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September 30, 2011

Sierra Club India - Democratizing Energy with Mobile Phones and Community Power

There are six billion mobile phone connections worldwide – 80% of which are in the developing world; A sizeable portion of this market, over 548 million people, own a cellphone but have no means of charging it. These un-electrified, mobile phone users mark the intersection between mobile phone and off-grid energy that is spawning a number of innovations shaping the future of rural electrification (community power and radical affordability amongst them).

Off Grid Mobile subscribers
 
The Green Power for Mobile program (PDF) has shown that energy access is also being driven by mobile phone providers seeking innovative ways to boost their average revenue per user (ARPU) – by providing heavily subsidized and even free clean energy charging options to their customers (because money not spent charging phones is spent talking on them).

As companies wise up to the opportunity to increase ARPU they are also providing important co-benefits by bundling their products with other services such as LED bulbs providing a tremendous opportunity to deliver on energy access goals.

Community Power Applications

Examples of this free clean technology trend are popping up all across the developing world. In Kenya, Safaricom has been employing a precursor to community power offering free charging to customers by adding charging docks to their base stations in off grid areas. Ericsson is employing another twist by employing a village entrepreneur to manage and maintain the charging station in return for a small fee for every charge.
Community Power Business Model Diagram
In western Africa UNICEF and Tostan have partnered under the Jokko Initiative to use mobile phones to teach villagers post-literacy skills through SMS texting. To ensure that phones stay charged they have partnered with the Rural Energy Foundation to provide solar powered suitcases that act as telecenters where customers can charge their phones or purchase micro credit through a phone to phone transfer system.
Tuff stuff solar panel cell phone charger The results of initiatives such as these are delivering on energy access goals and boosting bottom lines. One company increased ARPU 10-14% in field trials, while another increased talk time by .5 to 1.5 minutes per day.

Applying conservative estimates about the increase of ARPU and the average airtime spend of the off-grid customer, the size of the market opportunity for cell phone providers is US$3.37 billion per year - India alone accounts for $866 million. That means that cell phone companies can make $3.37 billion each year by providing free or heavily subsidized energy to the poor.

As policy makers continue their hand wringing and arguing about how expensive and difficult rural electrification is cell phone providers are scrambling all over each other to foot the bill for at least a portion of rural energy needs. 60% of mobile operators already have off-grid charging initiatives or are investigating off grid charging solutions. On top of that, they are using clean decentralized sources - 78% prefer a combination of individual and community solutions because large scale centralized fossil fuels are expensive and unreliable.

The International Energy Agency (IEA) has made it clear that if we don’t take advantage of these innovative opportunities to provide decentralized clean energy solutions we will barely make a dent in the unelectrified population by 2030. However, international financial institutions charged with alleviating energy poverty are continuing to employ failed approaches that are heavily reliant on large-scale, centralized fossil fuel plants that ensure the status quo.

It’s time these institutions provided the bulk of their energy finance to innovative solutions such as these. Because the question is, as the world changes, will they be a part of the solution, or simply a part of the problem.

-- Justin Guay, Sierra Club International Program

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