africa to help companies whose equipment gets damaged because of the country’s electricity crisis. Since 2008, South Africa has struggled with ongoing outages, blackouts and power disturbances that lead to damaged computers and other electronic equipment. Power outages not only impact productivity for businesses in the region, they limit growth in a nation that is a major contributor of sub-Saharan Africa’s economic output.