Electricity for the Developing World is Solvable

communities across India and Africa. Ashvin leads the Rockefeller Foundation's effort to not only end energy poverty, but also to unleash economic opportunity across the world. One point two billion people do not have electricity. If you've experienced living without electricity, even for a day or two, you'll know how frustrating it is, how small tasks suddenly become huge and everything

takes so much longer. On a bigger scale, energy poverty is a massive impediment to sustained economic and social growth. The alternatives to electricity are not ideal. Nearly three billion people cook or heat their homes by burning polluting fuels like wood, and of course that results in air pollution that causes widespread health problems. Now things are improving, just slowly. According to the latest data from the UN, eighty five percent of the global population now has access to basic

electricity services. Mostly this has been down to government's efforts in extending national grids as well as some off gride decentralized projects. But for Ashvin diale the challenges to reach every last person. Ashman leads the Rockefeller Foundations Global Smart Power Initiative. He has overseen the Foundations investments in renewable energy mini grades in India and it's working to achieve electrification for everybody in India, no matter where they live.

You think this is something that everyone would be on board for, you know, But Ashvin says that's not the case. Have you ever heard of the diesel mafia. Well, let's take a listen and I'll speak to you after. When people speak about something so vast as a billion people without electricity, a lot of people would just be distressed by that. They would think this is too big a problem. I can't solve it, I can't think about it. When you originally approached this problem, how did you think about it.

What led you to the solutions that you found. Did you break up the problem, did you took a piece of it? What was the thought process that you went through. Well, I think the first thing I really thought about is why is this even a problem? Why do we care about the fact that a billion people don't have access to electricity? When you look at the world around you

today and you see how economies are more interconnected. When you see how what you do in a village can be connected to what's happening in the markets in the nearby towns, and then what's happening in the cities when you look at the level of international trade. The pathway to prosperity is in fact an energy dependent pathway. If you want to move a little bit up the valued chain as a farmer, you need to have some processing.

You need to have some cold storage, you need to have some transportation, you need to have irrigation, all of these things that slowly incrementally allow a smallholder in rural Uganda or in Bihar in India to actually move up the ladder. Once you sort of get your head around why, then you start to kind of break it down and say, well, why isn't it getting fixed. Why are there a billion people?

And yes, it can seem daunting, but if you think back twenty years ago, probably four billion people didn't have access to any form of communications. The world was waiting for landlines to reach the farthest points of every part of India or southern Africa. And then along came mobile technology, and within a generation or less, almost everyone on the planet is able to access communications, is able to speak

to people, is able to download information. So this possibility of disruption and the possibility of applying the latest that we have in technology to another sector like energy, was something that we started to really experiment with and look at quite deeply seven or eight years ago, as we saw the price of solar technology coming down, as we saw new small companies starting to experiment with becoming essentially stand alone utilities providers of electricity into communities that the

big companies, the big utilities just weren't prepared to go because they saw them as loss making and we saw an opportunity. And it's from there that we really started to build our understanding of what the problem is, how it could be solved, and the role that we could play in it, and the solution you saw was to use smaller units of energy or smaller kinds of energy generation,

including just individual solar cells. People can have individual small sources of energy rather than needing to be connected to a big grid. So yes, lighting in the home is extremely important, you know, for a child to do their studies at night, for women to feel safe, and you know, just for your personal quality of life to be able to plug in a fan so that you can stay cool in often what are extremely hot climates, to be able to charge your mobile phone that we talked about,

you know, not being available twenty years ago. Those are all extremely important facets of sort of social life and well being that are extremely extremely important. But if you also want to power irrigation pumps, if you also want to allow a carpenter to use mechanized tools, if you also want to help a small collective of farmers do their processing of their wheat, the grinding of their wheat on site so that they get a better price, you need a slightly higher grade of electricity than just what

a home system can provide. So that took us to what we call minigrids. These are essentially anywhere between twenty to five hundred kilowat, so less than a megawatt standalone power systems. They have solar panels, they have the power electronics, and you have a little grid maybe one or two kilometer radius, supplying the village, supplying the homes, supplying the businesses,

and sort of decoupled from the national grid. That's the sort of area that we felt was most important because it brought both the economic development opportunity together with improving quality of life inside the home. Right, So these aren't individual power sources. It's a mini a small power source for a small area, typically for a village. Let's say it's a ville with two hundred households. That's a thousand people.

You have one system. It may serve say a hundred of those households because the other hundred maybe still can't afford this power. It'll serve twenty or thirty businesses, maybe twenty or thirty shops in that area. Sometimes it'll even serve a cell tower that was previously dependent on diesel

in order to operate. So, yes, these are small systems, but they're larger than the individual homes, and so they need an ecosystem of companies and government policies and other things to be available in order for the sector to flourish. Was there a particular technological breakthrough that was necessary. Is there some form of energy generation that you couldn't have done twenty years ago that you can do now that makes this work? Well? I mean, I think the biggest

breakthrough we've seen is with solar. We've all in different ways, seen the amazing and dramatic, frankly drop in cost of solar and the efficiency of solar panels over the last fifteen to twenty years. It's come down by sort of almost ten x so technology per se, but it's the price of technology that's really been most important that started to allow us to get to that sweet spot where

these systems can actually work. They can generate power at a price that communities are able to pay and willing to pay because they see the benefits for themselves and they see the improved incomes. They're still expensive and they still need to come down further. So there are still things that have to happen for this to absolutely spread like wildfire, if you like, the way mobile phones did

twenty years ago. And that's essentially the thing that we're trying to solve is how do we take this great idea, this great opportunity, and get it to the point where it can truly take off. Is that really a commercial question? Is it to do with selling it, Is it to do with distributing it? What are the big obstacles to installing these minigrids? So the installing of the minigrid is actually the simplest part of it. It is a commercial challenge.

You are trying to serve the poorest end of the market. These are consumers that utilities don't go to because they see them as loss making for every unit of electricity they sell. It's understanding demand. Is treating low income households in rural Myanma or India as consumers as an addressable market. But understanding that market, what do they actually need? How much can they pay? How do you supply it in

a way that is flexible to their needs? So not just saying here's a meter consumer, as much power as you want, and we'll give you a bill at the end of the month, and you know, all of a sudden you realize you can't afford it. But actually, maybe what you need is a package so that you can create over time, as a minigrid operator, a viable business. That's probably one of the biggest challenges, and honestly, we're

not there yet. We still need to innovate. We need to drive prices down, we need to get better at predicting what the demand will be in any given village so that people can size the systems appropriately. And we also need help from a government in the sense of seeing this as part of their solution. Governments take on electrification as sort of a national mission. This is what

they do. You have ministries of energy and ministries of electricity, but they have tended to adopt a single solution, which is we'll extend the grid and we'll keep extending it as quickly as we can, and you know it'll get to you when it gets to you, and there's a

massive opportunity cost around that. So it's really the dialogue with government to saying, look, we can build the grid from the outside in, but you need to create a policy environment that allows a many grid developer to go out somewhere and not worry that in five years if the grid arrives, they suddenly have a stranded asset. You may need to look at what sort of fiscal or tax incentives you can give to offset some of the

commercial challenges that still exist. And most importantly, we need to plan electrification as a combination of grid and off grid and choose the best solutions in the areas where they make the most sense. If you have a village right next to the grid, it probably makes sense to just extend the grid there. But if you have another community of a thousand people ten kilometers away from the grid, it actually doesn't make sense to extend the grid five

years from now. It makes a lot more sense to create the incentives and the policies that allow a minigrid operator to set up an independent system there and rather than that community waiting five or six or seven or eight years, you can have one of these systems up in three months. But it takes collaboration. It takes us at a public private partnership sort of mindset for this

to happen. And that's a lot about what I'm trying to inspire in working with both companies as well as investors, as well as governments, and then, of course, most importantly, community organizations on the ground. And do you have a set of tactics. Is there a way to talk to

governments to seeing it from your point of view. You can have all of the evidence in the world, right, you can put together all the reports you want, all of the policy papers, you can go into your sort of dialogues with government, and we do all of that,

but there's nothing like sort of seeing is believing. So actually bringing regulators, people from the distribution companies and the utilities, from the ministries to these sites, showing them what many grid operators are going and saying, look, you should actually be claiming this. You should be saying this is part of the government's effort to electrify everyone. So one tactic is just the seeing is believing, right, There is also

just making the business case for it. From a kind of national economic development point of view, there is an opportunity cost to not electrifying a village in today's modern economy. It means that village can't participate in all of the opportunities that are out there, whether it's in the agricultural sector or off farm. I think the thing that often resonates the most with government is when you say, look, this is actually a development play. This is not just

an infrast structure project. This is about unleashing new economic opportunity. It's about addressing the poverty challenge that you as a government care centrally about. So it's the narrative here that we have to see this as a national development effort, not just an infrastructure effort and the human development effort.

And then thirdly, you have to show the hard economics of it and show that you can actually save money overall if you are more thoughtful about how you combine grid investments and off grid investments, blending both the best of the public what the public sector can bring and what the private sector can bring. Just to give you an example, you know, there is this idea of a

results based financing. You know, so no country in the world has actually electrified its entire population without some level

of government investment and public finance. And what we're saying is you can incentivize through these results based finance schemes private operators to go and set these mini grids up in communities that your grid operators are not ready to go to and for a fraction of the cost of the subsidy that you would provide to the grid, instead providers as some sort of performance based incentive to a

private company. Let them go there, and you know, you're creating a quicker solution, it can be more sustainable sort of commercially in the medium term, and eventually you can integrate this all back into a single what we would call a sort of a smart grid, which is a grid that you know, where you can have flows going both ways between the consumers and the generators of power.

And once you put that sort of vision in front of ministries and government officials, yeah, you know, you start to find eyes sort of lighting up and champions emerging. Tell me about your work with private entrepreneurs. Is that very different from the government. Is there are there kind of buccaneering entrepreneurial people running minigrid companies whom you can offer advice to or is this something that you have to spend a lot of time persuading people that this

is a good thing to do. I'd say five years ago it was a bit of a Wild West kind of feeling where there were a bunch of well intentioned social entrepreneurs and quite small companies going out and trying to you know, were just a strong conviction around renewable energy and around energy access to poor communities, and you know, were largely although they were companies, they were relying a lot on grant funding to get the early proof of concepts out, and we had to certainly encourage companies at

a slightly larger scale to spot the opportunity. In India. We must have spoken to I would say about seventy five to maybe as much as a hundred different companies who are in some way related to the energy space,

but we're not specifically working on rural electrification. So maybe they were equipment manufacturers for some of the systems, you know, solar manufacturers, or they work companies doing energy supply to cell towers in rural areas, so they were some way connected to the ecosystem, but they hadn't quite seen this

as an opportunity. That list whittled down from seventy five two hundred down to less than ten that really wanted to then get in because this was still seen as a young field, a market that was unproven and frankly high risk, and so even though we were able to provide them with concessional capital with like low cost loans, it was still a big risk for them to enter. Those that have have started to do, you know, reasonably well.

The first company that we invested in India called Omnigrid micropower co operation has gone on to raise about ten times as much capital from other investors to expand their operations and are doing really well. And what about the recipients the people for whom these grids are being built. Do they say, why aren't we being connected to the main grid? Do they appreciate this kind of this innovative technology, and do they like the idea of it? Or is

there some resistance? There's very little resistance if the service that's provided is high quality and it is truly customer oriented. What you tend to find is a lot of frustration with the national grids, with state owned utilities that have been providing a very erratic service, making promises that they can't then meet our experiences. Somewhere between ninety seven to ninety eight percent collection efficiency, which is basically an industry term for you know, how much of your revenue are

you actually recovering on time relatively high levels of customer satisfaction. So, using industry benchmarks for customer satisfaction, you know, it's sort of seventy eighty eighty five percent, which is regarded as pretty good when you consider that most large utilities have satisfaction ratings at fifty five sixty percent, and that's probably true even in the developed world, and we're utilities in rural India and Africa used to thinking in terms of

customer satisfaction or was that also something you not at all? Right? I mean they saw the last mild customer as a loss making beneficiary of some government program rather than a viable consumer. So the relationship is completely different between these private companies and consumers. There is an accountability, there is a service standard that has met, there's a complaints mechanism, and at the end of the day, if you have an unhappy customer, you have a bottom line that's getting affected.

So there's some sort of basic commercial incentives to perform. Now, all of that said, your original question about the grid being a preference is also an important question because grid electricity is by and large significantly cheaper because it's subsidized.

So there is a larger sort of question about well, is it fair that a low income consumer in rural Bihar or in rural Uganda is paying an equivalent rate per unit of electricy that is higher than what an urban consumer or a periurban consumer is paying when supplied by the grid. And I guess you know. The answer

to that is fundamentally no, it's not fair. But is it beneficial to them in terms of improving their incomes, improving the quality of their life, and helping them reduce the costs of consuming alternative, dirty and expensive fuels like kerosene or diesel. Absolutely. So these are informed consumers who vote with their feet. They make the choices that they know benefit them. We must address that question over time.

That's why we talk about building the grid from the outside in and eventually integrating because at the end of the day, in ten years time, not only do we want everyone to have access to electricity, but it needs to be affordable, it needs to be reliable, it needs to be equitable, and so we still have big, big questions to deal with. And doessolar itself have an appeal? Do people say, wow, this is a kind of energy.

They can see that it's clean, it doesn't produce smoke, it comes from the son That is that appealing or is that does that give people the sense that it's not not reliable. It's appealing to governments, it's appealing to investors, it's appealing to people who care about climate change. So it has multiple appeals. But if you look at it from the through the lens of the actual consumer sitting in their home in in one of these places, it's

what is it displacing? Right, So it's not that it's solar, it's that I don't have a smoke filled room with because I'm using a kerosene lamp. If I'm a small shopkeeper, it's not that it's solar. It's that I don't have a little diesel generator right next to me, you know, making a hell of a racket and and spewing out noxious fumes. I often say, Look, these are some of

the lowest consumers of energy in the world. I think we have an obligation, given where we are as a planet, to make sure that the energy system of the future is green and is sustainable, and is largely based on renewable energy. I would not put the responsibility for that transition on the shoulders of the people that we are trying to serve. We promote renewable technology with these consumers because it offers a disruptive solution to get energy to

them in a way that hasn't ever happened before. Anytime you've when you've been working on this problem and trying to carry it out. Can you think of moments of real frustration? I mean are there people or companies or incidents that made you think, you know, this is never going to work or it's just not going to happen. Yeah, every day. You know, anytime you're trying to do something that is different, you often come up against forces that

perhaps comfortable with the status quo. When we set up the first set of minigrids in India, you know, there were mysterious things would happen. Lines would get cut in the middle of the night, wires would be ripped down, poles would be destroyed, and we covered over time that there were interests in the diesel ecosystem in that area, the diesel mafias it's called, that wanted to see this fail.

But you know, once communities start to see that they're really benefiting from it, that they actually create a sort of an almost like an invisible ring of protection around that because if the people who are ultimately consuming this want it, they find ways of making sure that it doesn't get as disrupted. So we had some of that

early on. You know, the thing I worry most about is probably I mean, there's a lot of things I worry about, But there's a couple of areas where I feel like we really have to see the biggest breakthrough. One is in government and in being able to really despite all of the openness that there might be to wanting to solve this problem. There are also some fairly traditional and calcified ways of thinking about electrification. But also there are champions within all of these countries who are

picking that battle. How sympathetic are the other cutting edge technology companies who are thinking about electricity and so on in different in different ways. How sympathetic are they? Is this problem? Do you have very Do you have trouble getting big companies to focus on this kind of issue? Not at all. I think there's actually it's more than just sympathetic. A lot of these companies see this as a market. I mean this is, like I said, a

billion people, and they are starting to invest. If you look at every major energy utility at a global level, from NL to energy to shell to total, each and every one of them has an off grade a rural electrification business unit that is starting to explore what they can do, starting to make I would say small and mid size investments in this space and What we're trying to do is nudge them along and say this is great.

Let's keep working together. Let us do the things that maybe you as a company can't invest in to help open up the sectors whole. And we hope that there are more of them going to be poised to enter into this market. We are in partnership with several of them now and I think there's only going to be more coming in in the future. So it's not just about being sympathetic, it's it's very much in their own interests to see decentralized renewable energy as the way of

the future. Are you expecting at some point for there to be a kind of tipping point whereby the delivery of this kind of energy will be commercially viable and nobody will need, you know, the Rockefell or Foundation to explain to them why it's necessary, how it can be done. Can you see that happening? I certainly hope so. Because you know we cannot do this alone, we can light

the spark. We can operate in the spaces that you foundations and philanthropies are particularly good at, which is early stage, high risk grant making or debt and equity investing. I think the big breakthrough will come when a large African country commits itself fully to integrate it electrific planning an investment and starts to really create a significant public private partnership that combines the best of sort of grid scale with off grid and I don't think we're that far

away from that happening. Another tipping point is would be a major company like the ones I mentioned earlier, or you know in India, Tata Power or something like that, committing to a very large off grid business, because what that will do is also drive the prices down. You know, part of the price challenges also just scale. You know,

the technologies out there. Solar panels have have pretty much come down to the level that you know they will, but there's other components that cost a lot of money that where we have to still squeeze fifteen, twenty twenty five percent out of the cost. If I can order ten thousand units of something, I can do that overnight.

So there's a procurement site to this which just requires a scale player, and I think that will be a tipping point that I'm very confident we will see that, you know, within the next three to five years of probably soon. Actually lots of food for thought there, like how private companies are more nimble and more willing to take risks than governments, but that can make energy more expensive. And also this made me realize just how far we've come.

That's a reason for hope right there. You know, as Ashvin says, just twenty years ago, there were four billion people without access to telecommunications and look at us now. I only feel alive when I'm on Instagram. I'm joking. Kind Of Solvable is a collaboration between Pushkin Industries and the Rockefella Foundation, with production by Chalk and Blade. Pushkin's executive producer is Mia LaBelle, Engineering by Jason Gambrell and the fine folks at GSI Studios. Original music composed by

Pascal Wise. Special thanks to Maggie Taylor, Heather Faine, Julia Barton, Carlie Miglio or Sheriff Vincent, Jacob Weisberg, and Malcolm Gladwell. You can learn more about solving today's biggest problems at Rockefeller Foundation dot org, slash solvable. I'm Mave Higgins, Now go solve it.