Understanding the economics behind off-grid lighting products for small businesses in Kenya

For illumination, many off-grid communities use lighting products such as candles, kerosene-fueled lamps, or dry cell battery-powered lights. Unfortunately, fuel-based and dry cell powered lighting can be expensive, a health hazard and often provides poor quality light. Manufacturers are currently designing rechargeable lighting products using LED technology as an alternative option for lower-income people. I developed a model to analyze the initial and life cycle costs of 19 off-grid lighting products. With the results, I make design recommendations for manufacturers. The analysis is based on product prices, laboratory measurements of product performance, and data about lighting cost and use patterns for small, off-grid businesses in Kenya. The field data were collected by Arne Jacobson, Maina Mumbi, Peter Johnstone and me during 2008. My results indicate that the economics of off-grid lighting using electric lamps depends on the charging mode. Products that are charged on a fee basis using grid electricity generally have a lower initial cost but a higher life cycle cost than solar-charged products. For grid-charged products, I found that increasing battery size and reducing power consumption strongly influence life cycle costs. For solar-charged products, I found that reducing module size proportionally to a reduction in power consumption influences life cycle costs moderately. I also found that it is best to design grid-charged products with an optional solar component and high-brightness LEDs are the preferred lamp type if available at a reasonable price. Potential design improvements may increase capital costs; manufacturers should consider customers' willingness-to-pay when making design changes.