NewtonX recently conducted an extensive panel on the possibilities for a Hydrogen powered world. Throughout this panel, energy experts including former VPs and C-levels at Toyota Europe, Tesla, Ikea (which recently launched a solar powered initiative), and the U.S. Department of Energy, cited the potential for solar powered homes as an initiative that could minimize finite resources consumption alongside Hydrogen initiatives. As a result of these expert insights, NewtonX formed a smaller, follow-up survey with solar power experts to determine the impact that solar homes are having throughout the world. The survey revealed a surprising finding: The locations that are the most solar dependent, and that are investing the most in solar powered homes, are off-the-grid, remote or poverty stricken regions.
Globally, there are roughly one billion people with no access to electricity, and experts forecast that in the next two years this number will only be reduced by around 130 million. For many off-the-grid households, traditional grid connection is neither economical nor technologically feasible without major infrastructure investment. As a result, these households are increasingly turning to solar energy, which requires relatively low upfront costs and and system-wide investment. According to NewtonX energy experts the move toward solar energy in sub-Saharan Africa and South Asia, in particular, could transform impoverished and remote locations into models of renewable energy powered communities — and provide a multi billion dollar investment opportunity for providers as well.
The Market For Solar Homes Has Skyrocketed, in the U.S. and Globally
A former senior employee with the U.S. Department of energy estimated that the global market for SHS’s has grown over 20% year over year for the past five years, and according to McKinsey, there are more than 4M units installed worldwide. Even in just the U.S., the solar market is growing: The U.S. solar industry added 2.5 GW of new solar capacity in Q1 of 2018 and solar photovoltaics (the conversion of light into electricity – PV, for short) accounted for the majority of U.S. electric capacity additions. Tesla released a Solar Roof in 2017, and had its first consumer purchased roof up and running in early 2018 in California.
The growth of solar PV in the past year has been astounding: just one decade ago there was not a single utility-scale solar power plants in the US, while today there are hundreds. The states with the most megawatts of solar capacity are California and Arizona — and in both areas solar as an industry has also generated job growth, with the U.S. solar workforce growing around 20% year over year for the past five years, according to the U.S. Department of Energy former employee.
Despite all this growth, though, the U.S. represents a mere fraction of the global solar economy.
Solar Homes in Africa and Asia Bring Medicine, Cell Phone Charging, and Cold Water to Communities
Remote and impoverished regions have historically profited from new technologies that bypass large infrastructure. For instance, the rise of cell phones allowed sub-saharan Africans to pay daily and weekly bills using mobile money, thereby allowing them to bypass traditional telephone line networks. Similarly, solar power is now allowing these communities to bypass traditional electric grids.
While the U.S. and Europe are almost completely powered, and have been for over 50 years, the absolute number of Africans without power has remained steady for decades. Even in areas with power, it’s often unreliable. In Tanzania, power outages are so common that they cost businesses between 7% and 16% of their annual sales.
In just the past two years, though, solar PV has resulted in a “power explosion” in Africa and Asia. Some solutions, such as Black Star Energy (Ghana) rely on solar microgrids, or small-scale versions of what we have in America. Others, like Off-Grid Electric (Tanzania) sell SHSs that run on panels installed on individual homes and can power lights, chargers, and a TV (though not a refrigerator, in most cases).
The impact of bringing energy to these communities goes beyond lighting and television. In Daban, Ghana, residents got access to yellow fever vaccines safely stored in the town for the first time in 2017 (the vaccine needs to be refrigerated). This potential for improved health and safety has resulted in government initiatives to promote solar PV; In Kenya, for example, Lighting Africa sponsored media campaigns, and even staged a product placement in one of the country’s most popular television shows. The campaign ran from 2009 to 2013, and adoption of solar energy in Kenya rose as a direct result.
Is Solar Energy The New Cell Phone? American Investors Sure Think So
In 2016 VCs invested over $200M in solar energy. D.light, a solar provider with offices in California, Kenya, China, and India, says it has powered over 83 million households. Its competitor, M-Kopa, an American startup that launched in Kenya seven years ago, has over half a million pay-as-you-go solar customers.
A NewtonX expert, formerly a partner with a Silicon Valley VC firm, noted that solar caught the interest of American investors because it became significantly more affordable in 2015-2016. Due to a drop in the price of solar panels and a rise in the efficiency of light bulbs and appliances, where once solar was not an affordable grid alternative, today it is. “Eight years ago, four hours of light, television, and phone charging would have cost a Kenyan close to $1,000; today, it’s closer to $300,” declared the former VC partner. A billion person market and an affordable product have combined to make off-grid solar energy one of the biggest market opportunities available today.
Because off-the-grid regions are more likely to adopt solar than, say, an American who has had power their entire life (especially now that Trump called solar “just an expensive way of making the tree huggers feel good about themselves”), it’s likely that regions that just ten years ago lacked power, will become models of renewably-powered homes and communities.