The ability to generate electricity was a decisive factor in the industrialization of Europe and America in the 19th century; it fuelled the mass-production capabilities that helped vault Western economies into a new age of economic prosperity and has been the route to economic development for many countries since.
Today, the Internet and digital technologies are driving forward another economic leap. But while cities around the world adopt smart energy grids (boosting energy efficiency and energy bill savings) and build sensor-driven intelligent transport systems that make urban areas run more smoothly (increasing productivity and reducing air pollution), rural populations are literally left in the dark, and thus stymied in their ability to reach for a better life.
Rural electrification is progressing slowly at best. In Sub-Saharan Africa, the International Energy Agency (IEA) projects that nearly one billion people will gain access to electricity by 2040, but that 530 million people, largely in the countryside, will continue to live without it. Even by 2030, the IEA reckons that 1.2 billion people will still lack access to electricity, 87 percent of them in rural areas. The gulf in living standards and economic opportunity between cities and the countryside will remain huge. Consider: The world’s 600 largest cities generated $30 trillion of GDP in 2007 (more than half the global total) but will generate an estimated $64 trillion of GDP (or 60 percent of the total) by 2025.
The implications of this divide for rural populations are enormous. Power and light not only make living conditions more pleasant and productive, but also connect people to important opportunities. The Internet is increasingly becoming the route to education, health care, jobs, and rising incomes. Yet the Internet revolution—and all its undoubted economic and social benefits—is at risk of losing steam. The number of new users has tripled in 10 years, but the pace of adoption has slowed. Access is the issue.
Given the economies of scale that cities enjoy, it is arguably much cheaper and more effective to encourage migration to urban areas, rather than bring infrastructure to rural areas. Many people will opt to move to cities in the coming years to improve their economic prospects—and they may well be better off doing so. But another promising approach is to aggressively deploy renewable energy and battery storage in rural areas.
Until recently, many viewed renewable energy (such as wind energy and solar power) as expensive and uncompetitive compared with traditional energy systems. Such intermittent, weather-dependent suppliers of electricity makes storing and managing energy imperative—and without today’s advanced technologies, it hasn’t made good economic sense. But renewables are now a much better bet than they were. They make the best use of scarce capital by using smart meters to better manage a grid, increasing efficient energy use. They also support the efficient development of massive supply stores in the form of advanced batteries. When used in the electricity grid, advanced batteries not only improve efficiency, but also allow energy managers to bring electricity to remote and underserved areas around the world.
India, for example, currently appears on course to become one of the most energy-insecure countries in the world; some 300 million people lack access to electricity. Yet these new digitally enabled energy technologies could increase the output of reliable power and expand access to electricity to between 80 million and 110 million people in relatively short order, changing the country’s trajectory.
Meanwhile, China has used digital technologies to develop an extensive ultra-high-voltage (UHV) transmission system; indeed, China is the only country in the world deploying UHV corridors on a large scale. The rationale is clear: 80 percent of China’s hydropower is in the west and 76 percent of coal in the north-west; yet more than 75 percent of China’s energy demand is on the east coast. The only way to serve the country’s most energy-hungry centers is by transmitting it over huge distances.
And one South African company has come up with a combination of a solar charger and battery-storage unit that allows consumers in remote areas to generate enough electricity to power a mobile phone, a computer, a radio, and lighting. Imagine the potential if these units were mass produced and distributed across rural Africa. There is a wave of innovation in Africa to overcome unreliable and inadequate electricity supply. The Kenyan nonprofit Ushahidi is developing a product called BRCK that can switch networks and power sources seamlessly to combat that unreliability.
If the current drive for large-scale renewable solutions continues, the sun could become the world’s largest source of electricity by 2050, ahead of fossil fuels and hydro and nuclear power, according to the IEA. In many parts of the developing world, then, the first supplies of electricity that rural consumers use will be carbon-free, generated by solar panels. The cheaper solar becomes, the most possible this future is. The per-watt price of a photo-voltaic cell has already dropped by 85 percent since 2000. And advances in energy storage are transforming the outlook for solar, which, by definition, is an intermittent energy source. McKinsey Global Institute has estimated that energy storage could produce up to $100 billion a year in value by 2025 by countering unstable electricity supply and up to $50 billion by enabling electrification of new areas.
Electricity is the current flowing through the digital world—the path to education, health care, and the eradication of poverty—and bringing reliable energy to rural areas is a critical move. It’s time to switch on.