Increasing access to energy services in rural areas - REEEP ...

SUSTAINABLE ENERGY REGULATION AND POLICYMAKING TRAINING MANUAL
page 10.34
Box 5.
SELCO model
SELCO provides technologies and financing services for developing country markets.
Wireless technologies such as solar PV demand little physical infrastructure,
but require skilled rural men and women to introduce, supply, service, and finance
solar electricity systems. The SELCO model does this by combining three essential
elements:
• Products: Small-scale modular wireless technologies such as solar photovoltaics
(PV) are used. The systems offer advanced, inexpensive lighting, electricity,
water pumping, water heating, communications, computing, and entertainment.
These products can be purchased for individual homes and businesses. They do
not require connection to a larger network.
• Service: Customers are met where they live. With its extensive network of service
agents, it is able to provide at-home design consultation, installation and
after-sales service on all products sold.
• Finance: Customers are helped to finance their purchases. It partners with rural
banks, leasing companies and micro-finance organizations to provide the necessary
credit to their customers.
Combining these three elements creates a virtuous cycle: Using high-quality products
reduces the cost of ongoing service and maintenance. With high quality products
and ongoing service, customers are able to receive financing for their
purchases. By providing a combination of product, service and finance, the SELCO
model is able to offer lighting and electricity at a monthly price comparable to using
traditional, less effective sources.
Another successful story of private participation for increasing energy service for
rural areas is the small hydro power (SHP) programme in China. SHP development
initially requires a large investment in construction, but it is a cost effective option
in the long term. Some of the strategies adopted in promoting private financing
of China’s SHP development, especially in the smaller sized SHPs, include:
• “Multi-channel, multi-level and multi-structure” fund raising: The Chinese
government has directed that local people should seek funds from individuals,
co-operatives, companies and any other external sources for the development
of SHP. Foreign investors are also encouraged to invest in SHP stations.
The principle of “who invests, who owns, who benefits” aims to allow investors
from multiple levels and areas to gain by investing in SHP.
• Share-holding and cooperative systems: Since the beginning of the 1990s,
most of the SHP stations in China have been developed under a shareholding
system. This system has become very effective in attracting funds. Table 3
shows the proportion of different SHP ownership systems in China.