Access to Energy for the Base of the - Ashoka

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56 Micro-credit financing is necessary to make low-cost solar home systems affordable by upper BOP segments Indian household BOP monthly energy spending INDIAN EXAMPLE for lighting and communications* Expenditure for a low-cost solar home system $ nominal** $ 200 1.3 BOP 500 2.7 BOP 1000 BOP 1500 BOP 2000 BOP 2500 BOP 3000 42 partner financial institutions, which charge ~13% interest. Microfinance significantly increases the 4.0 5.7 * Average Indian household energy spending (The Next 4 Billion database) and experts interviews for energy spending allocation to lighting and communication needs ** $ PPP to nominal conversion rate for Indian BOP (The Next 4 Billion database) Source: Hystra analysis; IMF; The Next 4 Billion Bangladesh 7.2 8.6 Figure 12 Impact of microcredit on accessibility of solar home systems 6.1 Monthly payment with a 4 year 20% interest rate 9.7 Monthly payment with a 4 year 50% interest rate Figure 13 Access to microfinance and rates in selected countries One-off payment of investment (no credit) market opportunity for SHS, so the gap in access is a serious impediment. Microfinance is still unavailable to a large majority of the BOP population and interest rates are often prohibitive Population with access to microfinance* Net microfinance annual interest rates compared to inflation** % % Annual inflation Net MFI interest rate Sri Lanka Peru Colombia Guatemala South Africa 1 3 6 8 9 20 Uzbekistan 20 66 Mexico Kenya India Senegal Sri - Lanka * State of the microcredit summit campaign report 2007 ** Variations in microcredit Interest Rates, CGAP brief, July 2008; IMF Inflation reports Source: Hystra Analysis; Next Four Billion 13 8 4 6 2 9 14 14 40 64
Finally, SHS have traditionally been installed by trained technicians. SHS are attached to rooftops or poles, anchored down, wired, and placed at the proper angle to the sun. Reliance on these technicians has slowed the expansion of SHS and increased the final cost to the consumer. Pioneers such as SELCO overcome these challenges using time-tested designs, tailor-made installations and customer service. The Solar Energy Foundation adds to this model a training school for solar technicians, a revolving micro-finance fund, and RFID payment technology that facilitates payment and enables technicians to turn off households that are behind on monthly payments. In Bangladesh, Grameen Shakti has reached 38k villages and 215k households by taking advantage of the foundation laid by the Grameen Bank. The ambitions are large. SELCO aims to triple installed systems in the next four years. Grameen Shakti plans to install 1m SHS by 2012. Around the world solar home systems are ready to go mainstream. Lighting, communication and income generation for richer BOP households In rural Ethiopia, only 1% are connected to the grid. The Solar Energy Foundation (SEF) installed 2.4k SHS in Ethiopia to enable households to work at night, light homes, and power communication devices. 50% of households in the Indian state of Karnataka have little or no electricity access. SELCO has reached 100k clients in Karnataka and Gujarat by focusing on similar needs. SEF’s system is sold for $80 upfront, and then $9 each month for three years. This replaces a $7.50 monthly spend on kerosene and dry cells. SELCO sells its 4-lamp system for approximately $60 upfront (15% of the total price) and $6 a month for the next five years. Though loans are usually provided by partner banks, SELCO has a guarantee fund to lend the initial 15% to customers who are not approved. Even with subsidies, microfinance and maintenance, SHS are only affordable by comparatively richer BOP households, those in the BOP2000 segment or above. Interview Figure 14 A Temasol customer in Morocco Harish Hande is the co-founder of SELCO India, a leading SHS business Harish, SELCO India has reached almost 100k customers and is one of the largest solar companies serving the BOP. Do you expect further growth? Yes. We have just raised $1.4m from social investors with the objective of reaching 200k more families within four years. Could such a growth be accelerated by new developments within the industry? Yes. SHS cost could be significantly reduced through R&D, allowing us to reach more and poorer people. For instance, there is a lot to do about the batteries. We believe that a significant effort on batteries could reduce the life cycle cost of SHS by ~30%. On top of that, batteries could be lighter, which would allow rental business for those who cannot afford a full SHS. There is so much to do within the solar industry! Because of this constraint, some SHS enterprises support income generation amongst their potential customer base. One way to do this is to design certain steps of the business model so that they can be performed by low-income people themselves. For example, Grameen Shakti’s Technology Centers train local women to manufacture and repair SHS accessories. Fabio Rosa links solar technology to electrified fences, which allow Brazilian farmers to rotate their animals through the fields to increase agricultural yields. In some early SHS initiatives, customers were unsure about how to maintain the systems. When the panels 57
Page 1:
Access to Energy for the Base of th
Page 6 and 7:
FOREWORD 1.6 billion people do not
Page 8: INTRODUCTION The opportunity to wri
Page 11 and 12: The projects discussed reflect mark
Page 13 and 14: Despite its size, the BOP energy ma
Page 15 and 16: 3. STATEMENT OF THE PROBLEM Energy
Page 17 and 18: electricity generating targets over
Page 19 and 20: 4.1 GRID CONNECTIONS Transforming s
Page 21 and 22: connections will provide safe, reli
Page 23 and 24: Before 1999, LYDEC experienced a lo
Page 25 and 26: LYDEC Legal slum grid connection in
Page 27 and 28: FUNDACION PRO VIVIENDA SOCIAL Natur
Page 29 and 30: SLUM ELECTRICITY COOPERATIVE Slums
Page 31 and 32: CONLOG Grid electricity with pre-pa
Page 33 and 34: CODENSA Slum Electricity grid conne
Page 35 and 36: 4.2 DEVICES Providing mass-market d
Page 37 and 38: A Mightylight, Cosmos pioneering so
Page 39 and 40: Enterprises on the way to being pro
Page 41 and 42: BSH PROTOS Plant Oil Stove Indonesi
Page 43 and 44: BP INDIA Mass-market bio-fuel pelle
Page 45 and 46: ENVIROFIT INTERNATIONAL Mass-market
Page 47 and 48: COSMOS IGNITE INNOVATIONS Solar LED
Page 49 and 50: D.LIGHT DESIGN LED-solar devices In
Page 51 and 52: TOTAL LPG Mobile Retail Dealers Ban
Page 53 and 54: VIDAGAS LGP for vaccines cold-chain
Page 55 and 56: 4.3 SOLAR HOME SYSTEMS Lighting, co
Page 57: Interview Solar Home Systems basic
Page 61 and 62: expects that the growing force of t
Page 63 and 64: Grameen Shakti has already built up
Page 65 and 66: Ability to solve the problem Econom
Page 67 and 68: � Financials: Solar technicians i
Page 69: "At the beginning, I was skeptical.
Page 72 and 73: 70 A rural cooperative is an enterp
Page 74 and 75: 72 Additional investment is often r
Page 76 and 77: 74 � Financials: Hari Sharan, Fou
Page 78 and 79: 76 � Financials: Tri Mumpuni, Fou
Page 80 and 81: 78 The four groups of business mode
Page 82 and 83: 80 Carbon credits is a challenging
Page 84 and 85: 82 AFRICAN RURAL ENERGY ENTERPRISE
Page 86 and 87: 84 E+CO Clean Energy Finance Global
Page 89 and 90: 5 Recommendations
Page 91 and 92: 5. Support favourable energy regula
Page 93 and 94: such as charging mobiles for a smal
Page 95 and 96: 6 Appendix
Page 97: which corresponds to a daily income
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