In the last five years, mobile money has transformed how people live and work in Africa. According to one estimate, 36% of Kenya’s GDP now flows through M-Pesa, the most popular mobile payment system on the continent, with similar growth across other countries like Tanzania and South Africa. But with 85% of Africans still lacking access to power, what comes next after mobile money? The next big thing in Africa may be decentralized energy markets. A growing number of companies are working to harness locally generated solar power and sell it directly to consumers using mobile phone apps.
What is a Decentralized Energy Market?
A decentralized energy market is an energy market that functions independently of existing national or regional grids. Essentially, it’s a spot market for electricity rather than a central grid.
How Does It Work?
It’s very simple. For example, let’s say you want to watch a movie at home. You head to your computer, pick a film from an online database of movies, and download it using software. The film is encrypted for your personal use only. After paying for it (either with cryptocurrency or through a credit card), you are then free to share it with others or keep it all to yourself.
Why DERM Works Best in Sub-Saharan Africa
One of DERM’s biggest advantages is that it can enable small and medium-sized enterprises to start generating their own power, opening up opportunities for creating jobs, particularly in rural areas. A 2014 report by McKinsey & Company found that off-grid solar has a total business potential worth $55 billion to $60 billion, and could provide electricity to 400 million people by 2030.
How Can You Participate?
Connecting to a grid, you’re limited by your utility company. For most of us, we never have access to more than 100 kilowatts or so of electricity at any one time. The big problem with large, centralized power generation and distribution is that it costs a lot of money to wire everyone up, and small grids can’t necessarily handle entire cities.
Examples from Kenya, South Africa, and Zimbabwe
Kenya, South Africa, and Zimbabwe are each home to a burgeoning decentralized energy market. A number of off-grid technology companies have set up shop in these countries and built business models that allow them to serve millions of customers, many of whom are rural farmers. The success stories include M-Kopa Solar (Kenya), PayGo Energy (South Africa), and Wecharge (Zimbabwe). These companies give households access to clean, affordable power from solar panels and small wind turbines. But then we are seeing next-generation companies like Melanin Solar that have elevated the decentralized energy concept further by incentivizing renewable energy adoption through trustless that are powered by the blockchain.