M2M connectivity, clean energy and local enterprise

©flickr/kailash mittal

Continuing my last post, it seems more and more charities and private businesses are building the case for investing in renewable energy for the rural poor. A critical feature of many of these efforts is the attempt to tie in the environmental benefits of supplying clean energy with the economic benefits potentially available to investors, local entrepreneurs and whole rural communities. Village Infrastructure is one such social enterprise attempting to tackle energy poverty. The organisation engages with debt finance investors to provide 1-3 year energy loans that are used to build solar power infrastructure in villages without access to electricity, ensuring an affordable, renewable supply of energy. Local entrepreneurs are then recruited to manage this infrastructure and are paid by members of their community wanting access to it; some of this money is paid to a micro-finance organisation to repay the original loan. 

Encouraging local entrepreneurship in this way can have a cascading effect of stimulating economic transformation across whole communities and villages in the deprived regions of developing countries (Kirubi et al., 2009). Aside from the economic gains, alleviating energy poverty by introducing clean, renewable supplies of power to these areas improves the health and safety of rural people by reducing the need to use polluting and dangerous fuels such as kerosene and biomass (I discuss the health implications of fuelwood and biomass burning in my post “Greening off-grid power in rural India”). So it is important that successful models of social enterprise, like Village Infrastructure, are being replicated worldwide – especially when considering that 1.3 billion people, nearly 20% of the world population, are living in energy poverty. 

Interestingly, research carried out by the Global System for Mobile Communications Association (GSMA, 2013) has pointed to the positive influence of mobile phone infrastructure in deprived rural areas. According to the GSMA, 75% of new mobile phone subscribers live in the developing world and there is a growing population of people living in off-grid rural areas around the world without access to energy and other basic necessities, who own mobile phones. The GSMA report links the wide distribution of mobile phone infrastructure – specifically through ‘machine-to-machine’ technology (M2M) – with the potential for providing clean energy to the rural poor. Globally, the expansion of mobile phone usage to these areas has now exceeded growth in electrification rates and access to water/sanitation (see graph below). The now-widespread distribution of off-grid mobile phone towers means there is an opportunity for charities, NGOs, private organisations and governments to implement a system of clean energy provision in previously inaccessible areas.

Source: GSMA, World Bank, IEA 2012

The key issue I initially had with this was the implication that mobile phone infrastructure could be exploited as part of the continued, yet generally ineffective, grid expansion programmes that are underway in the rural areas of many developing countries. As I have explained before in this blog, centralised systems of grid energy expansion are often expensive, unavoidably associated with fossil fuel exploitation and environmental degradation, prone to failure and, above all, increasingly unnecessary (Kaundinya et al., 2009).  However, efforts are now being made to build upon existing mobile phone infrastructure in innovative ways that incorporate decentralised renewable energy provision. These efforts are now combining elements of both “grid-connected systems” and “stand-alone systems”, as compared in this review by Kaundinya et al. (2009).

According to the GSMA, M2M technology can be used to wirelessly connect mobile phones with renewable energy sources, such as solar power stations and units, providing a unique way to monitor and manage the supply of clean energy according to individual consumer needs in remote areas of the world. Information about operational problems, individual consumption and photovoltaic production could be more effectively communicated. Pay As You Go microfinance solutions allow consumers to purchase energy access at a reduced price, repaying the full amount in small instalments. Effectively, consumers can pay for energy products, such as an individual solar panel for home use, as they use them, increasing affordability and accessibility (Pueyo, 2013). The GSMA paper notes the cost decrease of M2M technological solutions in recent years and the wider potential to incorporate such technology into smart mini-grid systems in rural areas. Mobile phone towers converting electricity into radio waves that already exist or are being built could be adapted to generate excess capacity that allows on-site charging and the supply of local communities with clean energy via mini-grids or transportable batteries (Clark & Pavlovski, 2010; Min et al., 2011). 

©OMC

Rural people without access to centralised financial systems can carry out microfinance transactions using their mobile phones to support such schemes, and there is an obvious economic incentive for mobile phone companies; the more people in poor and rural areas have access to energy, the more available consumers there are to charge and regularly use mobile phones. The possibility of a solution that offers financial inclusion using mobile phones means financial services ranging from “bill payments, social welfare payments, salary payments (and) micro-insurance products” (p.5) could be more effectively delivered to rural populations (GSMA, 2013). This could be incorporated with the growing number of social enterprise efforts being made in developing countries that attempt to encourage local entrepreneurship. Successful efforts have already been made in countries such as South Africa, Mali, Uganda, Haiti and Tanzania. In India, the country’s largest mobile phone provider made a deal with OMC Power last year to use off-grid mobile phone towers to provide renewable energy, encouraging global efforts to bring Community Power systems in rural areas to scale.

A recent paper by Glemarec (2012) uses the growth of the mobile phone industry as an example to demonstrate how off-grid clean energy technology could be rapidly commercialised in developing countries. Glemarec points to the statistic that almost 80 million mobile phone subscribers had no access to the electrical grid as of 2012, and notes that the dramatic uptake of mobile phones in developing countries in recent years itself “shows how quickly decentralised services can develop on a commercial basis under the right conditions, and raises the prospect that private finance could also drive decentralised energy access for the poor” (Glemarec, 2012).

©M-KOPASolar

However, as acknowledged in the GSMA report, there are significant challenges that will likely impact efforts attempting to increase energy access using M2M technology for larger rural populations. The main difficulties in replicating ‘mobile money’ services and incorporated clean energy provision in other countries would likely include regulatory delays over concern for consumer protection, reluctance among mobile phone companies and financial institutions uncertain of the full benefits and potentially high operational costs in some areas. 

Nonetheless, costs have been falling steadily and the M2M market is currently growing. It seems to me that greater standardisation and simplification of M2M technology would reduce current barriers to different forms of application and probably reduce overall costs. Many of the problems that have been encountered so far would be resolved by wider expansion: more widespread infrastructure and technical knowledge means operational failures would be more easily fixed and, as greater expansion would make the technology available to more areas, there would be less need for those in the most remote areas to spend time travelling to access energy in other neighbouring villages, which is currently a significant problem. 

In any case, it’s exciting to see that efforts have already been made over the world to combine ‘smart’ mobile technology with delivery of microfinance services and clean energy access in poor and rural areas. If these could be further integrated with efforts to encourage local entrepreneurship, such as those being made by social enterprises like Village Infrastructure, the transformative effect on rural communities would be even more remarkable. M2M technology is just one of many new sustainable solutions that are being brought to scale globally, leapfrogging centralised power generation in providing rural communities with renewable energy and vastly improving the resilience of decentralised systems of energy provision. 

Follow this link to a presentation on M2M global market development published by the GSMA in November. 

Here's a TED talk I came across by Steve Howard from Ikea that relates to my last post on business and renewably energy!