Access to Energy for the Base of the - Ashoka

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62 SELCO Solar home systems and lanterns India Executive Summary: SELCO, launched in India in 1995, is one of the most promising SHS (Solar Home Systems) companies, with almost 100k customers. Though its core business is SHS, the company also distributes lanterns and cookstoves, defining itself as a Rural Energy Service Provider. SELCO has demonstrated ability to break even and to attract social investors. Management identifies local roots, tailor made installation and customer service as key success factors, thus considering that replication in other geographies must be done by other local players. � Date of creation: 1995 �� Products delivered: � 80% of sales on households’ products: SHS (panel, battery and charge controller for 2 to 4 lamps and a 12V plug) and individual solar lanterns. Currently piloting cookstoves distribution � 20% of sales on collective solar systems � Pricing: � SHS sold ~$300, credit possible (15% upfront and then ~$6 over 5 years) � Lanterns: ~$12 (from $2 per month) � 100k clients in Karnataka and Gujurat � Founders: Neville Williams and Harish Hande, a Senior Ashoka Fellow � HR: 25 in HQ, 125 in 21 service centers � Partners involved: � 42 banks and financial institutions � Operational model: � Customer finance: provided by partner banks at 13% interest; SELCO has set up a guarantee fund to cover initial 15% for non bankable poorer customers � Installation and maintenance through 21 service centers. Maintenance free for the first year, all customers visited every 6 months � Marketing mainly by word of mouth, thanks to strong emphasis on customer service (e.g., free maintenance for poorest customers) Project basic information Typical solar installation in a rural home Silk farmer using a SELCO light
Ability to solve the problem Economic viability � Problem and magnitude: � 50% of 10m households in Karnataka lack grid connection or have erratic grid supply � Ability to target the poorest: � SHS reach BOP2000 customers � BOP500 customers reached through lanterns � SELCO has also set up rental scheme for non bankable urban poor (vegetable vendors, street hawkers...) who can rent batteries on a daily basis (~$0.06 per day) � Needs addressed: lighting, communication and income generation (working at night) � Sustainability: battery replacement every 5 years; panel guaranteed for 10 years � Growth targets: � Aiming for 200k more clients in 4 years, in current geographies � Currently focusing on Karnataka and Gujarat, looking at Maharashtra � Market environment: � No grid expansion threat ★★✩ � Replicability in other geographies: � Management believes that success lies in local roots and is not considering expanding in other geographies � Willing to set up a $3m fund and open its books to help entrepreneurs planning to replicate in other geographies Sources: Hystra analysis; Ashden awards; management interviews Scalability � Financials: � $3.1m revenue in 2008 � Profitable between 2000 and 2005 � Small losses due to 45% price increase in panels since 2005, ~$100k loss in 2008 � 27% gross margin on SHS (most common product) � Ability to attract funding: �� Demonstrated ability to attract grants (e.g., World Bank) and investors � Received funding from E+Co, Good Energies and other investors in mid-Jan 2009, indicating attractiveness of model � Investors are non-profit investors or agencies that accept below-market returns SELCO puts strong emphasis on tailor-made installation, for instance offering 4 types of lamps addressing different lighting needs ★★★ ★★✩ 63
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Access to Energy for the Base of th
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FOREWORD 1.6 billion people do not
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INTRODUCTION The opportunity to wri
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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 and 58: Interview Solar Home Systems basic
Page 59 and 60: Finally, SHS have traditionally bee
Page 61 and 62: expects that the growing force of t
Page 63: Grameen Shakti has already built up
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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