The Challenge to Keep the World's Smartphones Charging
Smartphones have been adopted by the billions worldwide in no small part because they are wireless. But they're not entirely so. They still use wires to draw electricity -- whether from a coal-fired power plant hundreds of miles away or a rooftop solar panel.
While delivering the next billion smartphones to first-time customers is relatively easy, finding ways to charge them is not, because many people in developing countries lack reliable access to electricity. Solving this problem will challenge the rich world’s assumptions about what services should be provided by which kinds of network companies.
In most countries where people lack reliable access to electricity, they have better access to a 3G or better cellular network. This means the smartphone -- and its business, social and entertainment uses -- will create greater demand for electricity.
That seems like an opportunity for power utilities to extend services, whether through a traditional network or a micro-grid that meets the needs of only a few hundred or few thousand consumers. But it might not be.
One reason is that, in the past 20 years, all the other things (other than smartphones) that the next billion consumers demand have become much more energy-efficient. For example, a 19-inch television targeted to the off-grid market, which is essentially a tablet screen with a TV receiver, uses only 10 kilowatt-hours of electricity per year -- compared with 67 for a traditional cathode-ray-tube TV. A full suite of basic electric devices (five 60-watt lightbulbs, one TV, a radio, a ceiling fan and a refrigerator) uses less than one-third the daily electricity than it did two decades ago.
This has made a significant dent in the electricity demand that can be expected from providing service to 1.2 billion people. Meeting their basic needs in the 1990s would have required about as much power as South Korea generates in a year. Now, it’s about as much as Malaysia makes. Take out refrigeration, and it’s barely more than the electricity generated by Serbia, a country of 7 million people.
For a traditional power utility, such low demand presents a challenge: Wires cost the same regardless of how much power runs through them, and when the throughput is low, it takes much longer to pay back the investment.
How, then, to meet the demand for electricity to power smartphones and other new devices?
One way is to avoid traditional wires altogether and build mini-grids. This is something cellular network companies have already learned to do on their own. And since they also have established service and billing relationships with their customers, they're in a good position to expand their services.
Another strategy is to give traditional power utilities something else to sell, to make the investment more worthwhile. Electric cooking is one option. People already cook, so the demand is there. Electric cooking produces much less indoor air pollution than cooking on charcoal or wood does, and its cost should vary much less than that of either of those fuels. That said, electric stoves are not as exciting as new phones or TVs are, and might not pull in as much demand.
Agricultural appliances could also bring in new demand for power. Irrigation pumps, processing equipment, and the refrigeration needed to preserve food for distribution and sale require significant amounts of power for short periods, and would benefit from the economies of scale that a large electricity network can provide. However, even those applications are already being met in a distributed fashion.
Powering smartphones for the next billion people who use them will be a big challenge, but also an opportunity to build networks, and bundle services, in new ways.
Bloomberg Professional Service subscribers can read Bloomberg New Energy Finance’s research note “Charging the Next Billion Smartphones” here.
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