Electricity for the developing world requires solutions that provide more than just energy
By Brian Warshay
Off-grid electricity solutions (often microgrids) compete against both the opportunity cost of extending lines to connect to grid electricity and the energy sources used for heating and lighting - often coal or biomass for heat and cooking and kerosene lanterns or candles for lighting.
Even though electricity is a higher value energy source than coal, biomass, kerosene and candles (it is cleaner at point-of-use and can be used for lighting, heating, cooking, and entertainment), electrical devices (light bulbs, phone chargers, televisions, stoves) have higher upfront costs and are at a higher risk for theft and breakage.
Despite the potential revenue-generating opportunities presented by an electrical connection, unpredictable cash flows, a poor understanding of energy conservation and efficiency by consumers, and a lack of skilled laborers to perform electrical maintenance can result in short-term energy Band-Aids and long-term sunk asset costs, regardless of promising internal rates of returns (IRR) on paper.