Every night, more than a billion people live in the dark when the sun goes down. They experience a different world than that of people in developed countries. Their only source of light, where available, comes from kerosene – a fuel that is expensive, dirty and potentially dangerous. Consequently, their immediate environment is often filled with smoke and fire, thereby making it difficult to even see properly.
Ten years ago, alternatives to kerosene were hard to find. Today is a very different story. Technological advances have greatly reduced the price of LED lights and solar, not to mention precipitating global mobile coverage. Jake Kendall and Rodger Voorhies cite in a Foreign Affairs article, “according to the World Bank, mobile signals now cover some 90 percent of the world’s poor.” These changes have fed a mini-revolution where it is now possible to bring a billion people out of the dark.
Low-cost micro grid pioneer, Mera Gao Power (MGP), which provides lighting and cell phone charging services, recently closed a U.S. $500,000 debt investment deal with the Dutch-based ICCO investment fund. This is a welcome development for energy access companies, which desperately need funding to meet the increasing demand for lighting, cell phone charging and other energy services. Although encouraging, many more investments are needed.
As it turned out, 2014 was a very successful year, when energy access companies secured at least $64 million in investments, mostly equity, according to Greentech Media. This may have outpaced energy access investments in all previous years combined. MGP’s investment is particularly relevant because debt financing signals achievement of past success, as opposed to equity, which is riskier. More difficult to obtain, debt investment is essential to attracting commercial banks, which are vital to truly scale the energy access sector.
MGP’s success comes on the heels of its accomplishment last year, as a winner of National Geographic’s Terra Watt Prize, a competition challenging energy access companies to provide basic electricity to communities living off the grid. To date, the $125,000 earned from the Terra Watt Prize has enabled MGP to build micro-grids in 70 hamlets in Uttar Pradesh, India, a number that is expected to double in the coming months.
MGP’s operation oversees the completion of one micro-grid facility per day, which serves approximately 25 households each with enough electricity to power two lights and charge a cell phone. This is cheaper, safer and a higher quality alternative to kerosene, which costs families 35 rupees ($0.55) per week and sometimes much more — and this does not include phone charging. As an alternative, MGP customers pay 30 rupees ($0.47) per week for lighting and phone charging services.
With such advancements, it is no wonder MGP is generating interest. Not only among banks and off-grid communities, MGP has also attracted attention among communities with grid-access. Even though these communities are grid-connected, electricity can be low voltage and therefore less reliable. “They can’t even charge cell phones,” explains MGP co-founder, Sandeep Pandey. However “with a partially connected grid, these households are particularly enthusiastic because they experience what it’s like to get access to electricity.” The demand for MGP services continues to grow.
“Families are simply happy to see the food that they eat after sun down, safely avoid snakes entering their homes, and no longer be exposed to the fire hazards of kerosene lamps. The economic case is not a hard sell, hence MGP customers are eager to obtain reliable electricity for 30 rupees a week.”