ACORE That just 1 percent of the world’s solar power production has been installed in the developing world is a “scandal for our industry,” said Michael Eckhart of the American Council on Renewable Energy.By 2020, the world’s biggest potential solar markets will be found in the developing world, areas largely ignored by solar industry today, according to executives working to bring renewable energy to rural regions.
Just 1 percent of the world’s solar panel production has been installed in developing countries, said Michael Eckhart, the president of the American Council on Renewable Energy, during a panel discussion Tuesday at the Solar Power International conference in Anaheim, Calif.
“This is a scandal for our industry and we must find solutions,” said Mr. Eckhart, who has worked on solar projects in Africa and India.
The market in Africa, Asia and Latin America is potentially vast given that nearly 44 percent of the population of the developing world lacks access to electricity, according to Simon Rolland, a policy and development officer for the Alliance for Rural Electrification, based in Brussels.
Therein lies a conundrum: Bringing solar energy to those communities means building and financing off-the-grid solar arrays in remote locations that use batteries to store the electricity generated by the photovoltaic panels.
Construction is fairly easy, said Lars Koerner, a project engineer with SolarWorld, a German solar company that has built off-the-grid arrays in Africa and China. The challenge, he said, is financing the projects and ensuring sufficient revenue to periodically replace a solar array’s batteries.
“If you can’t finance battery replacement, the system shuts down and is over — that’s what we’ve seen in the past,” said Mr. Koerner.
While villagers pay for the electricity they use, the cost must be subsidized and thus a financing model developed that pays the subsidy while allowing a return on investment to keep the photovoltaic, or PV, system running. “What we’ve learned from all these years of moving PV into developing countries is that PV can be moved but it’s the institutional context that creates sustainability,” said Mr. Eckhart.
For instance, India has 32,000 local bank branches that can make “solar loans” to finance photovoltaic systems, he said.
Mr. Koerner noted that in China, SolarWorld worked with a German bank and local government agencies to finance the installation of solar arrays in 142 villages. Since a typical Chinese household uses a fraction of the electricity of a European or American home, solar arrays generating 1.2 megawatts were sufficient to provide power for 29,000 people.
Solar developers also face another hurdle when moving into off-the-grid markets in the developing world: Energy efficiency.
The cost of building a solar array will skyrocket if local communities are using the electricity to power inefficient appliances, according to Mr. Koerner.
He cited the example of a village of households that rely on incandescent light bulbs, old refrigerators and inefficient computers and monitors. It would cost 22,000 euros, or $35,600, to supply electricity to such a village.
If financing were available to install energy efficient compact fluorescent light bulbs and newer model refrigerators and computers, the cost of the array and battery system would fall to 5,600 euros, or $8,300.
While the cost of grid-connected solar systems continues to fall as solar module prices decline, off-the-grid arrays probably will not see similar cost savings because of the high price of batteries. Mr. Koerner said batteries alone can account for as much as 40 percent of such a system’s cost.