The burgeoning off-gridsolarmarket is expected to be worth more than $3 billion in the coming years, with activity centered in sub-Saharan Africa and developing Asia.
But the need for access to electricity is also acute in Latin America, where an estimated 22 million people live without modern energy services. Haiti has the largest population living in energy poverty, more than 7 million people. Second to Haiti is Peru, where 3 million people don’t have access to power, largely because of the remoteness of the villages where they live.
“From the Andes to the Amazon, folks are really spread out,” said Michael Callahan, CEO of PowerMundo, a social impact startup that distributes off-grid clean energy products from lanterns to micro home solar systems.
The startup has been serving the nascent off-grid market for eight years. For most of that time, it has distributed solar LED lanterns. With a recent $300,000 USAID grant through that agency's Development Innovation Ventures program, PowerMundo will scale up its pay-as-you-go offering.
In total, PowerMundo has raised about $1 million. In other regions, private capital is starting to flow to startups addressing this market. But given the smaller market in South America, private money is not yet readily available for the off-grid market.
There are many differences between Peru and other regions of the world where many live without access to electricity. Unlike in East Africa or India, mobile payments are not nearly as common in Peru.
Another significant difference is that kerosene is illegal in Peru. The goal was to switch people to propane lanterns, but that has not worked in the majority of off-grid communities, said Callahan. "Instead, people have just gone back to using candles or burning diesel fuel.”
In Peru, the average income in the rural agricultural communities tends to also be higher than other regions with high rates of energy poverty, so consumers are often able to buy the basic solar LED lanterns outright without financing. Peruvians without access to electricity spend $15 to $20 per month on fuel, which may be more than 10 percent of their income.
A solar lantern retails for about $50. There are also smaller, less expensive models that people can purchase, using the savings from avoided fuel costs to buy larger solar lanterns. PowerMundo works with its distributors to offer clean cookstoves and other clean energy products that fit the market as well.
Unlike many other off-grid solar providers, PowerMundo is a distributor and facilitator rather than a manufacturer. It chooses best-in-breed technology to deploy, and has worked with providers such as d.light and Greenlight Planet.
It uses existing networks of nonprofits that can tap small businesses, such as local general stores, to be the local distributors for products. As PowerMundo scales up beyond lights, it will also have to provide training for its local networks to be able to service solar home systems.
Moving beyond solar LEDs, however, will take financing. Until last year, Peru’s mobile payment platforms were all closed systems provided by each mobile provider. Now, the country’s banks have come together to launch a single platform, Bim, that the three main mobile carriers will offer access to, according to Bloomberg Businessweek.
PowerMundo is hoping that access to mobile payments will also start to open up the markets where people have intermittent grid connections, especially on the outskirts of Lima. Callahan said that many of its products, such as the battery-backed solar home systems, are already compatible to be charged by either solar power or a grid connection.
The company is working primarily in Peru, and has replicated its model with another organization in Honduras. It has also distributed some products in Bolivia, which would be its next target market beyond Peru.
Check out these stories below for more on the growth of, and need for, off-grid energy solutions.