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Solar Power to Rural People

It takes a different business model to succeed in remote communities

While most of the world has access to electricity, millions of people in rural Africa, Southern Asia and Central America do not. (Source: World Bank)

By Michelle Klampe, OSU News and Research Communications

Flip a switch, and the lights come on. Insert a plug into an outlet, and the cell phone starts to charge. Turn a knob, and the stove burner begins to glow red. For many of us, access to safe, reliable electricity is an essential component of everyday life, at home, work or school. It’s easy to forget how different life might be without it.

Yet electric power is still a luxury unavailable to more than 1.2 billion of the world’s people. Most live in poverty in developing nations, in rural or isolated areas where steep costs, remote terrain and lack of technology make it impractical or even impossible to extend the electric grid. The barriers might seem insurmountable, says Inara Scott, an attorney and assistant professor in the College of Business at Oregon State University.

Solar panels power a fish farm in Ghana. (Photo: John Selker)

And yet, electricity can transform lives. Girls can study by electric lamp after the sun goes down. Women can run sewing machines or other small appliances to operate home-based businesses. Farmers can extend their harvest hours into the evening under the glow of charged headlamps. Entrepreneurs can tap into financial systems using cell phones.

As the technology improves and costs come down, off-grid solar-energy systems present a potentially ideal path forward for communities in need of power. Solar could meet a basic need for millions of people without putting additional stress on our already taxed environment. But there are still many obstacles.

“The residents don’t have money to invest in new technology,” says Scott, whose research focuses on environmental law and sustainable business. “Charity doesn’t seem to work. What people really want are jobs and the ability to define their own destiny.”

Local Business 

Undaunted, Scott is embracing the challenge through her work at Oregon State. She believes the solution may be found in effective social entrepreneurship, which marries strategies founded in market-driven enterprise with goals tied to social benefits.

“I’m extremely interested in the positive aspects of capitalism – how we can make enterprise and capitalism work in a positive way to solve challenges,” she says. “How can we use the system of entrepreneurship to make things better? Can you serve people’s needs while meeting societal goals and financial goals?”

In a recent study of organizations delivering off-grid power to this market, known as the “base of the pyramid,” Scott has found that success requires addressing the needs of each community. She has shown that effective enterprises combine business savvy with partnerships and knowledge of the social fabric.

Solar array for a water pumping system in El Jocote, Nicaragua. (Photo: Kendra Sharp)

Many commercial, nonprofit and government organizations, she says, are driven by the spirit of social entrepreneurship, a desire to do good for others while also doing well personally and professionally, but they aren’t always finding an easy path.

“Social entrepreneurs tend to be motivated by really powerful values, but they don’t always know how to handle the business side of things,” Scott says. “Meanwhile, the rules of traditional business don’t necessarily apply in base-of-the-pyramid markets. But I think the market is growing and will continue to grow. I see a lot of interest in working in these areas.”

People in poor rural communities often lack access to financial resources, commercial institutions and markets that are needed to make a solar enterprise successful over the long haul. Even a small cost can be out of reach for people whose annual incomes are often less than $3,000 per year, Scott says.

“You’re not going to be successful just trying to sell a product. This is really a social enterprise, with the goal of trying to bring people out of poverty while also emphasizing sustainable development. You want to create a positive cycle of development and growth, but surviving and growing in this market is very different than in a typical commercial enterprise.”

Building on Fundamentals

Nevertheless, the benefits aren’t just about the economy. “Energy access is enormously important for education and basic health and safety as well as for economic opportunities, and it’s critical for sustainable development,” Scott says. “Providing electricity starts an incredible cycle of improvement for communities without reliance on charities or government aid. There are also environmental benefits to encouraging sustainable development using renewable resources.”

Solar electricity can make a measurable difference in people’s lives in remote communities, says Inara Scott, assistant professor in OSU’s College of Business. (Photo: Karl Maasdam)

The market for small solar lighting and charging units has grown dramatically in the last few years, and solar home systems offer cleaner, safer and cheaper lighting over time than kerosene, the primary alternative for lighting in developing nations. Health improves when light bulbs replace kerosene lamps and when indoor wood-fire cooking stoves give way to electric, reducing indoor air pollution dramatically.

With her expertise in business and legal systems, Scott feels compelled to work on these issues. “I look at my own life and how lucky I am to live in the West, where resources are abundant. There’s a lot of suffering in the world. How do I, as a positive and moral person, help lift people out of that situation? That’s the end goal for me. I want to find ways to work with communities to solve problems. That’s something I feel like I can do to contribute.”

Principles for Success

In reviewing how organizations perform in some of the world’s most remote communities, Inara Scott found that success would likely include four primary components:

  • Community interaction, working to understand local norms, culture, social issues and economic systems
  • Partnerships with other companies, government organizations, nonprofit groups or nongovernmental organizations, to share ideas and resources and gain support
  • Development of local capacity by considering potential customers as both producers and consumers and by training local entrepreneurs to be distributors, marketers and equipment installation/repair technicians</p>
  • Addressing barriers unique to the off-grid market, such as financing of upfront costs, educating people on the products and their benefits and building trust in quality and reliability

“You can’t do these things in a purely charitable way, but you also can’t have a pure capitalist approach,” she says. “The successful enterprises I’ve seen in these areas have all embraced a hybrid approach. The way to reach the market is by working with the market.”

By Nick Houtman

Nick Houtman is director of research communications at OSU and edits Terra, a world of research and creativity at Oregon State University. He has experience in weekly and daily print journalism and university science writing. A native Californian, he lived in Wisconsin and Maine before arriving in Corvallis in 2005.

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