The Test: Excerpt from Chapter 2

November 1, 2017

Ed. note: The following is an excerpt from Jeremy Leggett’s ongoing online book, The Test. You can access the original .pdf file here.

Johannesburg, South Africa, 18th July 2017
Mandela Day. South Africans are celebrating the life of the father of their unified nation, four years after his death. Foreigners too. In Capetown, Richard Branson leads a parade with The Elders, a group of former world leaders and other senior luminaries that Nelson Mandela created to promote peace and human rights.

The theme of Mandela Day this year is action against poverty. South Africa’s National Development Plan aims to eliminate poverty and reduce inequality by 2030, consistent with UN Sustainable Development Goal number one. They have a long way to go. More than 63% of South African children live in poverty as things stand. Sustainable electrification will be vital if African nations are to hit their poverty alleviation targets, and that is why UN Sustainable Development Goal 7 has the goal of clean energy for all by 2030. I am at the Power Gen Africa conference and trade show, a gathering of 3,000 electricity-industry professionals from all over Sub-Saharan Africa, checking out progress.

The conference is making a Mandela Day donation to SolarAid to kick the proceedings off. I shake hands with the conference organiser as he hands me a fake cheque the size of a desk. A short speech is required, and I recount my memories of reading The Long Walk To Freedom, Nelson Mandela’s autobiography published in 1994. I recall a passage about the arrival of electric lighting in his village, and the impact it had on his life: his delight at being able to read long into the night, fuelling the education and wisdom that tee’d up the transformative things he would be able to do later in his life. But how many young South Africans are able to do that today without wasting their money on kerosene, I ask? I recount the arithmetic of The Test, and invite the companies attending the conference to play a part in getting a solar light into every African home.

We wait for the next speaker, Minister of Public Enterprises, Lynne Brown, who is stuck in traffic. All is not well in the nation Nelson Mandela played such a heroic role in steering clear of implosion and civil war. The current national leader, Jacob Zuma, is mired in corruption scandals. Commentators openly accuse the President of running the country through personal networks of favouritism and cronyism, a process they refer to as Zumafication. I am fascinated to hear what Brown has to say. I know that the corruption issue will be a huge factor in The Test, and not just in South Africa.

She has an impressive poise in speaking, as you might expect of a woman sitting at the top table in the African National Congress. She talks of a famous satellite photo of Africa, a collage of cloud-free images of the continent at night. It shows what the colonialists used to refer to as the Dark Continent, she says: in this case dark quite literally, because few lights are on in Sub Saharan Africa. Let us agree that when our grandchildren look at their equivalent of those satellite photos, they see light, meaning electricity driving prosperity. This is where the national utility, Eskom, comes in, she makes clear.

And where corruption rears its ugly head, I think.

She does not avoid the issue. She launched a probe into Eskom in May, and has since replaced the entire board with interim directors.

I am constrained in what I am able to say today because of the ongoing legal case, Lynne Brown says, but I can say this. When apartheid fell, Nelson Mandela and his generation of leaders laid a table with enough seats for all to be able to eat. They had an agenda of redistribution but not retribution. Instead, 23 years on, the rich have become richer. If we can’t redistribute the wealth better than we have, then we are doomed to an unsustainable future.

So what does a sustainable future look like?

Here the pragmatism of the politician kicks in. We cannot contemplate a future with growing carbon emissions, she says. We are already seeing climate change in South Africa, most notably in extreme drought in the Western Cape. But we can’t let the long term imperative of the planet’s breathability be more important in the short term need to maintain jobs. She spells it out. We must carry on mining our coal, and burning it for the foreseeable future.

Elsewhere in news today, analysts at Morgan Stanley are professing that solar and wind will be the cheapest form of power in most countries by 2020, just two and a half years from now. My colleagues at Carbon Tracker, the London-based financial think tank that I chair, tweet that on average they already are, if you do the accounting the correct way.

In Johannesburg today you would never guess. After the opening speeches, I tour the Power Gen Africa trade show. Hardly any of the stands feature renewables, notwithstanding the collective donation to SolarAid. Almost all are about building and servicing fossil-fuelled central power plants. I talk to delegates. There is a long way to go, they agree.

A long way rendered even longer in the face of corruption like modern South Africa’s. Resolving this will be a key element of The Test. I do not speak just of South Africa. The catalogue of corruption is long, worldwide, when it comes to the defence of fossil fuels.

One of the problems that must be solved, doubtless linked at least in part to corruption, is the question of subsidies. Enormous sums flow to fossil fuels, and far less to clean-energy alternatives. The International Energy Agency tallies in excess of four times more in subsidies for fossil fuels than for renewables: $490 billion compared to $112 billion in 2014. This is true even in the G20 of richer nations, where $71 billion per year went to fossil-fuel subsidies between 2013 and 2015, and $18 billion to renewables.

Kerosene is among the wasteful beneficiaries. One authoritative study, by Evan Mills at the Lawrence Berkeley Lab in California, analyses subsidies for kerosene in the 173 countries where it is used for lighting, cooking, and heating. Kerosene for these purposes cost consumers $43 billion a year in 2013.

That sum does not include $18 billion in direct subsidies by governments. $7 billion of that subsidises kerosene for lighting.

Another study, by Bloomberg New Energy Finance and Lighting Global, tallies $27 billion a year spent by the 1.2 billion people without grid electricity on lighting and phone charging using kerosene, candles, battery torches and other fossil-fuel powered stop-gap means.

To put these sums into perspective, let us calculate the cost of getting solar lighting to every one of the 1.2 billion people currently lacking access to electricity. SolarAid’s cost of operations to deliver a solar light for sale in Africa are a good starting point, for illustrative purposes. Averaged across the four most recent years for which we currently have audited accounts, 2012 – 2015, they amount to $5.5 (£4.2). In our best year, 2013, when we sold more than 600,000 lights, they were $3.6 (£2.8). Let us use that figure for the calculation, since there would be substantial economies of scale in selling millions, not hundreds of thousands. $3.6 is a very conservative assumption for sales at the volumes inherent in passing The Test.

An average of 5.25 people live in each household in Sub-Saharan Africa, and 5.14 in Asia, so let us take 5.2 as the average for the whole developing world. That means the 1.2 billion live in 231 million households, rounding to the nearest whole figure.

The total cost to an organisation like SolarAid of delivering a solar light for sale to each household can then be calculated: 231 million multiplied by $3.6, equals $0.8 billion.

But that’s just the cost of getting the products to where they are needed and we still need to cover the selling of the lights themselves, assuming we are not giving them away, but trying to create micro-enterprises by selling them, SolarAid-style. Assuming that the households buy the solar lights at the lowest available retail price today ($5), the total global cost to consumers would then be 231 million multiplied by $5, which equals $1.2 billion.

That is a hopelessly conservative figure, because high sales volumes would surely drive price down, as we have seen so spectacularly with solar panels.

It would certainly be much less than £1 billion in reality. If so, the 1.2 billion people without grid electricity are being forced to spend more than $26 billion a year by not using solar lights.

Adding the cost of delivery to the sales total gives a maximum cost for providing clean light to each and every one of the 1.2 billion people without grid electricity: $2 billion.

This is 28% of just the subsidies going to kerosene for lighting. The annual subsidies. The vast majority of the solar lights would last at least 3 years. It is a mere 7% of the $27 billion actual global spent each year on nonsolar lighting.

In fact these numbers are conservative to the point of being almost indefensible, other than for illustrative purposes, because the volume economies of scale – both in operational costs and product costs – would be huge, the more that solar lights made their way to the 1.2 billion people. Yingli and other solar light manufacturers fully expect their product costs to fall when volume lifts to millions of solar light sales a year. Long before every home would have at least one solar light, SolarAid would have rendered itself redundant, mission accomplished. Fully commercial companies would long since have taken over the charge.

But these numbers are surely one of the most spectacular examples of how dysfunctional our world can be.

Passing The Test does not require re-engineering the world according to some theoretically perfect model. It merely involves making it a little less dysfunctional.

Jeremy Leggett

Jeremy Leggett is a social entrepreneur and author. He has been an Entrepreneur of the Year at the NewEnergy Awards, a CNN Principal Voice, and is founder and chairman of renewable energy company Solarcentury, and SolarAid. He chairs the financial think tank CarbonTracker, contributes to the Guardian and the Financial Times, and is an Associate Fellow at Oxford University’s Environmental Change Institute.

Tags: Renewable Energy, solar power