fueling the future - Woodrow Wilson International Center for Scholars

Clean Energy Options for Rural Pakistan: Lessons from South Asiaenergy technologies to consumers. In its essence this commercializationmodel consists of a national program that provides subsidy support andquality control and allows private sector or NGO partners to supply systemsunder a certain warranty and quality guidelines. The private sectorsupplier will market the systems and make the sale. The national programroutes the subsidy through the supplier. In addition to providingthe subsidy, the national programs also provide financing for the purchaseof systems. In Sri Lanka RERED financing is provided throughindependent micro-finance organizations. In Bangladesh it is providedto the consumers through the participating NGO in the form of vendorfinance and installment payment. Solar home systems and householdbiogas technologies can be expanded rapidly in Pakistan by replicatingthe basic business models available in neighboring countries.FinancingThe availability of financing has been shown to boost investment inRETs. Financing is required for the private sector to invest in grid-connectedRETs or in ordering a shipment of solar home systems. Donorsupport has been utilized effectively in many countries by private developersto support market development and trail-blazing costs of early pioneers.These examples are subsequently picked up by the local marketsand attract competitors—expanding the market for energy services evenmore. The rapid growth of grid-connected small hydropower and solarhome systems market in Sri Lanka since 1997 and the solar home systemsmarket in Bangladesh since 2003 can both be attributed to their respectiveWorld Bank and GEF-funded projects that provided financing tosuppliers and project developers. This has been key to the commercializationapproach in both countries.On the consumer side, availability of micro-finance is key for manyrural consumers to purchase solar home systems. As the birthplace ofmicro-finance, Grameen Shakti in Bangladesh offered micro-finance forsolar home systems right from the beginning. In Sri Lanka, one of theparticipating credit institutions under the RERED program is the leadingmicro-finance agency in Sri Lanka, where solar home systems constitute aremarkable 30 percent of the micro-finance agency’s lending portfolio.Financing will be a constraint for renewable energy investors inPakistan as the sector grows. Pakistan’s Alternative Energy Development| 181 |