ABSTRACT

India represents perhaps the largest solar market in the world, with a population of roughly 900 million, of which 40% have no electricity. The hypothesis tested in this study was that in rural India in a market not subsidized by the government, a solar service company with available loans from local banks and cooperatives and with sales, installation, and maintenance personnel in the villages can be successful in introducing photovoltaic systems to provide basic amenities such as lighting and water pumping to the improvement of the quality of life, public health, and the environment. SELCO is a solar energy service company operating in Southern India since 1995 and has installed over 7500 solar home lighting systems to date. The initial success of SELCO lends considerable evidence to the acceptance of the hypothesis. This successful SELCO project serves as a model for other similar places in the world.

1. INTRODUCTION

India represents perhaps the largest solar electric market in the world, with a population of roughly 900 million, of which 40% have no electricity. However, a number of barriers exist to bring electricity in an environmentally and economically sustainable way with solar systems:

1.1. Lack of Awareness of the Solar PV Technology

The main use of solar energy in general has been confined to the process of drying, in many parts of rural India. Coffee drying in the back yards of the coffee estates as well as drying of clothes on the rooftops of houses have been some of the common primary uses of solar energy. Over the last four or five years solar water heating technology has been gaining a lot of importance, especially in the urban areas of India. Ever escalating electricity prices have driven lots of urban householders to install solar water heaters on their rooftops. Most of the newly built urban houses are having provisions for installing solar water heaters; thus incorporating at least some of the cost of the solar water heating into the mortgage of the house.

On the other hand, the usage of solar energy for lighting has not reached the same levels of popularity as that of solar water heating systems. One of the primary reasons has been that the use of solar PV is more suited to the rural areas, where the grid is either absent or very unreliable, if present, in the many villages.

Information dissipation and propagation of most new technologies have always been confined to the urban areas of the developing countries (but not PV!). ‘Seeing is believing’; rural folks have to first see the working of solar PV systems in order to realize its usefulness. For them to realize the worth of PV systems, ‘someone’ has to demonstrate the technology to them; and that ‘someone’ will be one of the primary links in the diffusion of the technology in the targeted areas of the country.

1.2. Lack of End-User Financing

For years policy makers, technologists, implementers, strategists alike have said that solar photovoltaics technology is expensive. On the other hand, in the villages of developing countries, solar lighting is also valued in terms of reliability and quality of light. Solar- powered lighting is considered reliable when compared to the inefficient grid electricity. As far as the quality is concerned, solar lights definitely provide superior lighting than kerosene lamps; the other main source of lighting. The above mentioned factors are some of the main reasons in motivating the rural families into buying expensive solar lighting systems. Decision-making might not always have been on purely economic terms but buying the solar system will definitely be requiring financial backing. Many rural families find it difficult to buy the system up-front.

Fig. 1: Willingness to buy a PV system with relation to financing period

(Source: Survey by H. Harish Hande in 1995 March in Village Puttur and Kundapur, Karnataka, India)

From the above figure, we can observe that breaking the first cost barrier will lead to an increased pace in the diffusion of solar PV technology. In other words, breaking of first cost barriers means staggered payments, i.e. financing. In India, rural financing is not a new concept. India boasts of a very sound rural financing sector. The multi-layer financing institutions such as commercial banks, regional rural banks, co-operative banks and farmers co-operative societies have reached even the remotest parts of the country. The rural financial institutions have, from the past 50 years, vastly contributed to the development of rural infrastructure. Surprisingly not until the advent of SELCO, any of the rural banks in India had ventured into financing of solar photovoltaic systems. The primary reasons were:

i. Risk investment into an ‘unknown’ technology: None of the rural banks were aware of the technology itself. Lack of awareness dissuaded the local bank management to risk their own capital into financing the potential end-users of solar PV.

ii. Solar photovoltaics not related to income generation: Rural banks have over the decades financed projects directly related to income generation. The logic being that increased income would lead to the timely loan payments by the borrowers. Lighting using solar photovoltaics did not relate to a direct increase in income. Thus the bankers found it difficult to justify the sanctioning of loans, ones which could not benefit the end-user in monetary terms.

iii. Absence of solar service centers: Proper functioning of systems lead to proper payments to the banks by the borrowers. Malfunctioning of the systems will result in larger default rates. Absence of solar service centers in the rural areas has prompted the bankers not to sanctions solar loans; as they could themselves not guarantee the regular maintenance of the solar lighting systems.

iv. High Cost of Financing: The registered farmers co-operative societies or cooperative banks do most of the financing at the rural levels. These societies are at the lowest rung of the financing ladder. Thus, the cost of borrowing is the highest at the bottom level. Farmers are ready to take loans at higher interest rates provided there is direct relation to the income yield. Solar PV is bought for convenience and higher quality of life but not always for increased economic yields. High cost of installation compounded with relatively high interest rates adds burden on the end-user.

In summary, it could be concluded that lack of attractive ‘door-step’ financing has been a deterrent for the dissemination of solar lighting systems in the remote parts of India and other developing nations.

1.3. Absence of Working Capital for Start-Up Entrepreneurs

Solar lighting systems account for high cost of inventory. A good amount of working capital is required by any entrepreneur to do a ‘comfortable’ level of business to sustain. To hire a technician for a year will cost the entrepreneur Rs 15,000 approximately, which is equivalent to the cost of 4 lights home lighting system (30). Some of the crucial bottlenecks faced by the entrepreneur in obtaining working capital are:

i. Difficulty in getting working capital loans from bank: Relative newness of solar business and its technology has made the banks hesitant in providing working capital loans. The banks have no prior experience in providing loans for solar PV business, thus have doubts about the sustainability of the venture itself.

ii. Absence of soft loans for solar photovoltaic startup business: Government and semi-government institutions have huge yearly budgets to provide soft interest working capital loans for entrepreneurs in fields like agriculture, electronics, machinery tools, etc. Sadly, this facility does not extend into the field of solar photovoltaics. The lack of such incentives lures away potential solar entrepreneurs to other fields where the process of getting working capital loans are much easier and less time consuming.

iii. Lack of credit facilities from module manufacturers: Module manufacturers and other solar system integrators are mainly located in the urban areas of the country. Their focus is more towards the government sector rather than the far-flung remote regions in the rural areas of the country. The lack of interest to develop the rural market has led to lack of attention towards the rural clients as well as the rural entrepreneurs. Thus the apathy to rural market by the manufacturers has led to poor credit facilities to the young rural businessmen.

iv. Lack of capital to create innovative financing mechanisms: Normal consumer items such as refrigerators, color televisions, grinders etc are being sold easily in the rural markets because of the attractive financing schemes offered by the consumer product dealers. These financial mechanisms have been formulated after feeling for the pulse of the local economy and the needs of the local people. Therefore, money for creating innovative schemes is required in the case of solar photovoltaics. Absence of consumer financing has created a handicap for solar PV business in general and entrepreneurs in particular.

1.4. Absence of after sales service network

Solar photovoltaic systems have often been labeled as maintenance free systems or minimal maintenance type systems. Little known facts about the solar PV systems are that small faults like loose wires, decrease in battery acid levels, dust on the solar modules, etc. will prevent the smooth working of the systems. In some cases the minor faults may even stop the functioning of the system leading to a case of typical ‘solar’ failure. As reported frequently, the government implemented PV projects across the country have had the label “not working” attached to them. Governments, manufacturers and system integrators without considering the maintenance part of the systems have implemented ‘solar PV’ projects. The projects start at the design level and end on the day the systems are installed. Soon enough small faults like the ones mentioned before lead to the failure in the functioning of the system. Small such failures create a negative name for the technology itself. A presence of a solar service network could have rectified the fault and kept the name of the technology intact; especially when the technology is in its nascent stage.

1.5. Subsidy driven government PV programs

The government of India through its Ministry of Non-Conventional Energy sources has implemented various PV projects, both large and small, across the length and breadth of the country. Most of the systems have either been gifted or supplied under heavily subsidized programs. They are systems that have been “granted” by governments precisely to motivate people to “think” in terms of renewable energy. These modes of “popularization” of solar PV have, unfortunately, been counter productive for the commercialization process. End-users, because of the subsidies, have not appreciated the actual worth of the systems, thus leading to the creation of artificial prices rather than market driven costs. Just as in the case of normal grid electricity, which is subsidized, there is level of expectation for subsidies on similar lines for renewable sources of energy.

The lessons learnt from such experiences of the government driven projects are:

i. Systems installed without the financial participation of the users will lead to lack of sense of ownership. This in turn will lead to the non-functioning of the solar system thus denting the reputation of the technology.

ii. Subsidies have distorted the market and have created a pseudo pricing in the market, which will have a negative impact on the commercialization of the technology.

1.6. Presence of Inferior Technology

Government programs have indirectly led to the mushrooming of small time electronic manufacturers in the rural areas. They manufacture charge controllers and luminaries for the PV systems supplied by the government. The balance of systems is poorly designed without much thought given to the sizing of the system. There are no standard specifications, in addition to the absence of quality checks in the rural areas to review the authenticity of these inferior quality balance-of-system components. Thus regular failure of the electronics leads to another form of ‘solar’ failure. These failures get embedded in the minds of the potential end-users as a failure of the technology itself; thus pushing the diffusion of the technology a couple of steps backwards.

As seen from above, the barriers are not ones that cannot be overcome. For a technology like solar PV to attain economic sustainability, adequate credit facilities coupled with decentralized service operations with good technical personnel are needed. The presence of a large market, as described in the previous chapter, can be an attractive incentive for “someone” to overcome the barriers to prove the economic viability of a solar PV venture. This is what has been done precisely by SELCO: a model to effectively penetrate the defined market in a sustainable way and to arrive at realistic methods that can effectively cross the pre-defined barriers.

2. MODEL STRUCTURE

The SELCO model aims to promote, develop, and facilitate solar rural electrification in India. To achieve its mission, the model has to overcome institutional barriers and generate changes in policies by government departments and financial houses, finally resulting in the understanding, acceptance and application of solar power.

The objective of this study is, therefore, to design and implement a business structure model to achieve the above goals. In short, the aim is to develop a method to deliver electricity to rural India in an environmentally, economically, and politically sustainable manner.

SELCO sells and maintains photovoltaic systems of various sizes for lighting, water pumping, and appliances. It does not engage in leasing. To accomplish its mission, SELCO works with commercial, retail, and rural development banks with large rural branch networks to stimulate loans to SELCO's customers based on a standard set of attractive financing terms. SELCO through its model has convinced the policy makers that the only way to increase rural families' access to consumer financing for solar home lighting systems was through the existing financial network available in the country. Private investment, loans, and conditional grants totaling over US$ 550,000 have provided working capital to date.

There are two key aspects of the SELCO model: rural door step financing and door step sales and service. The company and management are structured to reflect these key aspects.

2.1 Administrative Setup and Operations

The RESCO model for India can be an example for future RESCO-type operations in other developing countries. RESCO is divided into three administrative levels: At the village levels, there are “area motivators” to service and market solar home lighting systems (SHS). Area motivators work through a Solar Service Center (SSC). Each SSC will coordinate the local marketing, installation, and quality control of SHSs and provide training to area motivators. Each SSC coordinates with the Head Quarters (HQ), which in turn will be responsible for all SHS materials, equipment procurement, SSC operating procedure, component R&D, quality control, management and technical training and overall managerial control. Below are descriptions of the operational model:

2.1.1 The Motivator

The motivator is a village-level commissioned sales-agent and can also be a service technician. Motivators are responsible for marketing and SSC demonstrations, signing up potential customers, coordinating with local banks to arrange consumer financing, SHS installation coordination with local SSC, and in some cases, performing after-sales service on all locally installed solar home lighting systems

In some instances, RESCO motivators may only be commissioned sales agents, with service provided by technicians based in the nearest SSC. In a given SSC territory, there may be a combination of motivators, which provide service, and those serving as simply sales-agents of RESCO. Motivators can work in one of the following ways:

1. Sales, financing, and servicing

2. Sales and servicing

3. Sales and financing

4. Sales only

2.1.2 Selection and Training of Motivators

RESCO, before setting up an establishment in an area, will select a village-level youth or a group of youths to serve as its local representative. The person or the group will be locally well respected, intelligent, and reliable. Motivators could be gathered through local advertising, recommendations from village leaders, or other sources.

Upon selection of a potential Motivator or a group of motivators, he or she will be given the opportunity to work as an assistant in the nearest SSC. He or she shall assist in installing SHS and working with existing motivators to service SHSs. At the end of a week or two, they will be evaluated on their conversational and technical ability. Those selected will be given the opportunity to take a three-week class at a local SSC on the basics of SHS, installation techniques, SHS servicing requirements and troubleshooting, marketing strategies and area bank procedures for SHS finance. The training will be a combination of class-work and fieldwork, with an exam at its conclusion. Upon completion of the training, each prospective motivator having passed the exam will be offered a post with RESCO in his or her village.

2.1.3 Local Marketing

Each RESCO motivator will be provided with a set of maintenance tools and a demo two light solar home system through the local bank, underwritten by RESCO. The motivator will be also given marketing materials in the local language. He or she will canvass in his/her village, inviting neighbors and friends over to their homes in the evening to see how a SHS can change a family’s life, by adding several hours of lighting at night. Initial demonstrations will be completed with the guidance of the SSC Manager. Customers will know that the Motivator is personally using a SHS, and will be available in their village in case of any problems. Interested customers will be shown how to apply for bank financing, or could be signed directly for a cash sale. Motivators will receive a commission for each sale made. During the initial year, a portion of the commission will be used to pay off the demo 2-light system, and maintenance toolkit.

2.1.4 Installation

Upon signing a solar PV customer, the Motivator will contact the nearest SSC to arrange for installation. The SSC will then send the materials with a technician, usually with a Jeep. The technician will bring all necessary tools, installation materials, and an assistant technician to help with installation.

2.1.5 After-Sales Service

The Motivator could perform the after-sales service. He or she will be given a small inventory of fuses, bulbs, as well as 1-2-charge controllers and other potentially failing components. In case of any customer problem, the technician will be available to provide any service. Customers will be informed about their SHS, but told not to try any repairs or adjustments in their system. Any customer tampering with equipment will void any product and service warranty. Motivator will perform periodic servicing such as panel cleaning, battery maintenance, and system inspection. Reports on services provided will then be given to the nearest RESCO SSC for documentation.

2.1.6 Monthly Meeting

Each month, Motivators will meet at the local SSC to discuss performance, problems encountered, customer requests, and other issues. Performance-based incentives, contests, and prizes based on sales and quality achievement will be presented to high performers. Monthly commission payments and service-contract fees will be given to the motivators at this time.

2.1.7 Potential for Advancement

As well as earning a living wage, each village technician will have the opportunity to become a full-time RESCO technician. After a number of years, interested village technicians will have the ability to apply for Technician training at the central HQ office. Based on performance and technical and managerial aptitude, Motivators could receive further training and join the staff of the SSC.

2.2 Solar Service Center (SSC)

The Solar Service Center is the heart of the RESCO model. It is responsible for providing all Motivator training and coordination, scheduling installations, maintaining inventory, and promoting local marketing.

Following are the required staff for the SSC.

2.2.1 SSC Manager

The Manager of the SSC is responsible for overall management of the installations, quality control, personnel, and other issues. He or she will follow specific RESCO policy on SHS installation and servicing quality, SHS pricing, personnel, supply procurement, office setup and procedures, and other issues. The SSC Development Director at the Headquarters will evaluate SSC Managers to ensure the proper functioning of the office. The SSC manager could be paid a set salary, or paid on commission of sales-volume for the center.

2.2.2 Controller

The Financial Officer (FO) will be responsible for maintaining necessary inventory, ordering supplies from headquarters, and scheduling installation teams in the field. He or she will work with the Manager and Technicians to ensure that there was suitable inventory to provide for coming installations. The FO will also coordinate with the Technicians to schedule installations and quality control inspections. Every two weeks, the FO will send to headquarters a set of accounts for review by the Financial Director (DF), and an order for additional systems and materials to the Operations Director (DO).

2.2.3 Chief Technicians

Chief technicians are responsible for the installation and quality of each installation in a particular area. Each Chief technician should undergo extensive training in installation techniques, troubleshooting, and TQM. They are each given one-supply Jeep and are responsible for the scheduling and quality of installations. As transportation to installation sites is often difficult, several installations in a given area may be done simultaneously over a number of days, with chief technicians shuttling between sites to drop off equipment and assistant technicians, and checking on installation quality. Each chief technician may have one to five assistant technicians.

2.2.4 Assistant Technicians

Assistant Technicians are responsible for the installation of SHS. Each Asst. Tech will have training in installation techniques and will work for the Technicians to provide installation labor. During a week of installations, an Asst. Technician will be dropped off at the installation site with the Motivator for the particular village. They will be given all installation materials and tools necessary for the installation. The installation technician and Motivator work together to install a solar home lighting system. After a given period, the Technician will return with the Jeep to inspect the installation, and offer his or her approval.

2.2.5 Motivator Coordinator

The Motivator Coordinator will be responsible for the selection, training, and monitoring of all Motivators for the SSC service territory. The MC will be the liaison to the Motivators, and will preside over periodic Motivator meetings, and design incentive packages and sales strategies. Site visits to potential villages to meet with perspective motivators will also be handled. In a smaller SSC, the Manager could handle this position.

2.2.6 Headquarters Office

The RESCO Headquarters office will be responsible for the overall management of RESCO. It will set up all SSCs to RESCO specifications and train the administrative staff in RESCO procedure. It will handle all supply procurement, Technician training and quality control. RESCO HQ will be the liaison to all component and installation material suppliers, and will provide for all conveyance to the SSCs. It will provide all accounting and managerial oversight.

The Headquarters office will serve as the administrative center, as well as supply inventory-holding center. These may be sighted separately or the two may be together. The administrative staff to the HQ will be as follows:

2.2.7 Chief Manager

The Chief manager will be responsible for the overall management of the Service Company. He will oversee the running of the operations.

2.2.8 Operations Manager

The Operations Manager will be responsible for the purchase and delivery of all installation materials and components to the SSCs for installation. The Operations Manager will divide time among the office, the warehouse, and visiting suppliers. It is important that this person have experience with shipping, purchasing, and quality control management.

2.2.9 Financial Manager

This person will be responsible for RESCO accounting, and preparation of materials to satisfy all internal and external auditing requirements. Accountants under control of the FD will centralize the accounts for all SSCs, and chart the sales, expenses, and profit margin for each SSC. Furthermore, the FD will help the strategic planning of operations and investments.

2.2.10 SSC Manager

The Demand Draft (DD) will be responsible for directing the opening of additional SSCs, as well as monitoring existing SSCs. He or she will set up each SSC to RESCO specifications in conjunction with the SSC Manager. After startup, the DD will monitor the SSC Managers performance through accounting requirements of the SSC, as well as site visits to the SSCs.

Financing has been obtained through more traditional banks and also through farmers’ cooperatives. Loan repayments are usually the traditional ones, but sometimes creative methods have to be devised to reach those with less cash to invest. For example, through one church, families pay for the solar systems with baskets that they weave at night with the solar lights.

This company structure has the following unique features:

1. Grassroots Level Approach: Most of SELCO’s operations are in the rural areas of India. The policies of the organization and thereafter the decisions taken are dependent on the approaches taken at the field level. All the solar service centers are located in the rural areas and employs local youths from the villages: a grassroots level approach that has inculcated a level of trust among the villagers. They consider SELCO as their own. The villagers have developed a sense of ownership for the company.

2. Decentralized Operations: As explained in the earlier chapters a solar service center in the villages is in itself a mini-enterprise. The center is responsible for installations, service and quality of installations, local administration and co-ordination with local financial institutions. The decentralization of operations has given more flexibility to the local employees, which has resulted in creating more stability and a sense of belonging towards the organization.

3. Custom Made Systems: the technical team at the service center designs solar systems based on individual customer’s requirements. No assumptions or pre-designed systems are forced upon the customers. Thus the rural folks get what they ask for and not what is forced upon them.

4. After-Sales Service: The presence of strong after-sales service has been one of the main key factors for the success of SELCO. Service at the doorstep has boosted the confidence, towards the organization and the technology, of the end-user.

5. Creating a Financing Mechanism: SELCO’s grassroots level efforts to commercialize solar photovoltaics attracted the attention of lot of rural banks. Thus SELCO became the first model in the country to convince the commercial banks that financing solar PV systems was a viable proposition, resulting in the creation of a financing mechanism at the doorstep of the end-user: the “door-step financing”.

6. Refinancing the Farmers’ Cooperative Societies: SELCO effectively tapped the existent local farmers’ societies for refinancing solar systems to the end-users. SELCO became the channel for the World Bank line of credit to the farmers’ societies, thus creating a sustainable link from an international financial institution to the remote village level farmers society.

Following are some of the solutions obtained from the experience of SELCO in which barriers have been overcome:

2.3 Awareness of the Solar PV Technology

“Seeing is believing.” SELCO took the technology to the doorstep of the rural people. People could first hand come to know the working and the usefulness of solar lighting systems. The awareness created had a tremendous impact on the decision making of the people. Exhibitions, demonstrations by SELCO boosted the confidence of the people in solar PV technology. People have now seen the technology and not “only heard about it”.

2.4 Lack of End-User financing

SELCO had effectively broken the first cost barrier by creating innovating financing schemes through commercial bank and other local financial institutions. Some major features in crossing this barrier were:

· The so-called risk investment into an ‘unknown’ technology was overcome by installing demo systems in the banks and their local branches. The successful working of the systems infused confidence in the bank managers and their sub-ordinates. They quickly realized the vast potential of the technology and its usefulness to their clients: the rural people.

· Solar photovoltaic systems were never considered as investment related to income generation. Reliable and safe lighting led to better education facilities, increase in business for small rural shops. The bankers were convinced that solar systems could be financed as they increased the levels in quality of life and thus better economic prosperity.

· Absence of solar service centers had led to hesitation among the bankers to finance solar lighting systems as their repayments were tied to the proper functioning of the systems. SELCO effectively eliminated this barrier by creating strong after-sales network in the rural areas of the country.

· High Cost of Financing: In 1995 the National Bank for Agriculture and Rural development declared solar systems as eligible for priority sector lending. Priority sector lending attracts the lowest interest rates in the country, thus creating a major incentive for people to take loans for solar lighting systems

Thus as seen from the above points SELCO had effectively broken the barrier of consumer financing for solar lighting systems and had created the concept of door-step financing for PV. The survey done by the author (see Appendix J: Survey Report) also suggests that at least 20% of the population were willing to buy a system provided financing was available for at least 4 years. This further emphasizes the importance of financing.

2.5 Absence of Working Capital for Start-Up Entrepreneurs

SELCO had created the awareness of the technology among the bankers. The banks over the last 4 years have become very familiar with the PV systems. The banks started to believe that solar technology had a vast potential in the rural areas and thus there was enough scope for entrepreneurs to start a sustainable venture in this field. SELCO’s efforts led to the set up of training centers for young entrepreneurs and further led to the availability of working capital loans to them. The other barriers related to financing that were overcome included:

Lack of credit facilities from module manufacturers: Over the years the main market for the manufacturers were the department of railways and department of telecommunications. From last two years the saturation in the two mentioned departments has forced the main module manufacturers to look at the rural market for selling their modules. The manufactures have started encouraging the local integrators by extending better credit facilities.

Lack of capital to create innovative financing mechanisms. SELCO procured loans from Institutions like IREDA and channeled it through the local farmers’ societies. These societies tailor made the financing schemes as required by their members. The IREDA loans helped evolving innovative financial mechanisms at the grassroots level, thus giving a further boost to the technology.

2.6 Absence of After Sales Service Network

SELCO effectively overcame the barrier by creating a solar service network in the villages employing local youth: A service network for the people and by the people. Local presence with local personal helped it to build an image of a solar service company. By having the network SELCO proved the viability of the technology and drove out the myth that ‘solar does not work.’

2.7 Presence of Inferior Technology

SELCO procured high quality systems and effectively provided custom made systems for the rural people. Over the years people realized the importance of quality systems. SELCO’s quality systems drove out a lot of the local competition, which had mushroomed in lot of villages, and which appeared to want financial gain in the short term.

2.8 Subsidy Driven Government PV Programs

Subsidies shall remain a barrier for some time to come. Drastic policy changes will have to be brought upon to remove or decrease the subsidies in the field of renewable energy. People over time will realize the un-sustainability of such subsidies. As more and more companies get into the business of promoting solar technology, the subsidies will automatically be reduced; proving the growth of the market.

There are still options and ways to boost the existing solar market in the country. As a country there is still a long way to go before strong sustainable companies make an impact to the market that is still in its nascent stage. But the existing players, both government and the industry, could make further progress by taking certain positive steps to excite the market.

3. RESULTS

The results of the model to date are quantified below:

Number of Regional Branch Offices: 3

Number of Solar Service Centers: 10

Number of Employees: 52

Number of Solar Home lighting Systems installed: 7500

Financing to date: $550,000

Number of defaults on loans: zero

Some of the goals achieved by the model are:

1. SELCO solar lighting systems have improved the quality of lighting in many of the rural homes. Children in these households are now able to read under reliable and brighter light condition. They are able to study better with solar lights than they would have under the dim light of candle or kerosene lamps.

2. SELCO systems have enhanced the flow of information from the urban world to the rural areas. Lots of black and white television sets are been run on SELCO PV systems; thus allowing the rural people to access information regarding the rest of the world.

3. Installation of SELCO solar systems has directly resulted in the increase of the monthly income of a rural tribal house by extending the work hours in the evening. SELCO systems have been used for outdoor work, sewing, weaving and other income related work.

4. SELCO systems have definitely created better living conditions by providing “smokeless” lights. No smoke is generated from PV systems unlike in kerosene lamps or diesel generators. The World Bank estimates that 780 million women and children breathing kerosene fumes inhale the equivalent of smoke from 2 packs of cigarettes a day (9).

5. SELCO hopes in a very small way to stem the migration of the rural youth to the urban areas by creating employment and improving the quality of life; but it is too early to see the results of the SELCO venture in this regard.

6. Primary aim of providing adequate financing for solar lighting systems has been achieved by SELCO. In a small way SELCO has proved that rural people can pay for the PV systems provided adequate financing facilities exist at the doorstep of their homes. Support from Grameen, commercial banks and co-operative societies has helped SELCO to create the financing network.

7. SELCO has also created a sound service network in the rural areas employing rural youths resulting in the creation of local jobs.

8. SELCO systems have been custom designed to supply cost-effective and reliable light and electricity to homes and small businesses. The qualities of the systems have been proved by SELCO getting export orders from Sri Lanka, Vietnam and Bhutan.

9. SELCO produces all the balance of systems in the rural areas thus helping the technology to remain indigenous.

10. SELCO systems have helped in the prevention of household fires caused due kerosene lamps. Solar lights are safer and easier to use.

11. Slowly but surely SELCO type of ventures can help in the conservation of India’s energy. Systems installed by these ventures can divert some of the energy from the rural areas to the energy-starved industries. Decentralized PV power can provide lighting and other basic electrical needs for the majority of the India’s rural population, as shown by SELCO. This could save the country millions of rupees in transmission and distribution of regular grid supply.

12. SELCO PV systems have helped in reducing the time and expense of refueling and maintaining existing sources of light and electricity. Kerosene lamps and diesel generators must be filled several times per day. In rural areas, purchasing and transporting of kerosene or diesel fuel is often both difficult and expensive. Diesel generators require periodic maintenance and have a short life span. Car batteries, used to power TVs must often be transported miles for recharging. SELCO systems, however, requires no fuel, and will last for many years with minimal servicing.

13. By setting up a rural enterprise for commercial venture for solar photovoltaic, SELCO has also proved that the numerous barriers perceived for this type of business can be overcome if the right approach is adopted. SELCO in a systematic way, as explained, has crossed the hurdles to lay itself a strong foundation.

14. To develop a sustainable business model that can be emulated in other parts of the world with similar needs was one of the most important objectives of this thesis and has been partially achieved when operations on similar lines have started in Sri Lanka and Vietnam.

4. CONCLUSION

SELCO’s establishment of a doorstep service network parallel to a doorstep financing mechanism has resulted in a sustained growth of the rural solar photovoltaic venture. Employing local youth has ensured high quality localized service and convincing local rural banks has led to the creation of a sound financial network. The number of offices, employees, solar systems installed with no defaults on loans--all are an assessment of the success of the SELCO model.

5. REFERENCES AND BIBLIOGRAPHY

(1) “Government Subsidies in India” March 1997, Submitted to Department of Economic Affairs of Government of India by National Institute of Public Finance and Policy, New Delhi

(2) Hande and Martin, From Bellavista to India: Extrapolating By Three Orders of Magnitude, Global Forum 1993, New Delhi, September 1993

(3) Sinha S.S. and Kandpal, T. C., Decentralized v grid electricity for Rural India, Energy Policy, June 1991

(4) Bhatia R., and Pereira A., Socioeconomic Aspects of Renewable Energy Technologies, Praeger, 1988

(5) Imran, and Barnes, P., Energy Demand in the Developing Countries, World Bank Staff Working Paper, 1990

(6) Blitzer, C.R., Eckaus, R., Lahiri, S. and Meeraus, A., How Restricting Carbon Dioxide and Methane Emissions Would Affect the Indian Economy, Working Papers for the World Development Report, 1992

(7) The Hindu, Prime Minister of India, Mr. A B Vajpai, May 1999

(8) Hande and Martin, Photovoltaics for Rural Electrification in India, SESCI, Quebec City, July 1993

(9) World Development Report, World Bank Publications, 1992

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(28) Survey by H.Harish Hande

(29) SELCO Prices for the Year 1997-1998

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Proceedings of the American Solar Energy Society Annual Meeting, April, 2001

A Model for Sustainable Rural Electrification witH Photovoltaics