Bill Jordan A New Future For Haiti

Posted by Joe Boyce on Jul 13, 2010 in Featured Visionaries, Thought Leaders | 2 comments

Is a Solar Panel Like a Cell Phone?
Unique Infrastructure & Financing Challenges for Solar Adoption in Poor Communities
In 1996 my wife, Nancy Brennan-Jordan, and I returned to the United States after six years of very fulfilling work in rural Chile.  The majority of that time was spent in a small town about five hours south of Santiago, the country’s capital.  We rented an adobe house on a dirt road for $50 a month and remain good friends with the humble family who own and now live in that house.  Carlos and Angelica Aedo have three sons; Rodrigo, Carlos Jr., and Luchin.  In 2007 I had the opportunity to return to Chile as a translator for an eight day educational tour of New York farm leaders.  I spent an evening in that house we rented, as I placed the couple dozen New Yorkers in the homes of other campesino farmer friends to round out their educational experience of the Chilean countryside.
It was great to see the Aedo family.  Still poor, but full of life, one of the most shocking changes was to count five cellular phones in the family; one for each person.  These phones were functioning in a fairly isolated rural area, where there had been one phone within a ten mile radius.  The father of the family, Carlos Sr., was working in Santiago, but the family simply called his cell phone to let him know the gringo was back visiting after ten plus years.  We talked with little regard for the number of minutes or minimal cost, despite the family’s continued poverty.
More recently, in March 2009, the ubiquity of the cell phone’s presence in poor parts of the world was brought home to me on a trip to Haiti related to the “Let’s Share the Sun Foundation”, which Nancy and I founded to facilitate the installation of solar in remote and poor areas of the world.  In a letter to friends and family after the trip, I wrote, “A fitting analogy to the reality of solar energy is the fact that despite the extreme poverty, the poorest of people have cell phones in the poorest parts of Haiti. The community leader that was speaking with us about the fishing cooperative took a cell phone call in the middle of his presentation! Like telephone lines and cell phones, in the absence of electricity infrastructure, solar power offers the opportunity to bring electricity to very poor parts of the world, like Haiti, at a small fraction of the infrastructure investment.”
A couple of the solar pioneers interviewed for a special feature column that ran in PVNews related to solar in the poorest parts of the world have disagreed with significant parts of this analogy.  Neville Williams, the founder of the Solar Electric Light Fund (SELF) and the Solar Electric Light Company (SELCO), relayed his opinion, “I know that the potential of solar electric has been compared to the cell phone in developing countries, where the cell phone has become ubiquitous, but the cell phone industry has a much more centralized structure that allows it to work for cell phone companies. The solar industry does not have such centralization yet, nor will it be easy to achieve.”
I raised the same question to Dr. Russell deLucia, the Founder and President of the Small Scale Sustainable Infrastructure Development Fund, who tends to agree with Neville Williams.  Dr. deLucia begins, “Our organization helps finance the supply chains and basic infrastructure to facilitate small scale sustainable development.  Very few people have been able to accomplish what Harish Hande (Solar Electric Light Company – India, PVNews Sept. 2009) and Richard Hansen (Soluz, PVNews Nov. 2009) have in their respective efforts.  SELCO and SoLuz have been able to combine financing for both solar installations and some of the key infrastructure investments that make wider scale deployment possible in poorer communities.   Picking good partners is key.  This is why we have partnered with SELCO in India.  Most people are not inherently interested in serving the poor on an ongoing basis.  Service support after installation is also key to long term success.  Up to now there have been very few solar cell and module manufacturers interested in building supply chains that go all the way to the poorest communities on earth.”
Dr. deLucia continues, “Compare that supply chain reality in solar to the people in the oil business, particularly Shell and Mobile, where the oil companies build out infrastructure to provide markets in the most isolated parts of the world.”

In addition to centralization, Neville Williams highlighted the fact that many are too poor for even the most basic solar installation without significant financing support, and that most solar installation projects in the developing world have been implemented by entrepreneurial initiatives, where the skills needed to scale up from initial startup years are distinct from the skills needed to take those start ups to scale.  Dr. deLucia concurs that many are too poor, calling this situation a “poverty trap”.

Then how can so many of these extremely poor now afford cell phones?  A September 24, 2009 Special Report from The Economist delves into this question, restating this inquiry in the article title, “How a luxury item became a tool of global development”.  The Economist asserts, “The spread of mobile phones in the developed world, together with the emergence of two main technology standards, led to economies of scale in both network equipment and handsets.  Lower prices brought mobile phones  within reach of the wealthiest people in the developing world.  That allowed the first mobile networks in developing countries to be set up, though prices were high.”  Bringing this quote back to our Chilean rural community, the one phone within ten miles was a mobile phone that was so expensive to use, poor neighbors only used it in emergency situations.

The Economist continues, “The next big step was the introduction of prepaid billing systems, which allow people to load up their phones with calling credit and then talk until the credit runs out.  Prepaid billing saves operators sending out bills and chasing up debts… Once the switch to prepaid was made, the biggest barrier to broader mobile access became the cost of a handset… the price of a basic model steadily fell, from around $250 in 1997 to around $ 20 today.  As handset-makers became aware of the scale of the opportunity in the developing world, they turned their minds to producing low-cost models.  And for those who still could not afford their own handsets, help was at hand in the form of microfinance.”  The Economist goes on to ask, then answer, “Does the spread of mobile phones promote economic development?  At first the evidence was anecdotal.  There were stories about farmers and fishermen phoning around to see where they would get the best price for their produce and fish, for example.”  This was exactly what we observed in Haiti with our fisher cooperative presenter.  The Economist then cites micro and macro-economic research that has quantified the dramatic impact cell phones have had in poor countries.  The research affirms Columbia University’s Earth Institute Director and Development Economist, Jeffery Sachs’,  assertion that the cell phone has become “the single most transformative tool for development.”

The Economist article is worth a read at http://www.economist.com/specialreports/PrinterFriendly.cfm?story_id=14483872.  It goes into more detail than we can here, but my hope in raising the comparison between solar and cell phone penetration in developing countries is to encourage a dialogue and analysis of the similarities and differences between the two.  I am inclined to believe that legitimate barriers that experienced people like Neville Williams and Dr. Russ deLucia point out will be overcome as the solar industry turns its attention to such a substantial subset of the world’s population that currently has little or no access to electric power.

Early in 2009 I participated in a briefing session on the solar industry to a hedge fund considering investments in solar companies.  The presenter accurately summarized the “Anatomy of a Shakeout“ in the solar industry that indeed has been taking place this year.  Vast amounts of solar panels would be stockpiled and/or scrapped.  I jumped in to say, “Let’s not scrap all that product; surely some of it can be redirected to developing countries in ways that do not distort markets, but help achieve real improvements in poor peoples’ lives.”

Dramatic drops in prices, technologies that leapfrog right over phone land lines or grid tied systems, financing solutions that combine new entrants’ desires to gain new markets with microfinance programs that allow people to start using new technologies, much quicker adoption than any would have estimated just a decade ago.  Enough similarities to consider how solar might learn from cell phone adoption in the poorest parts of the world.

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