Roof-mounted semiconductors that turn solar energy into electricity have the most potential among renewable energies to supply power to the underserved in cities in emerging economies, the latest World Resources Report argues.
According to the report, released today by the World Resource Institute and titled Powering Cities in the Global South, solar photovoltaic systems (solar panels) are more effective at increasing access to power for poor urban households than biomass heating and cooling, micro-grids or wind turbines.
Rooftop solar is already the most common form of distributed renewable energy in the developing world, though the power produced by voltaic systems come closest to matching the demand for electricity observed in cities.
“When people are underserved in terms of electricity from the grid, they tend to turn to diesel generators,” said Ajay Mathur, director general of The Energy and Resources Institute.
“There are a large number of interventions that have been tried out in different parts of the world. The willingness and ability of people, particularly the underserved, to pay for these interventions is at the heart of what will work,” he said.
The report says “willingness-to-pay” issues must first be resolved in order to address the up-front costs of solar panels to consumers. Blended finance, social impact and green bonds are all cited as ways to scale the technology, though one of the authors of the report told Development Finance it is consumer finance models emerging in Africa that are laying the path to greater access.
Michael Westphal, senior associate for sustainable finance at the institute and contributing author to the report, said that the proliferation of consumer finance models such as PayGo show more households are becoming capable of paying for these renewables. He added that in some rural areas of the continent, the number of households using these services have doubled in the space of just one year.
“You have an exponential decrease in the cost of solar panels, and then this proliferation of these finance models, so we think solar panels will become increasingly affordable,” he said.
On the cost of solar panels, the report states: “As the cost for grid electricity rises for customers and the cost for solar PV [photovoltaic] falls, solar PV will become an increasingly appealing option for residential and commercial consumers, as solar PV need not be connected to the grid.”
In India and China, the average cost of electricity for residential rooftop solar is currently in line with the cost of natural gas–powered generation. The report also finds that utility-scale solar electricity has reached grid parity and is “competitive with retail electricity in a number of markets globally”. In as many as 12 Indian states, policies have enabled the retail costs for rooftop solar to reach the same parity for industrial and commercial electricity customers.
Anton Cartwright, researcher for the Mistra Urban Futures Green Economy Project at the African Centre for Cities, University of Cape Town, told Development Finance he believes that lack of financing for public sector energy remains a critical barrier to successfully scaled solar panel technology in cities.
He said Africa is currently urbanising at levels of household income below peer developing regions such as Latin America. This means energy supply technologies such as solar plants won’t be easily financed without innovative solutions.
“There are financial solutions that can be tailored if the particular needs of energy users is understood, if the affordability of those end users is understood, and if the products and service delivery package is design backwards from that need. If one is going to innovate both the technology and financial package, then those things need to happen simultaneously,” he said.