Navigant Research Blog

Non-Profit Solar Offers Hope for Developing Economies

Alex Eller — July 31, 2014

At the Lungra Health Clinic in the remote western region of Nepal, overhead lights now illuminate the operating room for the first time.  Midwives at this facility are grateful that they no longer have to use flashlights held between their teeth to deliver babies.  The recent installation of an off-grid solar PV system allows the healthcare providers at the Lungra Health Clinic to work through the night and store lifesaving medications and vaccines.

During the coming decades, developing countries will represent some of the most lucrative markets for solar PV.  Many of the largest global solar companies are devoting significant resources to understanding and developing products for these markets.  Moreover, the people who live in these areas will benefit from solar development more than developed world consumers.  In developing countries, solar power is often not a replacement for conventional grid power; it’s the only source of electricity available.

Some of the same factors that make these areas attractive for solar development, though, also create obstacles.  The lack of basic infrastructure, absence of established electricity markets, and spotty government policies to incentivize development make doing business in these areas extremely difficult.

Seeding Solar

A possible path forward to address many of these challenges has emerged from a global solar leader, SunEdison, which has helped launch a non-profit organization called SunFarmer.  The mission of this organization is “to make solar power accessible to the 300,000 hospitals worldwide that lack access to reliable energy.”  Using seed money from SunEdison combined with private donations, SunFarmer has already installed off-grid PV systems at six health clinics in Nepal, including in Lungra.

SunFarmer covers the upfront cost of installing the system and collects rental payments from the local organizations over a set period – until the initial investment has been paid off.  All rental payments are then recycled to install more systems where they are needed most.  SunFarmer uses only high quality components and provides operations, maintenance, and monitoring services throughout the life of the project.

While the obvious benefits of providing clean and reliable electricity to those who need it most is SunFarmer’s primary motivation, these ventures deliver additional value to the parent organization, SunEdison.  Establishing viable businesses in a mountainous and poor country like Nepal requires trial and error.  The SunFarmer program will provide valuable insights and experience for SunEdison with minimal risk as it attempts to expand its international footprint into more challenging, emerging markets.

Extreme Renewables

Once developers have established a viable solar business model, local stakeholders – including electricity users, grid operators, policymakers, and commercial lenders, all of whom are essential to a truly sustainable market – will enter the market.  The risk of lending to the first solar project or signing the first power purchase/lease agreement is much higher than in subsequent deals.  SunFarmer will work with local residents to educate them on the technical aspects of distributed solar generation.  The ultimate goal is to give locally owned solar companies firsthand technical experience with installing and maintaining remote power systems.

It will be interesting to see if this type of program is replicated by other large renewable energy providers looking to establish a presence in emerging markets.  Pioneering non-profit renewable energy ventures can create goodwill for the parent company, as well as an opportunity to put its technical expertise and business model to the test in the most challenging environments.

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