Solar power use in the United States is booming, as we reported a few weeks ago.
In parts of the world where access to any kind of electricity – let alone the green kind – is scarce, however, the news is not as bright, at least not yet.
Many people in sub-Saharan Africa and Asia still rely on kerosene lamps, torches or candles to see at night, solutions that are polluting, expensive, noxious and, crucially, rarely emit good quality light.
That’s where two business students at Stanford University taking a course on extreme affordability saw a sustainable business opportunity.
“It is actually possible to make an economically viable alternative to kerosene,” said Ned Tozun, co-founder of d.light, a company that is bringing rechargeable solar lamps to market in developing countries.
The company has been operational for five years and in recent months has manufactured between 200,000 and 300,000 lamps each month, with roughly 98 percent of those going to developing countries, according to Mr. Tozun, who is also the company’s president.
Like the CleanStar Mozambique, the project that is bringing clean-burning bio fuel stoves to the kitchens of Maputo, the story of d.light highlights growing investor interest in the junction between development work, renewable energy and profit-driven business.
“What we sold those guys is that fundamentally it is a huge market,” said Mr. Tozun about winning over the first investors for his venture – most, but not all of whom, were social impact funds. (Earlier this month, our colleague Stephanie Strom at DealBook mentioned d.light as one of those for-profits companies that non-profit funds invest in.)
The company designs, manufactures and sells rugged lanterns that can be recharged under the sun during the day, to produce a steady bright light when the sun is down.
Based on the newest battery technology and energy efficient LED bulbs, the lamps are designed and built to withstand years of everyday use (a claim that the company plans to back in 2013 with a two year guarantee on their products). These lanterns can be sold inexpensively enough — in the long-term — to be cheaper than the coal, kerosene or candles that they replace, explained Mr. Tozun in a telephone interview from California.
“If you can put it into the market, it’s very scalable and much more sustainable,” said Mr. Tozun.
The market was ready for the rechargeable solar lantern, explained Mr. Tozun, who estimates that renewable energy lighting technology makes up only about 2 percent of the market today.
The company did not make production costs available. However, since the pilot stages of the program, the lamps have always been priced to reflect the eventual large-scale production, explained Mr. Tozun.
Depending on the location, the cheapest lantern sells for as little as $7, while more advanced models, like those that also have a cell phone charging port, can cost up to $30.
“Our customers are very risk averse,” said Mr. Tozun who said that the price of the lamp often represents the cost of several months of kerosene or coal.
The company works with local distributors to convince customers that the investment in the solar lantern is worth it in the long run.
Today, 1.4 billion people live without any access to electricity according, to the World Bank. Another 1.3 billion make do without access to reliable electricity, meaning that a third of the world’s population cannot rely on artificial light.
According to the World Bank studies, it would take $35-$40 billion of new money each year until 2030 to get universal access to electricity.
Unlike some other forms of renewable energy, solar power can easily be harvested off-grid, making it much more readily adaptable for areas with no distribution infrastructure. Since the chargers, the lanterns and the batteries are all one unit, end users invest just once, with no need for upkeep or supplies for several years, according to the company.
The bright, steady lights have many benefits, from more active family households to improved safety.
Last month the company celebrated “10 million lives improved” by its solar lamps, a milestone based on its calculation of several members of a household benefiting from one lamp.The company says that the lanterns have impacted more than 2.5 million school-age children who can now study at home at night.
“It’s not just marketing speak, they really transform peoples lives,” said Mr. Tozun.
What do you think? Do for-profit companies have a role in development work? Are they the most efficient way to get renewable energy to those who need it?
