The road to hell is paved with good intentions, and that's exactly what is afoot with SkyPower, a utility-scale photovoltaic energy company and their plan to donate two million home solar kits to "the people of Kenya".
There are appropriate times to donate solar, such as disaster relief, or to schools and clinics who otherwise could never purchase them. However, bulk donation programs wreck the market and the customer's perception of solar as a concept.
Solar products need to be deployed and serviced with the highest quality of customer satisfaction in mind. Mainstream bulk donation programs often do not budget for high quality products or invest in the distribution and after-sales service required for solar, leaving customers with either inferior products or, over time, faulty products that stop working and spoil the market concept of solar in general.
In their recent June 2015 Opinion Brief, the Global Off-Grid Lighting Association highlights the issue:
"Systematic reductions on retail prices, and especially free give-aways, signal to consumers that they do not need to pay full retail price -- or pay at all -- for these goods, and consumers will accordingly hold out for reduced-cost or free goods in the future, regardless of whether they will ever come. While there may be a short term benefit for selected users, these reductions or give-aways will result in such adoption being less likely to be sustained and broader adoption of solar off-grid lighting being significantly hampered."
The tainted history of donating solar products to households is long and well-known by the industry, which makes SkyPower's initiative puzzling and to some down-right upsetting. From political campaigns, charities and corporate CSR, donating solar products to households has been done decades over with similar results - A flashy article and photo op for the organization, smiling faces of recipients, and the feel-good effect of thinking something good has been accomplished. It's understandable to want to help when heart strings are pulled at the sight of energy poverty. However the reality of donating solar to the masses is a dark one because of the long term down side such "dump and run" efforts produce.
Distributed energy solutions such as solar home kits are the cheapest, fastest and safest solution to take a family out of poverty overnight, if deployed using market principles of quality and service. They support increased income-generating hours, better and longer home and study conditions for women and children, and overall upward mobility. Ironically, donating solar to a family seems like a worthy endeavor, but without the right infrastructure and investments to support it typically leaves families with very poor experiences which is arguably worse than doing nothing at all. Losing new energy customer by giving free, inferior products and / or poor infrastructure to support them results in a U-turn in energy access development, not to mention it distorts the market conditions and disrupts the growth of record investments being deployed into the industry.
US President Barack Obama's Power Africa concurs and backs a strong market-based environment for energy access to thrive: "Power Africa supports bringing increased electricity access to Kenya through a market-based approach. Kenya is the center of innovation in off-grid solar and is the home to trusted companies -- many of which are Power Africa partners-- who offer high-quality products with strong warranties and service guarantees."
SkyPower has big, bold plans for Africa and beyond and there's no doubt we need SkyPower's valuable contribution to deploy clean energy for the world. With a revised plan, many beyond-the-grid companies and organizations might like to partner with SkyPower to support their objectives for energy access, however, alternatives in the case of solar kit donations into Kenya would have to be considered. Several attempts were made for on-record comments from Kerry Adler, SkyPower's CEO for this article to better understand SkyPower's plans and discuss constructive alternatives, however, Mr. Adler did not show up for schedules calls. In light of the missed opportunity, SkyPower and Mr. Adler may consider the following:
SolarCity's GivePower program offers a best-in-class example for when it's appropriate to donate IFC Lighting approved solar systems, such as to schools and health clinics backed with on the ground service operators.
Alternatively, natural disaster relief programs such as the deployment into Nepal this past spring demonstrate an effective use of the donation platform with certified quality products.
On the commercial side, SkyPower might consider setting up a working capital fund using the budget allocated to procure product for donation, and instead support beyond-the-grid companies already working in Kenya through deployment of working capital to fuel their efforts.
IFC Lighting Global echoes these recommendations:
"Lighting Africa welcomes the participation of companies in the off-grid energy space. Free products can assist people that may not otherwise purchase a solar product, but, if not managed well, they can harm the entire supply chain and the market. Given that consumers spend between $90 - $120 per year on kerosene for lighting, Lighting Africa believes that making solar products more affordable will have the greatest impact on accelerating energy access. We recommend setting up financing facilities with local banks and MFIs to support further sales of solar products with a focus on sustainable positive impact."
As a veteran energy access entrepreneur I have seen first-hand the market destruction of bulk donation programs. I have no doubt SkyPower has good intentions behind their plans, yet the Canadian company may wish to think twice before letting loose a wayward bull in Kenya's fast growing energy access market that could wreck the market for decades to come.