When Sam Goldman was a Peace Corps volunteer in Benin, Africa, 11 years ago, he saw his neighbor's son badly burned when the family's kerosene lamp overturned.
Goldman returned home with a conviction that there had to be a better way to meet widespread demand for household lighting among the world's poor. That idea grew into Silicon Valley-based business, d.light, which will deliver affordable solar lighting to its 50 millionth customer this month.
More importantly, d.light and other entrepreneurial firms are showing how to bring power to many of the planet's 3 billion energy-poor citizens without costly construction of electric grids or the destructive growth of greenhouse gas emissions. It's a little-noticed development with major implications for tackling climate change.
In fact, if d.light were a traditional electric company, it would rank among the world's largest utilities in number of customers served. (It has sold more than 10 million units; compare that with the largest utility in the United States, Exelon, which serves 10.3 million customers.) That's not an outlandish comparison, because many of d.light's devices truly are energy-delivery services, providing much-sought-after mobile device charging as well as light.
"It's not just plugging a light bulb in a socket," said Russell Sturm, global head of the energy access advisory at the International Finance Corporation (IFC), which works with d.light and other solar firms in the developing world. "What we're talking about is lowering the overall cost of an entire system needed to deliver a service. That's the paradigm shift."
Thinking small to tackle big problems
The key to tackling the big problem of bringing electricity to billions has been to think small. Companies like d.light were able to downsize solar panels because of huge advances in the efficiency of both light-emitting diodes, or LEDs, and batteries. As the size of photovoltaic panels was reduced, so was the cost of integrated solar lighting and charging devices.
As recently as 2008, products retailing at more than $50 dominated the off-grid lighting market in Africa, according to Lighting Africa, a project of the IFC and the World Bank. By 2010, many new products ranged from $25 to $50. Currently, d.light's lowest priced devices sell for $8 to $10.
"We can sell at such scale because the economics work," said d.light chief executive and co-founder Ned Tozun. "Instead of paying $3 to $10 a month for kerosene, they can buy one of our devices—and buy it once. That makes it a really good investment for a family."
It's a concept shaped in part by the principles Tozun and Goldman studied when they were classmates in the Stanford Business School class where they first met, Design for Extreme Affordability. In the project-based class, students work on design of products or services aimed at changing the lives of the world’s poorest citizens.
Goldman, who had by then returned home from the Peace Corps, shared his insights about the need for lighting solutions with Tozun, whose background was in engineering and technology.
Together, they developed the plan for d.light, a name that echoes both the nickname of Stanford's Hasso Plattner Institute of Design, "d.school," and the experience the young entrepreneurs hoped to provide.
"'Delight' is the emotion we want to create in our customers when they upgrade from burning fuel," Tozun said.
Sturm said he was speaking at an LED lighting industry conference about eight years ago when he first met the d.light founders, who were at the time students with an idea. Sturm said he had come to believe that LED lights were a potential game-changer, and Tozun and Goldman agreed. Old solar home lighting systems were based on 6-watt to 8-watt compact fluorescent bulbs, which were far more efficient than 60-watt incandescent lights. But with LEDs, customers could have useful light for less than a single watt.
"So instead of worrying about how someone who earns $2 to $3 a day can afford a $500 or $800 or $1,000 solar system, suddenly they're downsizing the system to a price point that is affordable," Sturm said. "And you can market these things differently, like fast-moving consumer goods."
The pair launched their business in 2006, with Tozun traveling to China to research how they could build the devices affordably, and Goldman heading to India to devise marketing and distributing plans. The two raised $40 million in venture capital from eBay founder Pierre Omidyar's philanthropic investment firm, Omidyar Network; DFJ, the venture firm that helped launch Skype, Twitter, Tesla Motors, and SolarCity; and a number of other social action-oriented venture firms.
And since d.light first began selling its products in 2008, the sector has experienced more than 100 percent a year annual growth, Sturm said.
A business, not a charity
All of d.light's lamps and charging devices have a characteristic bright orange casing, are designed for portability, and carry a two-year warranty. The company's low-cost product, the "learning light," has a stand that allows the light to hover over a student's homework.
At the top end of its product line, d.light's D20 solar home system includes two home lights and switches, a portable light, and mobile charging battery pack, currently selling in the United States for $144 on Amazon.
All are certified as high-quality products by Lighting Global, a platform for the IFC and the World Bank's work in the sector. Quality assurance is one of the ways they try to accelerate uptake of the technology.
But Sturm said the key to d.light's success has been its private enterprise approach. "What differentiated them from the traditional development paradigm is that they saw the only way to do this at scale was to do it commercially," he said.
Many lighting and energy access programs have depended on foundation grants and other types of giving, but the impact these can have is limited, Sturm said.
"If you have a $10 product and you have $1 million dollars, you can give away 100,000 of them and then you're done," Sturm explained. "But if you put a million dollars into a self-sustaining company, then you've got d.light and its similarly fast-growing competitors."
Tozun said the company this month expects to be halfway toward its original goal of helping 100 million customers upgrade from kerosene to solar lamps by 2020. He said the company is on track to reach that goal three years early.
Sturm said a more important number to keep in mind is the 1.3 billion people who lack access to electricity, according to the United Nations.
"There's no amount of donor money that's going to be coming through that allows you to reach all those people," Sturm said, "and even if you did, three years later, they're not going to be able to upgrade or replace products. The only way to do it in a sustainable way is for everyone along the value chain to make money. That's the only way you get scale."
D.light is among about 25 small solar companies active in the Africa and Asia markets that are selling around 50 different products that have been certified as quality assured by Lighting Global. The companies, including Australia-based Barefoot Power, Greenlight Planet, headquartered in India, and Omnivoltaic, of Hong Kong, among others, each have a different structure and marketing approach, but all have recognized a large demand for energy services in developing countries.
Some critical of decentralized, solar approach
Not everyone agrees that small-scale, decentralized solar lighting is the best way to bring power to the world's energy-poor.
The world's largest private coal company, Peabody Energy, has launched a campaign called Advanced Energy for Life, which says centralized coal-powered grid power will be "essential to meet the scale of Africa's desperate need for energy."
And the think tank, the Breakthrough Institute, has been critical of the focus on renewable energy to spread energy access in the developing world; instead, it favors research for large-scale energy breakthroughs (and development of nuclear and "advanced" coal and natural gas power plants in the meantime.)
Solar electricity "to power a fan, a couple of light bulbs, and a radio for five hours a day [is] a baseline that someone from a rich country would not recognize as access at all," said a Breakthrough Institute report last year.
But Sturm said the estimates show that the cost of grid electrification of Africa would be about $800 billion; it isn't pragmatic to believe that there are utilities with the wherewithal to take on that task.
He said decentralized distribution of solar devices is the most practical, cost-effective way to spread energy services to the most customers in Africa and other under-served markets, and it’s an approach that has clear benefits for the climate.
Cheaper, safer alternative to kerosene
Tozun said d.light customers don't have the choice between solar energy and a nuclear power plant. Instead, they are choosing solar as a cleaner, brighter, safer, and cheaper alternative to kerosene. And solar-charging devices are a cheaper and more convenient alternative to traveling to cities for charging of mobile phones.
In Kenya, for example, where more than 40 percent of the population has mobile phones, but the electric grid only reaches 20 percent of the population, citizens spend about $155 million annually on phone-charging services.
Also, Tozun said that just as high-efficiency LEDs made affordable solar lighting systems possible—expanded offerings will become available because of other high-efficiency appliances that are now in development, such as low-wattage televisions that operate on direct current so they are compatible with solar systems. At the same time, he said, microfinance, leasing and other financing options will help customers afford solar electricity systems and services.
"What we hear from our customers is that light is really just a first step," Tozun said. "Once they've turned on to the power of solar and what good quality solar products deliver, they want more. We think of it as a ladder of energy access, with light being the first rung. As we grow we'll be looking at delivering music, radio, TV, and other things that customers want in many of these places. We think this is the future of how energy is going to develop in these markets."