Here at LivingOffset we understand that Climate Change is a global problem. For this reason we are committed to work with Greenhouse Gas Reduction projects in both the developed and developing world.

For instance, across Africa billions are spent on projects that give people access to power. Development Banks like the Worldbank, African Development Bank, etc. and government donor agencies finance most of the grid extensions and rural electrification projects and in some East African through agencies like the Rural Energy Agency.

Yet still across the 36 countries in Africa, on average, only four in ten Africans enjoy a reliable power supply. In some countries seven in ten citizens (and as many as nine in ten in rural areas) do not have access to a grid at all. The majority of utility companies in most African countries cannot connect customers in rural areas to the grid and mostly do not connect farmers or small villages.

In fact many households that are connected to the electricity grid still do not necessarily have electric light relying on carbon heavy kerosene and candles. On average, only 69% of connected households actually have electricity that works most or all of the time. In Nigeria, while 96% of households are connected, only 18% of these connections function for more than about half the time. In Ghana, 87% of households are connected, but only 42% of those connections provide reliable power. Yet that is still three times the rate of well-functioning connections in Guinea (12%).

Currently utilities spend between US$800 and $3,000 per customer to build electrical infrastructure. In some areas the cost will be higher due to the remoteness of the supply areas and the distance from the main utility grid.

In fact, while most infrastructure projects to supply power to people are funded through interest free loans and grants, utility companies still have to carry the operational and generation cost to supply these areas. Furthermore, the majority of the extensions are supplied from weak grids and in many instances the cost to upgrade the grid and install more power production is not taken into consideration. Coupled with the fact that many utility companies sell energy at a low price, a price that does not represent the true cost of electricity. They are effectively selling electricity at a loss and this gap is filled by donors and development banks that bail out the utility company and offer finance that is cheap or free of charge.

These utility companies then in turn spiral down a road of potential insolvency and need the cheapest source of power production, forcing their reliance on cheaper thermal power.

In one East African country it was found that the cost per connection to a mini-grid can be as high as US$800 whereas a large stand alone Solar Home System (SHS) will cost less than $200 per household. Extending the grid makes economic and financial sense if the grid is extended to areas where there is commercial, light and heavy industry and where industry and commerce mostly uses power during the day and the domestic client base during the evenings. However, in most African Rural Electrification Agency (REA) programmes very little consideration is given to the operational cost the utility company has to incur to manage, maintain, replace and repair equipment, depreciate assets, react to faults and outages, provide customer services, etc. in the rural areas. In a number of countries utilities just neglect these networks, this in turn will shorten their lifespan and will mean that they have to be replaced in approximately 10 years time.

Most customers connected in rural areas are on some form of lifeline tariff and therefore pay very little for power and use very little electricity. In some countries the average sales per rural customer does not exceed US$5 per customer, per month, an amount that barely covers the cost of generation, not to mention the capital outlay to build the networks and extend the grid.

This, combined with the facts that these areas earn very little revenue for the utility and the remoteness of the network in many regions, means that the utility does not maintain the network which results in prolonged system outages and poor quality of service. In some REA programmes the grid’s capacity to supply the new extensions is not taken into consideration which in turn means the networks are overloaded, increasing technical losses (which is a financial loss to the utility but also a form of inefficiency which increases the generation need and by extension increases carbon emissions). These rural networks are also more likely to be subject to load shedding during times of energy deficits further reducing the level of services and the quality of electricity supplied. The constrained networks will, accordingly, experience voltage fluctuations which can result in appliances and equipment burning out.

A number of renewable investors argue that larger renewable projects are needed, in the megawatt scale, to reduce carbon emissions and, therefore, do not see SHS programs to be of great benefit.

These larger PV plans might have a zero carbon footprint but the utility still needs thermal power to generate power at night when the sun does not shine and this power must still be transported over the electricity grid to the end-consumer and along the supply path electricity losses occur due to thermal losses through the system. Furthermore to build the networks poles for overhead lines, conductor, transformers, equipment manufactured in factories, etc. are required — all of which are industries adding to the carbon footprint.

Let’s compare them;

Option A — A 1MW PV solar farm is the equivalent 100,000 x 10W SHS which can power 100,000 customers. The 1MW PV solar farm, after the power is converted to AC, might be able to supply 33,333 customers at an After Diversity Maximum Demand (ADMD) of 0.3kVA. Building the distribution network only to supply these customers will cost in the region of US$1,235 per customer compared to US$200 for a SHS.

Option B — A 100,000 SHS with four lights per SHS will offset four kerosene lamps or candles which works out 0.3 tonnes CO2 a SHS offset and therefore a 100,000 SHS offsets 30,000 tons of CO2.

Deploying solar home systems is not only cheaper to supply and install compared to the cost to extend the grid but also costs a fraction of the cost to support and maintain. And don’t forget that SHS also displaces the CO2 emissions from the original option of kerosene lamps and candles. So in fact, a 1MW solar farm in a high irradiation region can offset as much as 1,460 tons of CO2 per year while an SHS can offset 30,000 + 1,460 tonnes of CO2 per year, not to mention the reduction in CO2 as an output of the factories that need to manufacture grid and network elements.

Finance from LivingOffset will go directly to GHG reduction programmes such the SHS project with organisations such as Rise Africa. LivingOffset can therefore be used to reduce the reliance of rural African populations on carbon generating, grid-generated power. Moreover, and more importantly it will finance implementation of SHS across rural communities not only replacing cheaper, carbon generating electricity, but also replacing Kerosene and candles which are currently still used for lighting in homes with and without electricity supply and of course are another huge contributor to carbon emissions.