The poorest people on the planet spend more on energy than we do. Surprised?
I live in a two-bedroom apartment in Brooklyn and calculated that my roommate and I spend about $850 annually on electricity and gas. This represents 0.5 percent of our combined annual income (before I joined the startup world, that is). In Mwanza, Tanzania a typical household with an annual income of $200 would spend around $70 on kerosene—that’s 35 percent. Globally, it is estimated that the “energy poor” spend 25 to 30 percent on kerosene.
What does it mean to live in energy poverty? Imagine life without electricity. No lights. You have a cellphone but must walk miles to charge it. Those living in parts of New York City during Hurricane Sandy experienced how difficult this is. It’s the daily reality for 1.3 billion people around the world who lack access to modern energy, and who must rely on candles, or a kerosene lantern for any night activity. Students and shopkeepers depend on a flickering, dim light, and clinics can’t refrigerate vaccines. And the worst of it—about 1.5 million people, mostly women, die of kerosene-induced pollution annually, while even more are affected by respiratory diseases and burn injuries.
But there’s good news. Solar energy is abundant in these parts of the world and there’s a huge opportunity for solar to leapfrog the electricity grid and become the leading affordable, high-quality source of energy. Economically, it’s viable without subsidies thanks to the falling cost of LED lighting, batteries and panels, as well as new technology that allows customers to “pay as you go.” The opportunity is huge—a recent McKinsey study (1) projects 40-50 GW potential in off-grid and isolated grid markets between now and 2020. As a result, impact-oriented solar companies are sprouting all over the globe; check out Simpa Networks in India and Sunny Money in East Africa.
However, this solar off-grid revolution faces a critical obstacle: access to finance. Because solar projects are capital intensive, they require debt financing to scale. This might mean inventory finance for shelf-like products or project-oriented working capital for microgrid projects. Since solar companies operating in emerging and developing markets exist in the “missing middle”—too large for microfinance and too small for commercial lending—their financing options are limited. If they are able to secure a loan through local banks, interest rates can be as high as 30 percent.
Here’s SunFunder‘s solution. We’ve already seen how crowdfunding has spurred vital movements in microfinance and creativity. Kiva facilitated more than $300 million loans since 2006, and Kickstarter has funneled $371 million into creative projects since 2009. We at SunFunder believe that crowdfunding can do the same for energy access and solar empowerment worldwide by allowing anyone to invest in the “missing middle.” To this end, we carefully select and create long-term partnerships with amazing solar companies serving off-grid markets. By connecting them with individual lenders around the world through our platform, we provide our partners with low-cost debt finance and enable them to succeed.
Help empower lives with solar energy loans HERE.
(1) Aenesen, Heck and Pinner, “Solar power: Darkest before Dawn”. McKinsey & Company. May 2012.
Image courtesy of SunFunder
