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“Real” Electricity Still Comes from the Grid

A recent article in the New York Times describes how a solar home provider will, “help some of the 1.2 billion people in the world who don’t have electricity to leapfrog the coal-dependent grid straight to renewable energy sources.” Does that mean someone didn’t read my previous attempt to stamp out the phrase “leapfrogging” in the context of distributed solar energy for households in the developing world?!? Alas!

One of the reasons I object to the phrase leapfrogging is that, at least given current technologies, home solar systems do not provide anywhere close to the same level of service as electricity from the grid. By contrast, a mobile phone, the oft-cited analogy in the leapfrogging discussions, has at least one notable advantage over a landline – it’s mobile.

Preferred to the grid?
Preferred to the grid?

Together with my co-authors Ken Lee and Ted Miguel, I just released a working paper that provides direct evidence that home solar users have not leapfrogged the grid.

We surveyed over 2,500 rural households in Western Kenya, some of whom had grid connections, some of whom had home solar systems and some of whom were un-electrified. (I’m also not nuts about the term “un-electrified” in this context as it suggests that electrification is a binary outcome and a home solar system “electrifies” a household, but please bear with me.)

Households in the “home solar” category had either a solar lantern or a small solar home system. They had paid on average $55 for the solar lanterns and $235 for solar home systems – a lot of money to households whose average annual incomes are likely less than $1,000. Many of them probably have the M-KOPA system, as it’s the most popular in Kenya. It currently costs over $200 and provides an 8-watt panel, two LED bulbs, an LED flashlight, a rechargeable radio and mobile charging adapters.

Here’s what we found:

  1. People want high wattage appliances, such as irons. We asked households to list all of the electrical appliances they own. We then asked them to name the appliance that they would ideally purchase next (that they did not currently own). The chart below shows the most desired appliances among the three groups in our study: “grid connected”, “home solar” and “un-electrified”.Desired

For both the home solar and the un-electrified households, televisions and radios are the most coveted appliances. These do not have to be high wattage, although even a pretty efficient small television at 15 watts is asking too much from the typical 8-watt home solar system in Kenya. Irons, which are the third most desired appliance among home solar households and the fourth most desired appliance among un-electrified households, are very high wattage – typically 1,000 to 1,500 watts.

We also asked the households about their general standard of living, and the home solar users appear richer and better educated than un-electrified households. These higher living standards, however, do not translate into meaningful differences in appliance ownership.

  1. The set of appliances owned by home solar households is much more similar to un-electrified households than the households with grid connections. The set of appliances that home solar and un-electrified households most desire is exactly the same as the set of appliances most likely to be owned by households with grid connections – televisions, radios, mobile phones, and – you guessed it – irons. The grid accommodates high wattage appliances like irons because it has a large capacity and because not everyone uses an iron at the same time, so households can share the infrastructure. So, it looks like both home solar and un-electrified households aspire to the energy consumption of a grid-connected household.Owned
  1. Home solar owners still use almost as much kerosene as un-electrified households. We asked households how much kerosene they had purchased in the past month. Kerosene is primarily used for lighting in our sample — almost none of the households report cooking with kerosene. So, we would expect to see a substantial drop in kerosene consumption for a household enjoying electric lighting.

On average, un-electrified households had spent $3.90 while home solar had spent $3.41. Perhaps the home solar owners are still buying kerosene to light additional rooms or to compensate for days when they cannot charge their solar systems. A greater share of home solar customers reported spending nothing on kerosene — almost 25% compared to 3% of un-electrified households, though this implies that three-quarters of the home solar owners are still relying on kerosene.

Don’t get me wrong. I’m not opposed to solar lanterns or solar home systems. For some households, they provide a real improvement over kerosene lighting. Most solar solutions seem to be priced to give households slight savings compared to buying kerosene. And, to the extent households are using less kerosene, they’re exposed to less indoor air pollution and lower risks of fire or burns. But, they are best described as steps up the energy ladder, rather than leapfrogging.

The Center for Global Development describes recent research that makes a similar point. They found that nearly 90% of households in Tanzania who already had “access to electricity outside of the national grid, such as solar power” still wanted a connection to the national grid. They also link to an article that describes villagers with a solar microgrid in India who still want “real” electricity, by which they mean grid.

Certainly, grid connections provide very different levels of service, depending on the reliability levels. We did not see this in our data, but it’s conceivable that households would have both a home solar system and a grid connection – using the home solar system for basic lighting and cell-phone charging when the grid was unavailable. Fortunately, the World Bank is starting to collect data that will elicit more information on the different level of services that households experience.

Our paper also provides perspective on the potential environmental benefits of home solar. If we’re thinking of home solar as an alternative to a grid connection, it’s important to know how the grid electricity is generated. Over 60 percent of the existing generation in Kenya and other parts of sub-Saharan Africa comes from hydro, geothermal and other non-fossil-fuel sources.

So, pushing households to home solar in Sub-Saharan Africa may not save nearly as much fossil fuel as some proponents would have you believe. But, just because Sub-Saharan African grids are green now, though, does not mean they will continue to be. If all the new generation is expected to come from coal, home solar could have large benefits by offsetting this marginal generation.

We looked at countries’ plans for growing their grids and saw that most countries are projecting they’ll get an even higher fraction of their generation from non-fossil sources over the next 10-20 years (see Figure 2B in the paper).

Think of it this way. As countries in Sub-Saharan Africa develop, they will need more and more electricity to power manufacturing facilities, high rise office buildings, subway systems and all the (mostly urban) residential customers who are already connected to the grid. To meet environmental goals, we need to figure out a way to supply that power with as few emissions as possible. But as long as we’re trying to de-carbonize the grid, providing rural households with home solar systems doesn’t provide many environmental benefits and may even distract from attempts to, for instance, build grid-scale solar.

So, let’s stop talking about leapfrogging and help more people get access to “real” electricity.

Catherine Wolfram View All

Catherine Wolfram is Associate Dean for Academic Affairs and the Cora Jane Flood Professor of Business Administration at the Haas School of Business, University of California, Berkeley. ​She is the Program Director of the National Bureau of Economic Research's Environment and Energy Economics Program, Faculty Director of The E2e Project, a research organization focused on energy efficiency and a research affiliate at the Energy Institute at Haas. She is also an affiliated faculty member of in the Agriculture and Resource Economics department and the Energy and Resources Group at Berkeley.

Wolfram has published extensively on the economics of energy markets. Her work has analyzed rural electrification programs in the developing world, energy efficiency programs in the US, the effects of environmental regulation on energy markets and the impact of privatization and restructuring in the US and UK. She is currently implementing several randomized controlled trials to evaluate energy programs in the U.S., Ghana, and Kenya.

She received a PhD in Economics from MIT in 1996 and an AB from Harvard in 1989. Before joining the faculty at UC Berkeley, she was an Assistant Professor of Economics at Harvard.

41 thoughts on ““Real” Electricity Still Comes from the Grid Leave a comment

  1. I think you misunderstood the term “leapfrogging”… Leapfrogging is not about off-grid vs grid connected, it’s about centralised grid vs decentralised smartgrids (DOE has a very good explaination : http://energy.gov/oe/downloads/smart-grid-introduction-0 ). So in both case you’ll have a grid expansion, the question of leapfrogging is then not wether or not developping countries will expand their grid but how will they expand it and how will they manage it. Point is SHS are much cheaper and gives better lightning than kerosene lamps and electrical cells used in flashlight (this is a shame you did not track this major expense BTW) so whatever we do these PV pannels and these batteries will exist. It’s obvious that developping countries will not throw away these assets but connect them together and grow several locally managed grids until they are big enough to be interconnected together. The other alternatives being : keep them in the dark like it has been done for the past 50 years because no private investors will take the risk of expanding the grid for people who don’t use electricity and there is no public funds either for that because maybe money for public infrastructure is cheap in the magical word of AAA+ graded nations but that’s not precisely the case for most of these people.

    The Dharnai microgrid you mentionned is actually a counterexample of your claims. As the article mentionned the (subsidized) public grid is cheap and able to cover large load but unreliable even for days while the (private) solar grid may be expensive and fit for smaller load but highly reliable. What the article did not tell is that villageers there have not switched from the “greenpeace grid” to the “Nitish grid” but use both as the solar grid is more fitted for critical load like lights and phone charging.

    • Thanks so much for the comment. Are you sure you provided the correct link? The document you link to is focused on smart grids in the U.S., and only seems to mention microgrids for reliability. Also, is there documentation of the Dharnai microgrid operations?

  2. Some of the confusion stems from semantics. Catherine is apparently defining “the grid” as an interconnected network consisting of transmission and distribution lines (Wikipedia). (Elsewhere it often refers only to the transmission lines.) Either way, when rural electrification is “real” in many countries, it mostly is a matter of extending an off-grid distribution system to a more remote area. As already pointed out, these systems are usually subsidized by government-provided extension lines. The justification for this may be found in the government’s multi-faceted poverty reduction program. This leaves some moral hazard in the program to the extent that marginal benefits may be below marginal costs (although rural cooperative-run systems still may have high prices due to unavailability of economies of scale or mismanagement). The “unrealness” of electricity can be an advantage in such cases by providing an implicit cap on consumption, e.g. as in the “crushing” solar system proposed by Dave that is presumably(?) enough for a TV, limited lighting, and cell-phone charging. (As he suggests, some government “nudging” to make solar systems more competitive is warranted.)

    This would make for a nice little benefit-cost comparison between real electricity (but high power rates) and using the same budget to subsidize solar systems, leaving consumers with inframarginally cheaper but unreal electricity.

    By the way, many Philippine households with real-but-expensive power still use charcoal irons.

  3. First, I agree with Jim Lazar’s points. The paper talks about costs on one side, but doesn’t put them in perspective to the alternatives. Bruce Nordman’s point about different scales of “grid” also is important. For example, solar projects show scale economies up to about 3 MW but then modular construction flattens the per kW cost. A village microgrid separate from a national central grid may be quite cost competitive.

    The paper appears to lump large hydro in with other utility-scale renewables. The environmental (and economic development) record for large-scale hydro projects in the developing world is dubious at best. There evidence of significant methane emissions from tropical reservoirs. Habitat is destroyed and poorly designed projects don’t deliver expected benefits. Hydro is by far the largest energy supplier on these grids, and they may be little better than coal from an overall environmental perspective.

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