News

Spotlight – March 2017

d.light: Access to Energy, Internet, and Banking Will Transform Global Economic Development in the Next Ten Years

By Ned Tozun, co-founder and CEO of d.light

 

Photo credit: d.light

This year’s World Economic Forum focused world leaders on strategies to ensure all people prosper as technologies blur the lines between physical, digital, and biological systems. Yet, my fellow attendees in Davos must remember that this coming “Fourth Industrial Revolution”- in which automation and data exchange remakes entire industries and the Internet of things connects everything–holds less promise for the 30 percent of the world’s population that live without access to reliable energy, banking, and the internet.

Fortunately, another revolution is poised to take hold over the next ten years for base-of-the-pyramid families, defined by access to key resources through decentralized systems. In regions in Africa, Latin America, and Asia, this revolution is providing economic benefit to local populations–as well as international investors.

Agnes Wanjiru, who sells chips (i.e. French fries) from her cart at a local market in Kenya, is an excellent example of this. All it took for her to double her income was a small, simple solar lantern. With better light, her productivity was higher, and more customers were attracted to her stall. She went from making about US$5 day to as much as $10 daily. Four months later, Agnes upgraded her solar light and added a mobile phone charging business. Now she is selling chips and charging phones, increasing her income to $15 per day.

Two billion people like Agnes worldwide do not have access to efficient, reliable sources of electricity. Instead they spend US$27 billion a year collectively on kerosene, candles, generators, or other fossil fuel-powered stopgap technologies.

Habitual spending on these poor energy sources creates a massive drain on economic and social development. Research shows that national GDP suffers when a substantial percentage of the population does not have reliable access to electricity. The only exceptions are countries with an abundance of natural resources, such as Angola, Botswana, and Gabon.

Photo credit: d.light

In contrast, solar-powered products offer safer, less expensive, more reliable, and higher quality energy solutions. In eight short years, transformations in off-grid solar have led to a significant improvement in the delivery of energy access. As of June 2016, 100.45 million people have moved off of kerosene and other fossil fuel sources for lighting, according to the Global Off-Grid Lighting Association (GOGLA). This has resulted in $4.33 billion in energy-related savings.

Off-grid solar is expected to grow exponentially in the next few years. We expect this to catalyze a chain of events that move the developing world into new forms of energy access, financial inclusion, and internet connectivity, which will in turn significantly increase GDP. Here’s what we expect in the next ten years.

Abundant Energy Without the Grid

Photo credit: d.light

Just as mobile phones surpassed landlines, solar is leapfrogging the grid in various countries in Africa, Asia, and Latin America. Today, portable lights that charge mobile devices are giving way to solar home systems that offer a grid-like experience for base-of-the-pyramid families. But that’s just the beginning. Already, solar TVs have begun to trickle into the market. Within the next ten years, expect to see other large appliances powered by solar, including fans, refrigerators, cook stoves, and more.

Financial Inclusion

Rovina Surat, a single mother from Indonesia, is an ideal example of how energy access paves the way to financial inclusion. Because of a d.light S300 solar lantern, she was able to hunt squid at dawn and sell them to her local community. This income inspired Rovina to open a small kiosk selling everyday goods. She had previously saved cash under her mattress, but having this dream compelled her to open her first bank account.

Simple and affordable solar home systems that use pay-as-you-go financing technology have helped drive the use of mobile money across a number of countries. PayGo enables previously unbanked individuals to build credit histories through a solar product company, which opens up their ability to purchase higher priced products. At some point, d.light hopes to partner with financial institutions to make those credit histories transferable for other purchases within the community.

Connection to Global Information

Today, 5.4 billion people do not have access to the internet. A huge hurdle to expanding internet access is the lack of reliable electricity to power routers, smart phones, tablets, and computers. But as energy access improves, so should internet access–as long as providers provide access to relevant services at prices that base-of-the-pyramid families can afford. Companies like OneWeb, SpaceX, Google, Facebook, and Iridium Communications are all in various stages of building global networks using satellites or Wi-Fi enabled balloons to service regions of the world where broadband infrastructure is lacking. With the speed of technology development, it’s critical that people without global connectivity are not left behind.

Photo credit: d.light

Challenges to Tackle

Scaling solar energy access, leveraging credit histories, and expanding internet access in emerging markets all require significant levels of capital. A growing number of households in emerging markets have the ability to pay for higher-priced products, such as solar home systems, TVs, and fans, but they need financing support.

Primarily funded by social impact investing up to this point, the industry is now catching the attention of commercial investors. In 2016 alone, d.light and solar home system provider BBOXX raised equity from firms with a principle focus on returns, including NewQuest Capital Partners and MacKinnon, Bennett & Company, respectively. As these and other investors share their stories, we expect more firms to capitalize on the great ROI promise of solar power in the developing world.

We can one day live a world in which we no longer have families who are unelectrified, unbanked, or disconnected. In the near future, you could visit a remote village in Kenya or India without realizing that its residents are not connected to a central grid. They will have as much energy and internet as they require, powered by high-efficiency solar.

As technology moves at a faster and faster pace, the opportunity for sustainably improving the quality of life to more resemble developed parts of the world becomes within reach. We see a future in which energy access, financial inclusion, and internet connectivity are as available to base-of-the-pyramid families as they are to affluent families. The economic opportunities that this will open up for families, communities, and even entire nations should very much be part of the upcoming Fourth Industrial Revolution. The possibilities are ripe to ensure that all people of the world, no matter their income, have the technologies and services that allow them to keep pace with the rest of the world.

 

Ned Tozun is the co-founder and CEO of d.light, the leading provider of solar-powered solutions for the two billion people worldwide who do not have access to reliable electricity. d.light has impacted over 65 million lives with its products, with a goal of reaching 100 million by 2020.  Ned has been recognized by Forbes as one of the world’s top thirty social entrepreneurs. Prior to d.light, Ned founded multiple start-ups in Silicon Valley. Ned graduated from Stanford with degrees in Computer Science and Earth Systems, and returned to Stanford to earn his MBA.