The cost of solar fell 95% in 30 years so why do we still build old fashioned power plants?


To say Amar Inamdar has a vision is an understatement. The soft-spoken, steely-eyed Inamdar wants to see everyone in Africa get electricity, and runs a $100m fund to do just that. But not Eskom, coal-fired conventional energy.

Through his KawiSafi Ventures, he is trying to bring solar energy to East Africa and his quiet confidence shows he’s already making progress. “There is a revolution happening in the villages or towns around us,” he told the TEDGlobal audience in Tanzania last month. “It is an echo of the cellphone revolution and is also wireless. Now it is solar. There’s something remarkable happening ”

But the problem is the old ways of thinking about getting energy are rooted in unsustainable business models, which can never scale to reach the demands of a power-hungry Africa.

There are 620m people in Africa without a connection to the electricity grid, he says, and it will cost $1,500 (R20,000) to connect each household to the grid. It takes about nine years, which is like a life time.” When the connection do arrive, they are unreliable and doesn’t have enough robustness.

“The cost of building these grids is unsustainable. If you add up the deficits that all the utilities run, it costs $21bn to maintain that system and keep it going,” he told the audience, later telling me a large chunk of that figure is due to Eskom. South Arica’s national power utility is so stuck in the past it can’t even agree on how to include solar in its energy mix, and has recently set-back the renewable energy sector with more mindless, unsubstantiated obstruction.

A former World Bank and the International Finance Corporation (IFC) heavyweight, Inamdar has been at energy giant Shell for the past three years working on new energy projects and investments in Africa. And now he is driving those investments himself, with an impressive list of backers, including the Green Climate Fund and Acumen.

Even though “photons fall on roof tops sufficient for every household’s needs… up until now the technology hasn’t been available. A group of companies been chipping away at that problem over 10 years. They recognised that great big nuclear reactor up in the sky. In Africa we are endowed with more access than anywhere else in the world.”

But, “the opportunity has come,” he told the audience in Arusha, which gave him a standing ovation after his inspiring talk.

Three factors are important for this new way of getting energy. Firstly, the cost of solar power has come down drastically. “It’s absolutely collapsed in 30 years, and gone down 95%.”

Second, appliances have come down in cost. The energy efficient LED lightbulb cost  85% less now than five years ago, for instance, and “gives you 10 times the amount of light and last 30 times longer.”

Thirdly, the solar market, especially in M-Pesa-mad East Africa can piggyback off the cellular revolution, allowing people to pay off their solar kits in small increments of mobile money, often the same amount they spend on kerosene. A strident example of this is Kenya’s M-Kopa.

“This is an incredible change in the ecosystem that is happening and is very, very innovative,” he said.

The market in Africa for cellphone charging, batteries for torches and kerosene (the dangerous illuminating and cooking fuel) is worth $27bn a year. “There is not enough working capital coming into solar because venture capitalists  don’t know how to price the risk, so they do not come in at all.”

If only Amar Inamdar lived in South Africa. He might be able to save us from Eskom’s lack of vision.

This column first appeared in Financial Mail


About Author

Toby Shapshak is editor-in-chief and publisher of Stuff, a Forbes contributor and a Financial Mail columnist. He has been writing about technology and the internet for 20 years and his TED Global talk on innovation in Africa has over 1,5-million views. He has written about Africa's tech and start-up ecosystem for Forbes, CNN and The Guardian in London. He was named in GQ's top 30 men in media and the Mail & Guardian newspaper's influential young South Africans. He has been featured in the New York Times. GQ said he "has become the most high-profile technology journalist in the country" while the M&G wrote: "Toby Shapshak is all things tech... he reigns supreme as the major talking head for everything and anything tech."

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