IMAGINE a country the size of India without power. No electric lights, mobile phones, radios crackling with cricket or televisions blaring Bollywood hits. Its economy would be medieval: tailors without electric sewing machines; metalworkers without power lathes; farmers without water pumps. Everyone would rush to finish work by sundown. Nights would be lit only by the moon, cooking fires, candles and kerosene lamps.

This is reality for 1.1 billion people globally—not far short of the population of India. The biggest numbers are in rural southern Asia and sub-Saharan Africa (see chart). According to the UN, 220m people gained electricity between 2010 and 2012. But most of them were in urban areas, particularly in India. In sub-Saharan Africa, a region that, excluding South Africa, uses less electricity than New York state, electrification barely kept pace with population growth. Some 600m of its people are without electricity; demography means that by 2030 the number could be even higher. What would it take to bring all these people into the modern world?

Much as mobile telephony has helped the poor leapfrog landlines and bricks-and-mortar banking services, a handful of tech-savvy entrepreneurs are seeking to provide widespread access to clean, cheap energy with local systems, metered and paid for by mobile phone. They hope to vault electricity grids, harvesting solar energy beamed down onto rooftops rather than using fossil fuels, and connecting it to batteries to store the energy until nightfall.

Their offerings are likely to be best-suited to private customers in rural areas, whose energy needs are low and who are expensive to connect to grids. But their evolving business models, and innovative marketing and payment methods, also hold lessons for grid firms seeking to provide power to businesses and urban households.

Beyond the pylons

Governments and utilities in poor countries are often too cash-strapped to extend their grids. Part of the problem is widespread reluctance among users to pay for electricity. Customers who do not pay their mobile-phone bills can have their connection taken away remotely; electricity is harder to cut off, and easier to steal. This creates a vicious circle in which utilities lose money, reducing the funds available for improving and expanding supply, and further sapping users’ willingness to pay. “The real threat to energy access is that energy is not treated as a private good, but as a right,” says Michael Greenstone, an energy specialist at the University of Chicago. “And the problem with a right is that no one wants to pay for it.”

Across the world efforts are under way to change such attitudes, using technology and attempts to tweak social norms. In parts of Delhi, a utility has encouraged women to persuade neighbours to pay their bills in order to secure better service for all. Mr Greenstone is part of a project, funded by the International Growth Centre, a global research network with headquarters in London, that is looking for ways to encourage people to pay for electricity in Bihar, where 64m people are without power—the highest share, at 64%, of any Indian state.

Bihar has plenty of generating capacity, Mr Greenstone says, but gets paid for little more than half the power it provides. The rest is pilfered, unmetered or unbilled. The state power company has promised to provide electricity to “feeder” areas of 2,000-3,000 households that pay at least 60% of their bills. In a few randomly selected areas, it will increase the supply of electricity in proportion to the share of bills that are paid. The aim is to make people more aware of the value of their electricity supply and to encourage payment.

Mr Greenstone thinks that the results of the trial, due later this year, will underscore the need for pre-paid electricity meters for households. These are similar to coin-fed meters in low-income housing in the developed world, but can be topped up by mobile phone, rather than cash. Uganda, where only 15% of the population is connected to the grid, is an early adopter. Selestino Babungi, the head of Umeme, the sole grid operator, says that half its 800,000 customers use pre-paid meters. Before 2005, when it won the distribution contract, theft was ubiquitous. About 38% of electricity was “lost” because of illegal hook-ups or non-payment; some big businesses went as far as flying in Indian engineers to rig their meters. By making payments easier for clients and installing an automated system that detects when a meter is tampered with, the firm has brought that share down to 18.5%.

Higher revenues will help the company reach its goal of tripling the size of its distribution network to absorb additional power soon to be generated in Uganda. Most will go to industry and agribusiness, says Mr Babungi, creating jobs that bring more people to the income level where they can afford to connect to the grid and buy household appliances that consume more power. Customers in such areas are likely to be better payers.

(Continue Reading at http://www.economist.com/news/international/21693581-new-electricity-system-emerging-bring-light-worlds-poorest-key)


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