What should electricity cost?

​By Adam Eberwein & Madie Sturgess

How many times did you interact with electricity before you left the house this morning? There are countless thoughtless touch points from when we turn off the alarm to when we flick the last switch on our way out of the house. Consider for a moment how your routine would change if, due to unexpected soaring costs of electricity, you had to budget for and ration your energy use. Chances are it would change how often you used your phone or laptop, what kinds of food you’d prepare, and when you’d go to sleep.

When an under-electrified nation seeks to solve its energy crisis, determining what electricity should cost becomes more than a business plan or household accounting. The accessibility of electricity impacts culture, prosperity, and opportunity, and the costs – borne ultimately by customers, governments, or donors  -- depend on policy, technology, and delivery structure. The question, “what should electricity cost”, is critical to EarthSpark as we work with communities to build a model for decentralized, cleantech-enabled, energy infrastructure across Haiti.
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EarthSpark’s growing field operations are generating some real-world data necessary to help answer that question. Some of the latest figures from microgrid operations in Haiti are beginning to reveal the social and economic impacts EarthSpark’s microgrid energy is having on household and business.

Phone Use
Like in the US, Haiti’s rural communities depend on phones in daily life even though in Haiti charging a phone can be an expensive prospect involving a hike to the nearest phone charging business. Consequently, diesel generators (personal and small businesses) offer the primary source for phone charging, becoming a necessary and costly expense to the average household’s already tight budget.

In Les Anglais, our grid-connected customers have reported savings of 90% compared to their pre-grid phone charging expenses. More reliable and affordable access to phones gives customers greater access to information and opens opportunity for a mobile money economy to flourish. A change in affordability like this opens access to and participation in local, regional, and global markets in addition to news and information.

Access to Freezers
Households and businesses with grid-connected freezers are spending 45% less on electricity to reliably power their appliance. This makes freezers powered by a personal generator, nearly two times more expensive than its clean-powered alternative. Being able to afford to reliably power a freezer improves food security, nutrition, and economic opportunity. Local agricultural producers can nominally reduce post-harvest losses, households can store a diversity of foods for longer, and greater opportunities for small businesses arise. With inaccessibly high electricity tariffs these opportunities disappear, and with well-intentioned cheap tariffs these opportunities arise for a time but inevitably disappear as the operational model of the grid is unable to sustain operations and maintenance costs. In our team’s experience in Haiti, microgrid users’ adoption of freezers or fridges is an important step towards their adopting other income-generating equipment. The freezer holds the necessary combination of both a well-established and understood tool and a source of aspiration for many small businesses, with the ability to unlock new sources of income that were never before sustainable in this context. Our team has seen successful freezer utilization lead to adoption of tools requiring greater investment and savvy.

Lighting
In off-grid communities, kerosene lamps and candles are frequently used for lighting, releasing hazardous air pollutants, while delivering only poor lighting quality. When EarthSpark customers connect to the grid, they put away their candles and kerosene lamps and instead flip the switch on for LED lighting that is cleaner, more affordable, and shines as much as 250 times brighter than pre-grid lighting (on a lumens per watt basis). Households with quality lighting are often associated with better conditions for education and home-based work and displace air pollutants responsible for 8000 premature deaths a year across Haiti.
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Household Economics: Comparing pre-grid energy, microgrid energy, US grid energy expenses

The Challenge of Electric Cooking
Like EarthSpark, many microgrid developers have found some success in quantifying the cost to electrify household and community activities. Cooking, however, remains a rarely-touched area for microgrid operators. Transitioning communities from charcoal to electric cooking requires a model offering an affordable service that also meets the energy demands of local cooking habits. There is currently insufficient data to confidently determine the average household spend on charcoal powered cooking activities. Below is a table of a recent 9 customer sample recently taken in Tiburon which demonstrates this dearth of meaningful data. EarthSpark is currently pursuing technical and anthropological studies of the electrification of cooking to generate much needed data. By identifying the energy, time, and cost associated with local cooking habits and recipes, we aim to determine a pathway to electric cooking tariffs with competitive price points. Solving the cost of electric cooking makes a more robust case for the adoption of microgrid infrastructure in emerging markets.

Fundamentally, moving a microgrid model towards market must affordably meet the end user’s need. A genuinely sustainable model must also be capable of meeting operations and maintenance costs, and electricity access will only ever scale if the operations model includes sufficient revenues to pay (even subsidized) costs of capital. Striving to balance these competing needs, opens the conversation about the government’s role, be it by providing an enabling regulatory environment, offering subsidies, managing exchange rate fluctuations, or setting tariffs.

There is often a false expectation that renewable energy infrastructure must be solely rooted in the private sector to be considered a compelling fossil fuels alternative. And yet, globally oil, coal, and gas continue to receive $5.2 trillion a year in subsidies. These are exceptional heights of public investments for an industry that’s more than a century old and that carries such high social, economic, and environmental costs.

Determining asset ownership only further highlights the need to define the role of public and private participation in energy access. “What should electricity cost”, is a complex question that reveals how scaling an electrification model requires more than possessing a promising, technical innovation. Social, regulatory, and cultural challenges persist. These same challenges are relevant not just in other emerging markets but underly the global energy transition.