Why you should care
Small-scale entrepreneurs could be just the push politicians need to bring some sunshine into South Asia’s woeful energy situation.
In 2010, Shazia Khan had a bright idea, literally. That’s when this Pakistani-American, born and raised in upstate New York, launched the nonprofit EcoEnergyFinance, based in Karachi, Pakistan.
Today, EcoEnergy is out in the villages of Pakistan’s Sindh Province, going where no electricity line has gone before. It sells solar lanterns that charge themselves under the baking South Asian sun, and then provide eight to 16 hours of electricity. Solar could well help fill the subcontinent’s gaping energy needs. It draws on as many as 300 days of sunshine a year, while circumventing the need for huge infrastructure projects to get electricity where it’s needed.
“We’re focused on the rural poor because … the Pakistani government knows there is an energy crisis in Pakistan, but whenever they take any sort of policy measures to address this problem, they really don’t talk about the rural poor at all,” says Khan, formerly an environmental lawyer at the World Bank. “They’re focused on setting up these really big power plants.”
South Asia’s needs are crushingly obvious. Rolling blackouts in India plunged 700 million people into darkness for two days in late July 2012, a jolting reminder that amid talk of South Asia’s economic miracles, energy remains a mammoth Achilles’ heel. South Asia’s energy resources just can’t keep up with its booming population and economy.
The regular sunshine amounts to a huge underutilized resource, as solar technology improves and costs fall. Potentially it could cut India’s and Pakistan’s reliance on foreign coal, gas and oil.
Most transformative: The mechanics of solar power make it fairly simple to deliver “off-grid” and avoid the limitations of India’s and Pakistan’s abysmal energy infrastructure. Solar could bring electricity to the hundreds of millions of rural poor who lack access, in the same way that mobile phones allowed millions of people to leapfrog the expensive infrastructure of the landline.
Today, roughly one-third of Indians rely on kerosene, dung or wood for most energy needs. Next door in Pakistan, it’s worse — roughly 40 percent of its 180 million people have no electricity. The financial and physical state of the electrical grids is worse than decrepit. Energy theft is routine in both countries, creating mounting piles of utility debt that make it hard to keep the lights on, let alone improve or expand power lines.
There’s appeal for entrepreneurs and startups to work in communities that have never had electricity.
At the end of 2012, Pakistani’s energy-industry debt topped $9 billion, according to The Economist. “It’s one unholy mess,” says Michael Kugelman, an expert on South Asia energy issues at the Wilson Center think tank in D.C.
Powering up solar, though, raises its own set of issues, including creating incentives for investment in an industry with high upfront costs and low initial returns. “It is very much a long-term investment and not something that can address the immediate energy crisis in Pakistan or the insatiable energy thirst in India,” Kugelman says. The greatest hope for capitalizing on solar energy’s potential lies with innovative small-scale projects that can connect people to electricity for the very first time, like EcoEnergyFinance.
The company recently received a grant to pilot a pay-as-you-go program for the lanterns via cell phone SIM cards, rather than collecting monthly installment payments, village by village. Another grant will help set up solar-powered energy hubs in villages, where residents can come to power their cell phones and other electronic devices.
EcoEnergyFinance aims to become cash-flow positive, so it can reinvest income and scale up operations.
“Solar energy is a very fundamentally easy thing to put into place,” says Kugelman. It just takes solar panels and a few other pieces of equipment. And there’s appeal for entrepreneurs and startups to work in communities that have never had electricity. “You’re not competing with other industries, the oil industry, the gas industry,” he says.
In India, Dr. Arunabha Ghosh, the CEO of the Council on Energy, Environment and Water, a Mumbai-based nonprofit research institute, says his organization has counted 250 companies producing off-grid energy. Most use solar, and most sell individual home systems. Still, more companies are now building “microgrids” — clusters of solar panels connecting anywhere from 20 to 100 households. Some are using the the same pay-as-you-go model that Khan’s nonprofit is experimenting with in Pakistan, Ghosh says.
Though the industry is fledgling, political leaders have begun to put money and political capital behind solar. In May, Pakistan’s prime minister, Nawaz Sharif, inaugurated the country’s first solar power park, with aims of producing 1,000 megawatts of energy by 2016. It’s one of the largest in the world. India has an even bigger solar facility in the works, though environmental concerns may slow the project.
According to Ghosh, solar energy in India has grown a hundred-fold, from almost nothing to 2.6 gigawatts in installed capacity in the last four years. That’s still just a fraction of the total 300 gigawatts of installed electrical capacity. Ghosh thinks that with the right policies, however, solar and other renewables could grow to make up 15 percent of of India’s electrical capacity in the next 15 to 20 years.
New Indian Prime Minister Narendra Modi is also a solar enthusiast, after successfully launching several projects when he was chief minister of the state of Gujarat. Solar energy will be central to achieving his lofty energy promises, including one light bulb in every Indian household by 2019.
Big projects are still shackled by a lack of financing options and know-how necessary to attract big private investors and scale up solar energy use. But that’s not stopping pioneers like Shazia Khan. And Ghosh says it’s projects like hers that will embed solar power in the region’s energy future. In the same way people in rural communities around the globe have come to rely on cell phones for everyday life, he predicts that solar energy, too, will become “indispensable.”