Issue Briefs

The coming power revolution for developed and developing countries

The coming power revolution for developed and developing countries

Paolo von Schirach

May 7, 2018

When it comes to electric power generation and distribution, in developed countries we are used to a basic tried and tested old model. Large power plants produce electricity. From these sites, relying on a complex network of power lines, (the power grid), electricity is delivered to customers, be it industrial plants, offices or individual homes. The fuel used for power generation can be coal, gas, nuclear or hydro. More recently we have developed renewable energy: wind, solar and biomass.

A new model

Well, in the not so distant future, this complex architecture founded on several large sources of generation from which transmission lines deliver electricity to the end users may become obsolete. Recent developments opened a window on a likely and completely different future, a future that can soon become reality, assuming that innovative technologies keep improving, and costs keep going down.

Simply stated, soon enough we shall be able to have our miniature power plant at home, no longer relying on electricity coming to us through a grid, care of the local utility company. We are clearly not there yet. But we may get there soon, probably sooner than we think.

Miniature solar power plants in your own home

In America we have plenty of power generation sources. Going forward, the shale gas boom guarantees that there will be plenty of gas-fired power plants. Still, at the same time, solar power generation, while still relying on subsidies and tax breaks, is becoming much more efficient. Its costs are going down. According to industry and many experts, we will soon get to a point in which it will be cheaper for individual users to install their own domestic solar power plant (based on solar panels that generate electricity) rather than pay a monthly bill to the utility.

A revolution

When we get to that tipping point, this will signal the beginning of a revolution that will have a number of large –in fact truly transformative– consequences. The first one will be the growth of the solar panels industry and of all the services associated with it, (installation, maintenance, etc). The second one will be that individual households as well as industrial plants, office complexes and commercial centers will be energy independent. The third one will be that most of the complex national and regional regulations that have been created to manage power generation and distribution will eventually become obsolete. The fourth one will be the death of the large power plants, along with the death of all the industries that support them: think of coal mining, storage and transportation, for instance.

More broadly, locally produced affordable power will improve basic economic conditions. Households will no longer have to pay electricity bills that include the shared cost of maintaining an expensive grid. Overall, affordable energy will be a boost for many energy intensive industries, and the equivalent of a tax break for almost every user.

Biggest impact in developing countries

That said, while this technological innovation will radically change for the better the economies of developed countries, the biggest transformation will occur in emerging markets. Indeed, tens of thousands of rural communities in Africa, India and elsewhere that currently have no electricity will no longer have to wait for governments to invest in power generation and transmission lines so that electricity will at some point in the future come to them. They will be able to produce their own electricity, on site, without any recurring fuel costs. This will be a real revolution. Sunlight is free.

No development without power

While most of us who live in the developed west do not think about this, it is a painful reality that without power these villages are essentially cut off from any chance to have any meaningful economic progress. Besides, even in regions of developing countries that do have access to electricity, the service is often poor and spotty, with frequent power outages. Unreliable supply forces all customers who can afford it to purchase power generators to be cranked up when the utility stops delivering its electricity. All this is cumbersome, wasteful and very costly.

More broadly, if you think about it, there is no hope for real, sustainable development without reliable and affordable electricity supply. Not much is possible without power. At dark, almost everything has to stop. People cannot read at night. Students cannot do their homework. Besides, medical facilities cannot store medications which require refrigeration. Shops cannot refrigerate food. Indeed, food rots in the heat. You cannot have functioning workshops or small factories. Power tools cannot be used. And forget about basic amenities like street lights, or entertainment such as cinemas, bars and restaurants.

Solar power will change all this

But if, indeed, on the basis of the recent experience in more developed countries, local communities in emerging economies will be able to install affordable solar power generation on site, these new modalities of producing electricity would create an incredibly important short cut to development.

Right now the key obstacle for any plan to bring abundant, affordable power to emerging countries, especially to isolated, off the grid communities within them, is the large capital cost of building power plants, plus the additional cost of fuel and the high cost of constructing transmission lines, often in remote and almost inaccessible areas.

Well, if truly cost-effective solar power can be deployed at the village level, no need to focus on huge investments in large-scale power generation and long distribution lines.

Hundreds of millions will step into modernity

To be clear, I am not even remotely suggesting that all this is happening right now on a large scale. But it looks as if it is just beginning to happen. As solar and other renewable technologies keep getting better and costs keep going down, it should become realistic to think of business models that will allow scaling up affordable renewable energy solutions for the hundreds of millions of Indians and other underserved rural populations in emerging countries who have little or no power.

Likewise, even city dwellers in Pakistan, Nigeria or Zambia who are used to frequent power cuts due to unreliable power supply will have a chance to break off from the grid and finally have their own uninterrupted power supply.

It is clear that it is impossible to have basic economic and social development without the support of reliable and affordable electricity. Until now not much has been done to create adequate electricity generation in many poor countries, because of the very high cost of this effort.

When new solar and other technologies will radically change the model by bringing down cost of power for individual users, then a huge barrier to development will also come down.

And life will change for hundreds of millions around the planet.


Paolo von Schirach is President of the Global Policy Institute and Professor of International Affairs and Economics at BAU International University He is also the Editor of the Schirach Report


The views and opinions expressed in this issue brief are those of the authors.