The biggest threat to global warming and to greenhouse gases in the future is the unbridled development of the Third World.--Neville Williams, founder, Solar Electric Light Fund

Such a statement is quite bold coming from a man who strives to provide electricity to individuals living in the developing world. However, as bold as his statement is, Neville Williams has never backed down from a challenge.

China's energy-related pollution problems cannot be easily overlooked. They are likely to plague China for years because of the country's great potential for growth in energy use. However, China's success in de-coupling energy consumption and economic growth in the 1980s is cause for hope. Continued efforts to improve energy efficiency, use more renewable energy, and incorporate environmental factors into energy planning can help put China on a more sustainable energy path.1 --Congressional Testimony

PROBLEM ONE--CHINA'S ENERGY SHORTAGE:

Despite economic growth in China during the 1980s of approximately 10 to 14 percent annually, energy growth was significantly lower, at 4 to 6 percent. The gap between energy supply and energy demand was growing at an astronomical pace, and by the year 2000, sources predicted that there could be an energy shortage as high as 700 megatons (coal equivalent).2 China's citizens were in desperate need of power, as some two hundred million of them remained without electricity. (See Appendix A)

One source attributed the growing gap between China's energy supply and energy demand to four key factors:3

1. Despite China's large population and energy production, China had a very low per capita energy use, only 40 percent of the world average. Augmented economic growth would lead to an increase in income, of both urban and rural citizens. More income would increase power demand and therefore place additional strains on current energy sources.

2. China's energy consumption rate per US$ of GNP was four times that of Japan and five times that of France. In other words, it cost China four times the amount of money for electricity than Japan, and five times that of France.

3. Investors infrequently funded the construction of power plants, opting for alternative projects which have shorter returns on investment.

4. Fossil fuel reserves were not evenly distributed. This poor distribution of resources caused coal prices in Western Tibet to be 10 times higher than normal. Such high costs inevitably retarded economic growth.

PROBLEM TWO-ENVIRONMENTAL PROBLEMS:

With the rapid exploitation and high dependency of coal productivity, China is damaging not only the physical environment, but China is also creating health problems for Chinese people, and people in surrounding countries--Conclusion of Study Done By T.E.D., an environmental think-tank at the American University.

Since approximately 70 percent of China's energy consumption comes from the burning of coal, it is not surprising that China's energy use has posed large-scale environmental problems to the entire world and severe health risks to Chinese citizens. Increased emissions of sulfur dioxide (SO2) from the burning of fossil fuel have resulted in large amounts of air pollution. (See Appendix A) This pollution has been far from negligible. In 1988, chronic obstructive pulmonary disease, an ailment caused primarily by SO2 (and cigarette smoking) accounted for 26 percent of all deaths in China. Additionally, from 1988 to 1994, lung cancer deaths in China grew 18.5 percent.

Coal burning has also drastically increased carbon dioxide (CO2) emissions, which has subsequently exacerbated global warming. Besides global warming, acid rain has been linked to fossil fuel burning in China, the effects of which are easily noticed in China's urban areas:

When rain falls in metropolis cities in China, the pollution is clearly visible. Soot coats the pavement turning it into slippery muck, and turns the leaves a black-brown color . . . [Coal burning] has led to a rise in cancer and lung disease.4

Even with such obvious health and environmental risks, little has been done to improve China's energy problems. Plans for the construction of a new 2,640 mega-watt coal burning plant are underway. One report concludes: "Despite proof of toxic air pollutants and acid rain, China is making minimal efforts in converting coal burning plants to more environmentally safe methods."5

Since everyone relies on scarce natural resources, China's environmental problems inevitably effect the entire World. While past environmental damage cannot be reversed, future development can avoid the global environmental problems of previous electrification efforts. Conventional grid extensions of fossil fuel power to the approximately two hundred million non-electrified individuals would only add to the growing number of environmental problems and health risks. The obvious question arises: how do the remaining individuals in China without access to electricity get a reliable power source without doing additional damage to the planet?

Enter Neville Williams, an ambitious scientist and scholar whose previous job experiences have included the promotion of photovoltaic technologies for the Carter Administration. Having traveled to over 50 developing countries, including China, Mr. Williams noticed how introducing electricity to developing nations drastically changed lives. However, at the same time, he was cognizant of how previous conventional electrification efforts have done irreversible environmental damage to the Earth's scarce and precious resources. Nevertheless, he was more than eager to tackle the traditionally contra-objectives of electrification and environmental preservation.

SEEKING SOLUTIONS:

"If the Third World develops in the way we did the world would be a wreck . . . because 70 to 80 percent of the people in developing countries don't even have electricity.6 --Neville Williams

Since Mr. Williams thinks that individuals living in developing nations "don't care about the environment," and only "care about getting electricity any way they can," he needed to discover a solution to provide them with power as quickly as possible. To that end, in 1990 he founded the Solar Electric Light Fund (SELF), a non-profit, Washington, D.C. based company. Mr. Williams formed SELF with the underlying philosophy that all individuals are entitled to electricity, but at the same time, the entire planet is entitled to a safe environment. (See Appendix B)

Relying on his experiences under the Carter administration, Mr. Williams turned to photovoltaics as a potential solution to China's and ultimately the World's energy crisis. The task at hand for Mr. Williams was to be the first person to reach the non-electrified individuals in China because, as he notes "the first person to show up with electricity wins!"7 Mr. Williams thought that if he did not electrify these people first with an environmentally safe power supply, another group would reach them using conventional fossil fuel power, thereby augmenting a rapidly growing environmental disaster.

THE MAJOR OBSTACLE:

You've got to give these people a way to afford 20 years of technology, which is what a PV panel gives them . . . But the cost . . . $500 to $600, is generally what these people make in a year.8 --Neville Williams

The major obstacle that Mr. Williams would ultimately need to hurdle was financing the project. "There isn't enough money in the world to give this stuff away," he declares. Moreover, Mr. Williams' philosophy was not to provide free electricity to individuals. With ownership comes a sense of personal pride and people in the developing world need such a pride, he argued. Additionally, ownership of their own power source should encourage individuals to conserve energy. Such a philosophy is easily seen in an explication of the "SELF" acronym. (See Appendix B)

THE MAGIACHA PROJECT IN GANSU, CHINA:

We only had kerosene lamps, which gave us little light, like the stars do. It's so difficult for us to do any work in the evening time. The most dangerous thing was when we got up in the morning, our noses and mouths were filled with black ashes . . . [Kerosene makes us feel] dizzy in the head and dim of sight --A Resident of Magiacha

Magiacha, a small village of about 200 families located in Tongwei County in Gansu, China, is situated about 1200 miles west of Beijing. In 1992, Magiacha was not connected to the current power grid and subsequently all 850 individuals living in the village did not have access to electric power. The village leaders performed a cost analysis of extending the current power grid to reach the village, but the analysis concluded that the village could not afford an energy grid extension.9

Magiacha represented a specific target in China where Mr. Williams could attempt his mission--the village wanted some form of electricity and grid extension was not economically feasible. Opportunity knocked for Mr. Williams; he had a village that he could electrify with PV if he could demonstrate the affordability of the new technology. Nevertheless, creating an innovative solution to fund such a large-scale project would be the ultimate test of Mr. Williams' perseverance.

FUNDING AN AMBITIOUS ENDEAVOR:

No market structure yet exists to handle the required capital flows [for solar technology] . . . the emerging [solar] industry . . . has been plagued by poor access to capital. Only about 5 percent of rural households in developing countries have the ability to purchase a system outright with cash.--Findings from Pocantico Paper Number Two.

Since SELF had both limited financial resources and a corporate philosophy that centered on individual responsibility, SELF would not provide free electricity. While the PV units that Mr. Williams chose would provide only a modest supply of power, their cost would nevertheless place severe economic burdens on the villagers as the cost of such units were equivalent to the villagers' annual incomes. (See Appendix C)

At the same time that he was attempting to electrify the village, Mr. Williams also wanted to stimulate the development of an entire, self-sustaining solar industry in China. Magiacha was only a beginning for him; eventually, he hoped, no outside assistance would be needed to electrify the remaining areas of China. Such an ambitious project required that SELF "sow solar seeds" or facilitate initial purchases of PV units to begin the process of forming an independent solar market.

POSSIBLE SOLUTIONS TO FINANCING PV TECHNOLOGY IN MAGIACHA WHILE STIMULATING PRIVATE MARKET DEVELOPMENT:

Using the philosophical and ideological beliefs of Mr. Williams and SELF, which of the following possible solutions to China's energy crisis would be most appropriate:

Possible Solution A:

One possibility would be to secure funding from the Chinese government which could be used to partially subsidize the PV units. Since the Chinese government already was subsidizing current grid extensions, it easily could direct some financial resources to purchasing PV units. Thus, instead of the Chinese government funding electrification projects that produce environmental problems, it could finance environmentally safe projects, that at the same time, would produce equivalent electrification results. In fact, since SELF asserted that any extension of existing electric grid structures would require copper wiring at the cost of approximately $10,000/mile,10 subsidizing PV technology would also be cheaper. While an extension of the electric power grid would provide a greater power source, SELF argued that PV units would adequately meet the power demands of the villagers--individuals never before exposed to electric power. This solution also would allow the Chinese government to take responsibility for its own environmental problems by redirecting financial resources from environmentally devastating projects to environmentally friendly ones. As PV units spread throughout the country, SELF would eventually leave and private firms would enter the PV market, realizing a viable business endeavor and thus helping to facilitate electrification.

Possible Solution B:

Many organizations throughout the world spend millions of dollars to preserve the environment and promote humanity. SELF could first argue that all individuals are entitled to a decent standing of living, and that such a standard requires electric power. Thus, it would only be fair that Magiacha receive electricity. In fact, China had already electrified 85 percent of its citizens, mostly through electric grid extensions and out of fairness, some method of electrifying the rest of the country should be found. However, while most of China's electricity comes from fossil fuel burning, as an alternative, SELF could push for private sector charitable funding of PV technology to preserve the environment. This would enable the village to be electrified in an environmentally safe manner and would take advantage of the millions of dollars donated to environmental and humanitarian organizations. SELF would simply act as a catalyst in securing funds to individuals willing to purchase PV units. The funding would cover only down payments, ensuring that the villagers would pay for their electricity on a monthly basis and subsequently allowing the villagers to take individual responsibility for their own electricity.

As more individuals purchased solar units, for profit corporations would also enter the solar market and electrification would proceed with two unique routes at twice the speed: Subsidized purchases via SELF organized funding and privatized market purchases.

Possible Solution C:

After initially securing working capital from environmental groups and governments, SELF could establish a "revolving credit fund" to provide low interest loans to the villagers to purchase individual PV units. SELF would collect a down payment on the units, followed by monthly installments, thereby having the villagers pay for the entire cost of the unit. Payments would then be used to finance additional loans to other individuals wishing to acquire PV units. In addition to providing more funding for other loans, the revolving credit fund also would promote borrowers to make timely, and sometimes early payments to allow others access to loans. The fund would grow as more people made their payments and subsequently private solar markets would eventually develop. As a market began to form, SELF would exit China, thereby allowing the forces of the market to electrify China.

Appendix A: China's Environmental Problems

http://gurukul.ucc.american.edu/ted/CHINCOAL.HTML

Appendix B: SELF's Corporate Philosophy

Mission Statement-Solar Electric Light Fund

The Solar Electric Light Fund, or SELF (for energy SELF-sufficiency and SELF reliance) was founded in 1990 to address the issue of how 70 percent of the people in the Third World are going to get electricity without doing additional damage to the planet. Two billion people attempting to emerge from centuries of darkness into an electrically lighted future will be one of the critical issues of the 21st century. Generating solar electricity at the individual household level is the only known sustainable and already proven means of meeting the electric power needs of the most widely dispersed rural population of the developing world.

Source: "Solar Electric Light Fund Photovoltaic Rural Electrification," Official World Wide Web Site--Solar Electric Light Fund, Http://www.crest.org/renewables/self/newbroch.html, 1-2.

Explication of the "SELF" Acronym

Use                Meaning                                                                   
SELF-help          Demonstrate benefits of clean, decentralized, renewable energy            
SELF-reliance      Families purchase their own solar power systems                           
SELF-determinatio  Ability to allow children to read after sundown and have access to        
n                  electronic information                                                    
SELF-interest      Individual households are responsible for their own units, and ensure     
                   its efficient use                                                         
SELF-sufficiency   Become less dependent on oil; rural people become less dependent on       
                   urban grids                                                               
SELF-sustaining    Economic development as solar enterprises, employment and service         
                   businesses grow                                                           
SELF-improvement   People in agricultural areas raise their living standards in current      
                   rural locations                                                           

Appendix C: Cost of Photovoltaics

Average Costs for PV Units

Power    Unit Cost   Light          Capability                                       
(W)      ($)         Hours/Day                                                       
                                                                                     
60        600.00     15             About Six Lights, Some TV and Radio Most of       
                                    The Night                                         
20        300.00     6              About Two Lights and a Radio                     

Approximate Cost and Capacity of PV Cells

                                        1981      1992      
Cost (Per Peak Watt of PV Cells)         $         $        
                                        14.00     6.00      
Capacity (MW)                           5         55        

Source: "Rural Development," Energy Economist, 1993 Apr.

2 Yingjing Nan and Anhua Wang, Alternative Energy Options with Reference to China, p. 2. (Use Chart)

3 Ibid.

4 "China Coal and Pollution," http://gurukul.ucc.american.edu/ted/CHINCOAL.HTML," 3.

5 Ibid. at 2

6 Neville Williams quoted in "Interview: `SELF'--Working to Electrify the Third World," Greenwire, 1992 Feb. 4.

7 Ibid.

8 Ibid.

9 Neville Williams, The MaGiacha Village PV Pilot Project: An Illuminating Success.

10 "Solar Electric Light Fund Photovoltaic Rural Electrification," Official World Wide Web Site--Solar Electric Light Fund, Http://www.crest.org/renewables/self/newbroch.html.