By Nick Leiber, for Bloomberg
The bottom line: Solar power could spread in the developing world, thanks to new financing plans that reduce upfront costs.
An estimated 1.2 billion people worldwide live without electricity. Many depend on kerosene lamps to light their homes—a fuel that has ill effects on health and is costly. Solar power might seem the better alternative in sunny parts of the world, except the poor can’t afford the upfront cost of the equipment, which starts at around $50 for a modest rooftop system. “Even though photovoltaics have become much more affordable over the past 10 years, it’s still too expensive to be competitive with other sources of energy,” says Paul Polak, a social entrepreneur who has spent the last 25 years creating affordable tools used by millions of poor farmers and is now working on a solar water pump.
Solar pioneer Danny Kennedy, the co-founder of Sungevity, whose leasing plans have put solar power within the reach of thousands of middle-class households in the U.S., has nurtured solar startups, including Mosaic and Powerhive, at an accelerator at his Oakland (Calif.) headquarters. “The evidence is in that once you create the model for easy, affordable monthly payments, which in most cases pencil out at less than what these poor people are paying for kerosene, the adoption rates are terrific,” he says. “Pay-as-you-go, whatever the finance structure behind it, will result in the rapid electrification of much of the world that doesn’t currently benefit from it.”