Poor people are rich enough for reliable electricity

20 September, 2019

Credit: Image by Michelle Maria from Pixabay

Get out

A couple of months ago, I was in Wales charging tablet, listening to podcasts working on my laptop in the evening when suddenly everything went pitch black. I checked outside… no streetlights… It felt like a horror movie.

What should I do? Stay put or get out? But where were the keys?
What if there were burglars? My phone battery was only at 10%… Why did I not charge it earlier? Oh my gosh, I might die…

You can tell by the level of paranoia that I’m not used to power cuts. Eventually, exhausted by the multiple catastrophic scenarios I ran in my head, I fell asleep… And the power came back at 3:27 am (the lights woke me up)

Less than $3/day but ready to pay

This experience was a reminder that having reliable electricity is a luxury compared to some countries. I panicked following a few hours of total darkness, which happened once in a blue moon, but for example, in rural India, power shortages can last eight hours on a daily basis. Smart Power India, an initiative of the Rockfeller Foundation, set up a decentralised grid powering more than 200 villages and improving the lives of more than 150,000 people.

A report (1) about customer’s behaviour and satisfaction of electrification in rural India showed the rural population and the low-income class are yearning for reliable electricity and more importantly, happy to pay. 56% of the villagers earned less than $3 per day. Basically poor people are rich enough to pay for reliable electricity.

Another interesting fact: between 97% and 100% of revenue collections are made on time. These are numbers the biggest energy suppliers would dream about. In 2017 in the UK, an estimated 600,000 accounts were behind their electricity bill payment (which represents 2% of the total domestic accounts)(2), but if we look closely at the low-income category (ie earning less than £10,000 per year), a whopping 15% were in arrears in the UK (3). It sounds counter-intuitive but the numbers from rural India appear more appealing and less risky.

Let’s continue with the smart power survey, the overall satisfaction is high. 9 out of 10 Business owners were in awe (perhaps too strong of a word) with the mini-grid services.

Ria image poor rich - Poor people are rich enough for reliable electricity

but they were certainly amazed by a reported 43% increase in their revenues.

Coming to Africa

While most of the Indian population benefit from access to electricity, more than half a billion people in Sub Saharan Africa remain unconnected. With the success rural India has demonstrated, how can we apply this recipe to Africa? Smart Power India initiative implemented a tight collaboration between grids and off-grid to customise the electricity usage to rural demand (Mixed up about grids and off-grids? read our explicative article).

It took 16 years to bring electricity to half a billion people in India, with an increased rate of 40 millions per year since 2011. So, we all know, it’s possible.

What are we waiting for?

At RiA, we currently work on a renewable energy deal of over 10 Mega Watt, which costs $10 millions and should bring electricity to 10,000 people in Sub-Saharan Africa (the details of the deal are confidential). Two of the main obstacles to a smoother rollout are 1) missed deadlines; 2) late payments, which contribute to missed deadlines. We are worried about the end-customers not able to pay for electricity, but the report showed no such thing. Instead, we found the late payers throughout the supply chain involved in bringing electricity. Is it a lack of will? To some extent yes, unfortunately. It is also linked to a lack of adequate administrative process to follow up on projects.

Therefore, we urge everyone involved in the industry in Africa to check their tracking systems in place, because delaying the implementation ends up costing more to everyone. The issue lies within us and we should do everything in our power to change and improve so we can deliver on this promise of electrifying the dark continent.

Happy ending

I got out of the power shortage with nothing but a good story to tell about life in Wales. But in other part of the world, power cuts represent nothing but an ordinary life event. The good news is people, even the low-income segment, are ready to pay for reliable electricity. The risk of arrears is lower than expected. If we put in place the access and the appropriate systems, we could transform the lives of half a billion people. Now, it’s our job to get our act together and stop wasting people’s potential.