The world's poorest are spending a lot on next-gen lighting

The world's poorest people are spending an increasing amount on LED lighting, energy storage and other off-grid electricity systems.

The world's poorest people are spending an increasing amount on LED lighting, energy storage and other off-grid electricity technologies.

These same folks aren't connected to the traditional power grid. So, they're turning to other sources who have jumped into the rural electrification space, according to report by Lux Research.

There are about one billion people in the world who lack reliable grid connection in their home. Grid connections either don't reach their villages, or the reliability is so poor and daily power outages so common, they are essentially living "off the grid."

The failure on the part of national utilities has created an opportunity for other companies to step in and supply electricity through off-grid solar power, energy storage installations and other solutions. Despite low average income, lighting systems for residential consumers throughout India, Pakistan, Thailand, Indonesia, and Sub-Saharan Africa are becoming big business, says Lux Research in a report released this week.

A range of startups have circumvented utilities and government agencies and tapped into the rural lighting and electrification space with some success. In the past decade, off-grid solar power, LED lighting and energy storage installations in the developing world have grown from zero to 4 million in the past decade, according to Lux Research.

A big part of the increase in these installations have been the steady decline in cost for solar and LEDs. A decade ago, these customers fulfilled all of their lighting needs through kerosene lamps, Lux Research analyst Steve Minnihan wrote me in an email. The sharp cost reductions in photovoltaic solar and LEDs have enabled this newfound electrification trend in the past three years, Minnihan said.

While these lighting systems are certainly more advanced than a campfire or kerosene lamp, they are still the low-cost, low-tech and low-quality cousins of solar, lighting and storage systems used in developed nations.

That doesn't mean companies are strolling in with ease and instantly reaping rewards. There are all kinds of challenges and hurdles to providing electricity to the developing world, including theft, vandalism, extended payback periods and hardware failures.

Photo: SunEdison (rural electrification project in India)

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This post was originally published on Smartplanet.com