Electricity in the developing world: Who will pay for it?
Today, 1.3 billion people worldwide still live without electricity despite incredible technological advances. That’s due, in large part, to the fact that people disagree about who should pay.
Companies like SunEdison Frontier Power, which tries to profitably bring electricity to developing countries, are making big strides in technology and infrastructure, yet the financing remains a challenge. CEO Kathy Zoi, who took over the role in April, said on Tuesday at Fortune‘s Brainstorm E conference in Austin that she still grapples with balancing the risk of rural utilities customers defaulting on payments and convincing banks and other lenders to provide financing programs.
“What is very important to us is accessing debt,” she said, adding that she continues to talk with development banks, which are more willing to work with riskier investments. Hopefully, when more data about customer repayments and defaults is available, bigger and more mainstream banks and financing channels will be more willing to participate.
But there’s another important player in this equation: government.
“What it requires is a forward looking investment from governments,” saidPierre-Yves Lesaicherre, CEO of Lumileds, a company specializing in LED lights and formerly part of Philips’s lighting division.
And that’s not impossible. China, for example, has created a program to provide 70 million subsidized household lamps to its citizens, and plans to add more than 35 million street lamps, Lesaicherre pointed out. And with the declining cost of electricity, infrastructure, and even lighting, it wouldn’t be surprising to see more governments roll out similar programs for basic utilities in the near future.
But ultimately, it’s also a question of priorities.
“If governments keep spending on weapons in certain countries in Africa rather than bettering the lives of their citizens, it’s not going to happen,” Lesaicherre said. “It requires investment up front and if nobody’s putting the money, it’s not going to happen,” he warned.
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