Access to Energy for the Base of the - Ashoka

Interview
Solar Home Systems basic description
A typical Solar Home System (SHS) contains:
A solar panel (typically 10 to 50W)
A battery to store the power
A charge controller to protect the battery
2 to 6 lamps (LED or CFL)
A 12V plug (mobile charging, radio and TV)
Early model of Solar Home Systems:
Price: $800
Payment: Largely upfront,
possibly from grants
Financing scheme: Grants from
multilaterals and
governments, and
household savings
Maintenance: Rapid reduction in
functionality of
systems
Source: Hystra analysis
Dr. Harald Schützeichel is a theologian, philosopher
and musicologist, former CEO of a German
solar company. He launched the Solar Energy
Foundation, selling Solar Home Systems in
Ethiopia since 2005.
Harald, do you think Solar Home Systems have the
potential to become a mass-market product?
Yes, rural customers are very enthusiastic about it and they
are pushing hard to get the product as soon as they see it
somewhere. After we just launched our first pilot in Rema,
Ethiopia, lots of people from surrounding villages asked us
when we would be able to install products in their house. And
many showed they would find the money for it.
What is missing to accelerate the spread of SHS?
In some rural areas, it is difficult for the poorest to finance it.
When microfinance is not available we lose a lot of our poten-
SHS entrepreneurs have been stymied time and again
by market distortions in the form of subsidized energy. In
places such as Honduras and Sri Lanka, customers have
been promised government or aid agency help.
Entrepreneurs such as Soluz or the Solar Electric Light
A SELCO display showing
SHS components
$150-300
Emerging model of Solar Home Systems:
Price: $150 - $300
Payment: ~20% upfront, rest
monthly fees
Financing scheme: Microfinance or
revolving funds, some
household savings
Maintenance: Designed for the life of
the system, in original
business model
Fund found it difficult to compete with the promise of
free help, no matter how inconsistent or inaccessible
this aid would turn out to be. In some cases, such as
rural Ethiopia, 99% of the population is not connected to
the grid and does not expect to be so - this territory is
ripe for SHS expansion. In general, the industry has been
moving towards a combination of microfinance and
social investment capital, as this allows more flexibility
to respond to market opportunities.
SHS are an expensive outlay up front, and return the
savings over time. This is the cash flow pattern least
suited to low-income households, who have little
savings at any one point and some cash flow over time.
Consumer financing is required to spread out SHS
payments to match the cash flow of low-income
households.
However, microfinance is not well established
amongst the majority of the BOP. Despite decades
of microfinance, only 20% of the Bangladesh BOP
has access to financial services; perhaps 1% to 10%
of the BOP population in other countries can access
microfinance. In order to provide financing to
customers SELCO has developed relationships with
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