Opinion: Africa’s Low-Carbon Revolution Could Democratize Energy

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Written by Staff

From ProjectSyndicate. Story by Kevin Watkins, director of the Overseas Development Institute, a U.K. think tank on international development and humanitarian issues.

The African energy market is inefficient and unfair.

While the minority of Africans connected to national grids – most of whom are wealthy – benefit from cheap, heavily subsidized electricity delivered through state utilities, the unconnected majority pays about $10 per kilowatt-hour of energy delivered in the form of charcoal, batteries, candles, and kerosene.

To compare, the average American pays 15 cents. In other words, some of the world’s poorest people are paying some of the highest prices for energy.

An effective solution to this problem exists: solar-power technology.

According to African Progress Panel estimates, poor African households would save $58 a year, on average, by installing solar panels – money that they could spend on education, health, and productive investment. The firms providing those panels would, of course, also benefit considerably from tapping this large new market.

So why has the market for solar power yet to take off?

Part of the problem is that poor households cannot afford the up-front costs of solar technologies. While the price of solar panels has fallen by more than half in the last few years, even a $150 entry-level package remains far beyond the means of someone living on less than $2.50 a day.

The challenge for investors – and for governments – is to lower the cost of connecting to solar energy.

The good news is that some innovative companies are already developing new business models that address the underlying market failure.

Read more at ProjectSyndicate.