While grid-parity garners most of the attention, the breakthrough of residential solar and mini-grid systems in the developing world may prove a more transformative event for the future of solar PV. Solar manufacturers should be prepared for surges in stand-alone system demand, independent of existing grid-tied demand, as the push for clean electric power increases in the developing world.

Solar is proven to deliver consistent, cost-effective power to villagers and residents in developing markets, particularly in rural settings. There are success stories everywhere. For example, with just a 10% subsidy and the use of pre-existing microfinance institutions, families in Bangladesh can currently enjoy electric light and cell phone charging via off-grid, 50W solar PV and battery systems.

The current market segmentation between off-grid solar modules and grid-tied modules is divided by module wattage. The question becomes when and how will increased demand for power and electrical services boost demand for higher wattage panels in the developing world.

In solar rural electrification programs, 50-100W panels will continue to remain a viable market niche to power stand-alone, battery-module products like solar lanterns and cell-phone chargers. However, as solar module costs decrease, and families and businesses wish to use higher-powered devices, the need for higher wattage solar solutions is inevitable (see Figure).

A 300W or a 12,000W Society?

Back in 1998, the Swiss Federal Institute of Technology proposed that a comfortable but sustainable level of development is possible if the entire world could achieve an overall power consumption of the equivalent of 2,000W per person, inclusive of all services that a society produces and consumes. These forecasts fall short of current reality. In Western Europe, society now “runs at” approximately 6,000W/person with the U.S. and Canada at 12,000W/person. India is now, on average, at 1,000W/person with Bangladesh at 300W/person. These averages level inequalities between rich and poor, urban and rural, and industry, government, and home consumption.

At present, a successful program in Bangladesh offers a $360 USD micro-credit scheme (with a $40 USD subsidy) for families to purchase a 50W solar panel, a battery, three compact fluorescent light bulbs, plus a cell phone charge adapter. At current prices and for current needs in Bangladeshi villages, this supply of electricity is a great step forward, even though the per-capita energy use of these villagers is far less than is considered “normal” in countries that are members of the Organization for Economic Co-operation and Development (OECD). Every noticeable energy advance for local residents provokes interest and desire to enjoy at least some of the benefits of the wealthier world.

However, at some point, decisions must be made at an individual, local, national, and international level to advance to the next stage of electricity-enabled convenience. Are laptop computers with satellite Internet access a top priority? Or television? Refrigeration is a less glamorous, but highly useful electrical device. Air conditioning is likely not a top priority at subsistence level but residents of the urban periphery might very well favor room and house cooling. Saving scarce firewood by using electric cookers can be highly beneficial but requires a fairly high power output. Each technology requires an increment in wattage and battery storage capacity over the basic 50W system that enables small, low-wattage electronic devices.

The next increment in power demand for developing nations will have a profound impact on the convergence between off-grid and grid-tied solar markets. If, instead of 50W or lesser sized panels, 100, 150, or 200W panels become the norm in the developing world, more electrical services can be provided.

Home Electric Systems or Mini-grids

One of the primary questions impacting development of the solar rural electrification market is whether this market will grow primarily via: 1) the sale of family-sized, consumer-managed home systems (single modules with attached battery storage), or 2) 1MW to 5MW mini-grids with professional management of arrays and storage.

In the consumer electricity market in the developed world, a professionally-managed electricity system has been the norm. Even a simple home solar-plus-battery system requires maintenance and a bit of technical skill. While solar modules are usually reliable and long-lived, batteries degrade in capacity and require maintenance. Given current technology, batteries need to be swapped out periodically to continue to deliver adequate amounts of electricity. Furthermore, in tropical and sub-tropical climates, conditions are harsh for metallic and electrical devices, with often high humidity levels, monsoon rainfall, and abundant insect life.

By contrast, a utility-scale array with a multi-megawatt-hour battery bank would offer, in most cases, more reliable, consistent power for a number of reasons:

A mini-power-plant will require one or more full-time technicians whose job it is to ensure the smooth functioning of the mini-grid and reliable delivery of power.

Economies of scale will continue to enable substantial savings on a per-watt basis in capital costs, more than compensating for the increased maintenance budget required to pay professional staff.

Various large-scale energy storage technologies have advantages now and may in the future have additional advantages over household-size battery banks.

Current per capita energy consumption is among lowest in the world, but growth is expected to add 280 GW by 2022. Alternate energy sources are needed to meet the demand. Source: Key World Energy Statistics, 2009; IEA

Mini-grid development is still a fraction of the solar rural electrification market, confined mostly to demonstration projects. Industry representatives, government leaders, and development banks will have to make a concerted effort to add mini-grids to the already burgeoning small home-system market in order for the market to progress.

End-use Applications Will Change the Game

Another factor that may favor larger scale solar development is the use of solar electricity to build businesses and support community development. Some small businesses run by individuals or families will benefit from simply using single or multiple home systems to illuminate their work, charge their cell phones, or even power their laptop computers. However, other businesses will require powered machinery like refrigerators, electric sewing machines, electric drills and saws to grow beyond a bare subsistence level. Use of modern, highly-efficient electric tools in business on a daily basis, will quickly outstrip the power output of a 50-watt solar panel, requiring large-scale solar development.