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Power Play

... and then there was light

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On a January evening, Anand is shelling betel nuts by the light of an electric lamp in Halliberu, his village in Karnataka. As his friends gather on the lamp-lit porch to swap stories, children play in the yard. Inside, after decades of cooking in the dark, Anand's mother prepares the evening meal while a visiting neighbour weaves garlands of flowers.

In October, Bangalore-based Simpa Networks Inc installed a solar panel on Anand's whitewashed adobe house along with a small metal box in his living room to monitor electricity usage. The 25-year-old rice farmer, who goes by one name, purchases energy credits to unlock the system via his mobile phone on a pay-as-you-go model.

When his balance runs low, Anand pays Rs 50 - money he would have otherwise spent on kerosene. Then he receives an SMS with a code to punch into the box, giving him another week of electric light. When he pays off the full cost of the system in about three years, it will be unlocked and he will get free power. Before the solar panel arrived, Anand lit his home with kerosene lamps that streaked the walls with smoke and barely penetrated the darkness of the village, which lacks electrification. Twice a week, he trudged 45 minutes to a nearby town just to charge his phone.

ELECTRICITY REVOLUTION


"Things are much easier now, " Anand says, describing how he used to go through 5 litres of fuel a month, almost half of it bought from the black market at four times the price of government kerosene rations. "There was never enough. "

Anand is on the crest of an electricity revolution that's sweeping through power markets and threatening traditional utilities' dominance of the world's supply. From the poorest parts of Africa and Asia to the most-developed regions in the US and Europe, solar units such as Anand's and small-scale wind and biomass generators promise to extend access to power to more people than ever before. In the developing world, they're slashing costs in the process.

Across India and Africa, startups and mobile phone companies are developing so-called microgrids, in which standalone generators power clusters of homes and businesses in places where electric utilities have never operated.
In Europe, cooperatives are building their own generators and selling power back to the national or regional grid while information technology developers and phone companies are helping consumers reduce their power consumption and pay less for the electricity they do use.

'POWER TO THE PEOPLE'


The revolution is just beginning, says Jeremy Rifkin, a professor at the Wharton School of the University of Pennsylvania and author of The Third Industrial Revolution (Palgrave Macmillan, 2011).

Disruptive to the economic status quo, the transformation opens up huge opportunities to consumers who may find themselves trading power in the future much as they swap information over the internet today, he says.

"This is power to the people, " says Rifkin. For now, though, the alternative-energy industry still relies on subsidies in much of the developed world, and governments are reining in aid for clean energy as they struggle to trim their budget deficits.

Germany, the biggest market for solar panels, plans to cut subsidies to owners of photovoltaic generators by up to 29 per cent in April and said it would impose monthly reductions thereafter.

END OF THE BOOM


"Governments are running out of cash, " says Benny Peiser, director of the London-based Global Warming Policy Foundation, which is described by its chairman, former UK Chancellor of the Exchequer Nigel Lawson, as "open-minded on the contested science of global warming. "

"The boom will eventually come to a halt once the subsidies come to a halt, " he says. And yet as subsidies are wound down in Europe, investors such as Boston-based Denham Capital Management LP are shifting their attention to developing markets. In March, Denham invested $190 million in a joint venture with Madrid-based Fotowatio SL to build solar parks in South Africa and Latin America.

India has 30 gigawatts of mainly diesel generators that could be replaced by cheaper solar power tomorrow, says Tarun Kapoor, joint secretary at the Ministry of New and Renewable Energy. (One gigawatt is enough energy to power about 200, 000 US homes. )

UTILITIES UNDER PRESSURE


Within a decade, installing photovoltaic panels may be cheaper for many families than buying power from national grids in much of the world, including the US, Japan, Brazil and the UK, according to data from Bloomberg New Energy Finance.

The ultimate losers in this shifting balance of power may be established utilities. They've invested billions of dollars in centralised networks that are slowly being edged out of markets they've dominated.

ENTER THE PHONE COMPANY


European utility stocks are already suffering as entrants using new technologies pour in to meet demand. The Bloomberg European Utilities Index touched a seven-year low in September, and German power futures contracts were in doldrums as of March 12.

The changing makeup of power generation is attracting companies from other industries as well as smaller developers such as Simpa Networks, the venture capital-backed developer that installed Anand's solar panels. Bharti Airtel Ltd, India's biggest mobile operator, for example, has signed on as a partner to a pay-as-you-go solar microutility called SharedSolar to sell airtime and electricity to Bharti's 50 million subscribers in Africa. In many underdeveloped regions, it hasn't made economic sense for utilities to build the capital-intensive infrastructure required to deliver energy from traditional sources.

'SECOND GREAT LEAPFROG'


In parts of Africa, the poor, lacking electricity, buy power in the form of batteries, kerosene and candles;in effect, they're paying as much as $4 per kilowatthour, according to Vijay Modi, a Columbia University professor who heads the SharedSolar project.

That's about 66 times what a resident of Manhattan is charged for electricity.

Simpa co-founder Paul Needham says filling the power gap will entail a transformation similar to the one in which mobile phones bypassed traditional landlines to deliver telecommunications services to vast populations in India and Africa. "What we're seeing is the beginning of the second great leapfrog story, " says Needham, who estimates that 1. 6 billion people in the world don't have access to electricity.

'THINGS WILL BE DIFFERENT'


For Anand, solar-powered electricity is a pathway to prosperity. It allows him to work a few extra hours each day on chores, such as shelling betel nuts, that need to be done in the light. Local children can boost their chances of one day getting a better-paying job by extending their study time.

Other villagers are catching on. His neighbour Chandra, 42, has bought the same solar system, and six other families are awaiting installation.

Looking across the rice paddies, Anand takes in Halliberu's 60 homes. "Come back in a couple years and everyone will have one, " Anand says. "Things will be different. "

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