Solar Home Systems for Rural

Electrification in Developing Countries

An Industry Analysis and Social Venture Plan

Steve Dahlke

ENTR 311 Social Entrepreneurship, Terri Barreiro
College of St. Benedict and St. Johns University
Venture Overview
Lack of access to electricity is one of the biggest issues facing the worlds poor,
with over 1.6 billion left in the dark globally. The vast majority of these people live in
rural areas of developing countries because they are too poor and may be in too remote a
location to be reached by the national grid. For their lighting needs they rely on candles,
kerosene lanterns, and firewood. This results in a daily expense that is expensive in the
long run. Furthermore, this type of indoor lighting causes indoor pollution and chronic
lung problems. Long-term, solar energy is the most practical and economical way of
bringing power to poor and remote communities.
Small-scale, distributed solar home systems provide an effective and affordable way
to bring light to people without electricity. A basic system consists of a small solar panel, a
battery, a charge controller, LED lights, and a universal outlet for charging cell-phones or
other small appliances. A basic system will cost roughly $350, and can be made
affordable through microfinance options. Partnering with local banks and/or microfinance
organizations to create payment plans can help overcome the large initial investment
associated with purchasing a system. Energy savings result from not having to buy candles
or kerosene fuel, and can make the monthly payments affordable.
When proposing this technology to a new area, it is important to target a
community that has expressed a need and desire for solar electricity. Identifying and
allying oneself with a respected community leader who is receptive and supportive is a
good idea. Also, word of mouth and seeing their other systems successfully installed are
the most effective advertising strategies and drivers for technology adoption. Therefore, it
may be a good idea to initially donate a solar generation system to be used at a highly
visible building, like a community center or school.
The proposed organizational structure will be very community-centered. The
system components, including the solar panels, will be sourced locally to the greatest
extent possible. The system will be assembled and installed in conjunction with the
purchaser of the system. This will minimize costs, build local capacity, and provide
opportunity to train the owners to properly operate and maintain their system. Early
owners who become knowledgeable may then serve as advocates and technical support
for future customers in their community. This approach differs from the many for-profit
organizations, who use conventional business strategies, simply importing their
technology and sell the product with financing to those who can afford it. My community-
centered capacity building strategy differs from current industry players in that it allows for
increased local capacity and empowerment. It is the key social innovation in this social
venture plan.








Value Proposition and Opportunity
There are over 1.6 billion people worldwide who lack access to electricity. The
vast majority of these people live in rural areas of developing countries, where scarce of
government investment and difficult geography keep the national electric grid from
extending to their villages. Investment in transmission lines is expensive, especially when
a village is far away from a large city or in the mountains. Poor villages without electricity
face greater difficulties in meeting needs such as food, shelter, and entertainment. They
must do so with forms of energy other than electricity. Candles and kerosene lamps that
emit toxic fumes damaging to the lungs are commonly used for lighting. Firewood is
commonly used for cooking, which can further contribute to indoor pollution, and
refrigeration is not an option. Studying after dark to dim, flickering candle lights and
kerosene lamps is difficult for children, and businesses usually cannot continue operating
after dark.
Small-scale distributed solar home generation systems offer a solution to these
energy issues. A solar home system (SHS) can be installed and function almost anywhere
there is sunlight. They can provide electricity for services such as lighting, television, cell
phones, fans, cooking, refrigeration, and more. Furthermore, storing the electricity in a
battery will allow electricity to be used for hours into the night. While there are
companies already doing this in rural areas, the need is vast and all over the world. The
problem is being addressed in small pockets all across the globe, but this is only a small
dent compared to the total amount of people without electricity. For the problem to be
addressed, many more social enterprises distributing SHSs will need to be set up in
countries all across the world.
There are a variety of benefits to adopting a solar home system. Besides households,
solar home systems could provide power for schools, clinics, or small businesses. Having
this bright source of light during the night can also deter wild animals that are dangerous
or eat their crops and livestock. They replace kerosene lamps and candles traditionally
used for lighting. Having to purchase fuel and/or candles is a daily expense that can be
eliminated with a SHS. Typically, a rural family will spend between $5-$10 per month on
energy and lighting expenses. Furthermore, fumes produced from traditional lighting
methods are toxic and lead to chronic lung problems, especially when children are
exposed. Generally, a family will use about 3 liters of kerosene per month. Using these
dimmer sources of light for studying or handicraft production can strain the eyes and
cause long-term vision problems. Having a solar system will allow children to study and
small businesses to continue production later into the night. This increases the
populations ability to be self-sufficient, raises their incomes, and allows them to begin to
lift themselves out of poverty.
This study looks at the potential of small-scale solar energy generation for
electrifying rural communities in developing countries. It includes an industry analysis,
profiling innovative companies around the world that work in this area. From that, barriers
to rural electrification and industry best practices are concluded. Finally, a preliminary
venture plan is created and next steps are identified.

Target Market
The target market for this particular application of solar home systems (SHS)
includes individuals living in rural villages of developing countries who are not connected
to the grid and without a sustainable or reliable source of electricity. The solar solution
will need to be customized depending on the village, available materials, need, and
income of the potential customer. However, in its most basic form it consists of a small
solar photovoltaic panel, a charge controller to regulate the current and voltage, a storage
battery (usually a lead-acid battery in distributed applications), and the load, which
consists of everything in the house demanding electricity. This includes lights, television, a
cell phone charger, etc. (see Figure 1). It is not rocket science; rather it is a simple, basic
technology that is being applied in a new small-scale way to address a need.
When distributing these
systems it is important to keep the
needs of the customer in mind. Not
all energy needs are the same, even
in a community without electricity,
so being open to customizing the
product is a good idea. Some
families will not be able to afford as
large a system as others, some may have larger homes with greater lighting needs, or some
may prefer to trade off less lighting for more appliances, like a television. The point is that
a one-size-fits-all approach is not ideal. Before attempting to sell any systems, it is a good
Figure 1: Components of a solar home system
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idea to spend a few months in the target area doing field studies, identifying community
leaders, and figuring out what the local needs are.
Adoption of a solar home system will proceed in a set of stages, just like the
adoption of any technology. When planning outreach strategies it is helpful to have in
mind Rogers classic five-stage model of diffusion of innovations. First is the knowledge
stage, where a consumer first learns about the technology and gains an understanding of
how it functions. He then forms a favorable or unfavorable attitude towards it in the
persuasion stage, chooses whether to adopt it or not in the decision stage, and puts it into
use in the implementation stage. During the confirmation stage, he seeks reinforcement of
a decision already made, and may reverse the previous decision in response to new
information. Furthermore, decision makers can be divided into five groups based on when
they adopt the technology. Innovators are the first adopters. They are venturesome and
less risk-averse than other groups, and are relatively wealthy and well-educated. The early
adopters come next, who are well-respected people and often play the role of opinion
leaders. Typically, others look to them as role models and imitate their adoption decisions.
The next two groups of people to adopt are the early majority and late majority. The
laggards are last, and tend to have traditional, conservative values and low incomes.
2

Dividing the target market into these segments is a helpful way of understanding the
customers.
Having success in distributing SHS to bring electricity to the poor depends on a
variety of factors. Awareness is most effectively spread through word of mouth and
observation of existing systems. So, when entering a new area it may be in the ventures
best interest to donate a system to a highly visible building, like a community center or
school. Rebane et al studied adoption rates of solar home systems in rural Nicaragua, and
came up with a list of factors to consider that affect an individuals likelihood of
purchasing/adopting a system, in no particular order:
Familiarity of Technology: An individual is more likely to adopt a system if they
have already learned about it from a friend or neighbor, or by directly observing it
in operation.
Number of children: Entertainment and illumination for studying are two top
reasons customers point to for adoption of an SHS. So, the more children they have,
the likelier they are to purchase a system.
Per-capita income: While aimed to target the poor, SHS systems still present a
significant up-front investment. Innovative financing structures have been
developed to address this issue, discussed later in this paper.
Level of education: The higher level of education a person has, the greater
likelihood they have of purchasing an SHS.
Proximity to dealers: The closer someone lives to an SHS dealer or non-profit
organization that promotes the technology, the greater likelihood they have of
buying a system.
3





Financing
Financing is a crucial component for any enterprise wishing to sell solar home
systems. Systems can cost many times what the consumer makes in a single month, and to
a rural family is a purchase comparable to a new car in a developed country. Local banks
and microfinance institutions offer the potential to overcome the financial barrier standing
in the way of a household and a solar home system. However, the presence of banks
alone does not guarantee success. Many banks perceive the poor as high risk and are
unwilling to make loans to them, even if this may not be the case. The emerging field of
microfinance has proven financing the poor can be low-risk, with default rates being the
same or lower than conventional loans. However, because of the perceived risk, banks
will usually offer loans with high interest rates. Furthermore, when providing financing for
a solar home system they will usually require a high down payment, often between 15%-
25%. This is still too high for many poor families.
This first cost issue is probably the biggest barrier to widespread adoption of solar
home systems. Other impediments to lending include the fact that banks are hesitant to
take on the risk of lending without collateral, and many families do not have the means or
resources to provide the proper collateral. Also, poor customers can lack legal standing,
not have an official land title, or not have any credit history. Most successful microfinance
institutions conduct business in urban areas, where high customer densities make profit-
generation easier. Asia is an exception to this, where they have a strong financial
infrastructure in place serving rural areas. However, in the case in Latin America rural
customers account for only about 10% of microloans (see Figure 2). Unfortunately, the
large majority of people in the world without electricity who need off-grid generation
systems are in rural areas. These financial obstacles may seem daunting; however there
have been innovations that make rural financing feasible. Here is a list of strategies that
will reduce the financial barriers to SHS adoption:
1. Recruit a banking institution to provide loans.
An important goal for convincing institutions to lend to the poor is to mitigate the
financiers risk or perceived risk. SELCO Solar in
India has been a pioneer in developing financial
mechanisms for making possible the purchase of
solar systems. They have partnered with a wide
variety of rural banks to make this happen (SELCO
is detailed later in this report). Mitigating the
financiers risk can be done in a variety of ways.
For households that dont have the resources to
put up the necessary collateral, the system itself
could be used as collateral. Furthermore, a third-
party institution or non-profit could cover the loan
risk. Even a partial loan guarantee could be
enough to persuade banks to lend, as SELCOs
experience has shown. Or, a third-party could
cover the down payment. It is also possible to
account for external system benefits when
Figure 2: Ratio of rural to urban customers for
microfinance
4
assessing risk. For example, with a small business, having a solar system can allow the
business to operate later hours and generate extra income.
2. Overcome the free-rider problem.
SELCOs pioneering efforts with microfinance in rural India is a large reason why
they have become a world leader in the field. However, their case also brings to light
another issue relating to free riders. Innovative companies willing to be first in the game
can be put at a competitive disadvantage when they spend resources on innovation and
capacity building. This is due to other companies taking advantage of their earlier efforts,
getting a free-ride. For example, after SELCO spent many years and dollars on
developing Indias rural financial infrastructure, other companies benefited from it. There
were even some banks that, after giving out successful loans for SELCO systems, started
selling their own systems for personal social development programs. Broadly speaking this
isnt a bad thing, as it results in greater adoption of the technology and increased
electrification for the poor. However, it does result in a decreased incentive for individual
companies to innovate if their competitors are accruing benefits from their investment.
To overcome the free-rider problem, governments and non-profit development
institutions should provide funding and incentives for enterprises to innovate. This could
be in the form of technical and financial support for businesses entering an unserved
geographical area. Furthermore, a government or non-profit could provide financing for
early-stage systems, which would allow local banks in the private sector to see the
technology successfully implemented before they decide to take on the risk of making SHS
loans.
Successfully financing a solar home system can have external benefits in addition
to the direct benefits of electrification. Many poor rural individuals have never been inside
of a bank before. Simply the process of applying for and receiving a loan, as well as
successfully repaying the loan, instills financial confidence. This leads to greater financial
literacy and can result in them opening savings accounts. From the banks perspective,
success can lead to the establishment of a relationship with a community previously
thought of as being unlendable. After experiencing on-time repayments this can result in
future loans, further lifting the community out of poverty.
3. Raising Capital Funds
Financial return in this business can be slow due to multiple factors. High
transaction costs occur from small-scale sales, transportation, and maintenance across a
large geographically dispersed market. As a result, raising funds from conventional
investors that dont take into account social returns is difficult. The World Bank has
historically been a big financier for these types of projects. The social enterprises Grameen
Shakti and Tecnosol (profiled later in this report) currently have the majority of their
operations working within World Bank-backed government frameworks for consumer
finance and subsidies. For a more detailed account of World Bank and other international
developmental organization-sponsored rural electrification investments, see The Welfare
Impact of Rural Electrification (IEG).
5
National governments can also sponsor projects and provide subsidies, making
systems more affordable. However, caution should be exhibited with government-
sponsored approaches, as subsidies can manipulate the markets and change customers
expectations of system costs for the worse. Give-away programs or subsidies raise the risk
of long-term industry failure when funds run out and the program ends. Non-coordinated
government programs will take away opportunities for private enterprises to grow and be
self-sufficient. Customers will not purchase systems that their neighbors had previously
received for free or purchased for much cheaper. Also, without coordination, government
programs run the risk of targeting areas that have already been sold systems by a local
enterprise. This happened in the Dominican Republic, when a government give-away
program targeted an area that already had systems installed by the SHS company Soluz.
6

The most common energy solution offered by government is investment to expand
the electric grid. This is important, as it allows a country to electrify lots of homes at once.
However, there will always be a segment of the population that is too remote to receive
grid access or too poor to pay connection fees. When announcing planned grid
investments, governments should be transparent with where they plan to build. Non-
transparent or unpredictable government investment in electricity development or grid
expansion has the potential to disrupt business operations of SHS enterprises. Households
will not want to purchase systems if the electric grid will be coming their way shortly, and
the social businesses cannot plan their operations accordingly. Even the mere possibility
of planned investment (sometimes empty promises by politicians to gain votes) has shown
to disrupt business. This was also Soluzs experience in Honduras and the Dominican
Republic in the late 1990s and early 2000s.
7

Instead, governments would be better suited to channel their funds to market
innovation and building the right environment for social enterprises to flourish. In addition
to government investments, private investors or development institutions will sometimes
invest in these projects by providing grants or equity. For example, the non-profit
organization E+Co has provided seed funding for many private enterprises related to
energy and development. It has invested in SHS providers in Nicaragua, Tanzania, Ghana,
India, and Nepal, including Tecnosol and SELCO India, detailed in this report.
8
As shown,
there are many financial issues that must be confronted by any social enterprise in this
field. An existing financial infrastructure is important to have for any business to be self-
sufficient, and as such should be a precursor when deciding where to establish an
operation.

Barriers
There are significant challenges that make implementation of SHS difficult.
Drawing from the experiences of the organizations analyzed in this report, a number of
common barriers have been identified:
High initial cost of SHS. Spending $400 or so on a electricity system for a home in
a poor rural village is proportionally similar to buying a car. It is a large investment,
and without financing will not be affordable to the majority of the target market.
Even the down payment on a loan for an SHS may be too expensive for many
families. So, offering financing that can minimize the initial down payment if
necessary is necessary.
Lack of financial infrastructure. In many rural areas of developing countries,
especially in Latin America, there arent many banks or institutions that provide
microfinance. Partnering with banks to expand their service to rural areas is one
option. Otherwise, renting systems is another way to overcome the high cost of
SHS without presence of microfinance. However, a business plan based on renting
requires high capital investment. Another option in the absence of microfinance is
to set up a revolving loan fund. Enersol, a predecessor of Soluz in the Dominican
Republic, spent $10,000 to set up a revolving loan fund to make loans for solar
home systems.
Lack of knowledge or suspicion among rural populations. It is likely that the
customer doesnt have previous experience with solar, and possible they havent
heard of SHS at all. It is also possible that a village has had visits by politicians or
government officials who have made empty promises to bring electricity to their
village. To overcome this it is important to invest enough resources in outreach,
demonstrations, and training.
Lack of capital funding. Because of the many small sales spread out over a large
geographic distance, high transaction costs characterize this business model. As a
result, the slower return on investment associated with this type of social venture
make raising capital funds more difficult.
While the barriers listed here are significant, there are a number of successful
organizations that have made it work. Collectively they have managed to distribute
hundreds of thousands of solar home systems to the rural poor. There is ample opportunity
to learn from the experiences of pioneer companies.

Industry Overview
The following is a series of mini case-studies, profiling of social businesses who are
currently doing work in this field. The intention is to give the reader some examples of
how people have been successful and give them references for further contact if they
would like to learn more.

SELCO India
SELCO is a for-profit social enterprise
that provides sustainable energy solutions and
services to under-served households and
businesses in southern India. They aim to
empower their customers by providing a
complete package of product, service, and
consumer financing. Founded in 1995, SELCO
has become one of the world leaders among
energy development social enterprises in terms
of volume of units sold and company
innovation. It is based in Karnataka, and operates in the surrounding rural areas (Figure 3).
SELCO employs about 170 employees spread out geographically. Since 1995 it has sold,
serviced, and financed over 115,000 solar home lighting systems. They are now a
profitable, multi-million dollar enterprise. SELCO has 25 regional services spread out
across the Indian states of Karnataka and Gujarat. Their product line consists of standard
Figure 3: SELCO India coverage,
headquarters and approximate retail
area
9
home lighting solutions ranging from 1-10 lights and fans. They also will customize their
systems depending on the energy requirement of the client. A typical SELCO SHS will cost
a little over 400 U.S. dollars, and the majority of their products are sourced locally. The
customized system will depend on local factors like lighting needs, available financial
institutions, and other community dynamics.
Furthermore, SELCO has pioneered rural micro-credit in India. Since their
inception they have forged partnerships with nine regional rural banks, as well as
commercial banks, NGOs, and rural farmer cooperatives. Interest rates on their loans
depend on the credit source and range from 5%-14%. Customers typically put between
10%-25% down, paying the balance over three to five years. SELCO employees do sales,
installations, user education, and maintenance. Before closing a sale, a local installation
technician visits to install the system and teach the customer on proper use and care. They
will also periodically visit after the installation to check on performance. They service
systems for free during the first year, including planned quarterly visits. SELCOs success
with customized product and financial solutions show the power of door-step service.
Website: http://www.selco-india.com/






Figure 4: Tecnosol offices
10
Tecnosol
Tecnosol is a for-profit enterprise based in Nicaragua, with small operations in El
Salvador and Panama (Figure 4). Founded in 1998, they have installed more than 40,000
systems in Central America and have executed over 300 energy projects of various types.
Tecnsol has 17 offices throughout
Nicaragua, and one each in El Salvador
and Panama. Similarly to SELCO,
various micro financiers have integrated
Tecnosols systems in their loan options.
Their most basic product is called a
pico lamp, imported from Germany,
and costs $80 per lamp. Each lamp
includes a battery and universal charger,
but does not include a solar panel. They
also offer a variety of LED lamps, batteries, solar panels, and more. The majority of their
technology is imported from abroad, with solar panels imported from the U.S., China, and
Germany. The battery for a pico lamp lasts from 2-5 years, and replacement costs $8. In
terms of providing credit, they partner with micro-credit organizations and various
foundations. They also have their own pot of money that they use.
Website: http://www.tecnosolsa.com.ni/


Soluz
Soluz is one of the oldest enterprises working with solar home systems. It was
founded in the mid-1990s by Richard Hansen, an engineer who has been working in the
Dominican Republic since the 1980s installing solar home systems. They have
established operations in the Dominican Republic and Honduras (see Figure 5). Since
inception they have served over 10,000 households and small businesses in off-grid areas.
There are negligible micro-finance
options available in these regions, and
government policies are largely
unfavorable for social enterprise
development. As a result, Soluz has
pioneered a different financial
approach, with a business model based
on unsubsidized micro-rentals. They
have been able to offer household PV
systems starting at $5 a month. Renting
systems is a good idea if microfinance
is not available, or if there is potential
of national grid extension in the near
future. Renting allows the customer to
avoid the expensive up-front payment.
It is also a good idea for customers who
Figure 5: Soluz coverage in the Dominican
Republic (top) and Honduras (bottom)
11
face a risky and unstable financial future (like farmers who depend on an unpredictable
growing season), since there is not a long-term commitment. The downside to renting is
that it requires significant capital investment from the enterprise to make the business
viable. Soluz is one of the world leaders in innovation, and has pioneered their model of
rentals to become the world leader in rural PV rental systems.
Website: http://www.soluzusa.com/

Quetsol
Quetsol is a for-profit company that provides solar home lighting systems for
customers in rural Guatemala. In Guatemala there are around 500,000 homes without
light, about 20% of the population. They provide a simple, easy to use plug n play kit
that consists of up to 3 LED light bulbs and a universal cell-phone charger (Figure 6). Their
solar panels will last about 20 years, LED light bulbs about 7-8 years, and the batteries
about a year and a half. The biggest maintenance challenge is replacing the batteries,
which needs to occur every couple of years and costs about $20-$30. Therefore, when
they sell kits, customer training
consists of informing them how
to operate the system to
optimize battery life and to make
them understand the costs of
replacement. Furthermore, they
plan specific maintenance days
Figure 6: Quetsol solar home lighting kit
12

where they invite all consumers in a certain area to bring in their systems to change the
batteries. A large indigenous population lives in rural areas of Guatemala, and there are
22 indigenous languages spoken among them. This presents a cultural barrier, and to
overcome it they use local sales people. 90% of their systems are sold through micro-
credit. They have partnered with banks, including one of the biggest banks in Guatemala,
Banrural, as well as one of the largest micro-finance institutions in Central America,
Genesis Empresarial. Quetsol also partners with local NGOs to better connect themselves
to the community, and have received funding from a variety of foundations. They have
recently constituted the Quetsol foundation, a non-profit arm designed to bring lighting
solutions to people unable to afford systems through commercial operations.
Website: http://www.quetsol.com/

Grameen Shakti
Grameen Shakti (shakti means energy in Bengali) was created in 1996 as a non-
profit organization designed to deliver climate-friendly and reliable energy to the poor in
Bangladesh. It is a subsidiary of Grameen Bank, the well-known pioneer organization of
micro-finance started by Muhammad Yunus. They utilize their expertise in micro-finance
to make renewable energy applications affordable to rural people. As of October 2011,
they have opened 1,348 total offices, employed 10,800 people, and installed 718,146
solar systems. See Figure 7 for a year-by-year breakdown of growth in installations of solar
home systems. They have calculated that one of their solar home systems replaces about
374 kg CO
2
from entering the atmosphere annually, and saves between $6.00$7.50 per
month on kerosene fuel costs.
In terms of financing, the organization has developed four different credit schemes
to make solar home systems affordable. Customers pay different proportions of down-
payments and monthly installments based on their financial circumstance. These are
supported by low-interest loans made possible by foundations and the World Bank.
Grameen Shakti has also received grants from USAID to cover overhead costs. Grameen
Shakti has tried to involve the local community by starting a network of technology
centers. These are managed mainly by women engineers, who then train other women as
solar technicians. They serve to service and repair systems in their areas, and manufacture
solar home system accessories. They have also received the European Solar Award in
2003 and the Ashden Award for Sustainable Energy in the UK in 2006.
Website: http://www.gshakti.org/
Figure 7: Annual Installations of SHS, Grameen Shakti
13
Casa Solar
Casa Solar is a renewable energy organization located in Quetzaltenango,
Guatemala that works on a variety of sustainable development projects, including
installations of solar home systems. The kit they have used consists of a 50W solar panel,
4 compact fluorescent lamps, a 5-amp charge controller, 105-amp battery, and a cell
phone charger. They import their panels from Germany, China, or Spain. While Casa
Solar is a for-profit enterprise, they incorporate social development aspects in their
projects. For example, on a recent project they partnered with a foundation to deliver 58
solar home systems to a community. They then used the profits to purchase a communal
refrigerator so the residents can sell ice cream, cold drinks, and more to generate
additional income for the community. They are also looking to partner with local banks to
provide credit. Casa Solar is smaller than some of the other companies profiled here, yet is
innovative and promising.
Website: http://casasolar.com.gt/

Barefoot College
Barefoot College in India has been working with solar electrification in non-
electrified villages since 1989. The Barefoot method involves working with rural villages
that express a need. They will then take a few local community members and train them
for six months in India to become solar engineers, who will then return to their
communities to install, maintain, and repair solar lighting units. Barefoot college
encourages communities to send middle-aged and poor women to be trained as solar
engineers, even if they have no previous qualifications. They dont even need to be literate.
Part of this is because they want people with strong roots in the community who will
return to the village and work for its development instead of finding a job in the city after
they are trained. In addition to India, Barefoot College has brought in and trained
engineers in 25 total countries spanning Asia, Africa, and Latin America, and speaking
English or Hindi is not required. The College has partnered with Indias Foreign Ministry,
which covers the travel costs of bringing in women from other countries to train in India.
The entire community must be involved in the electrification process; every
individual who expresses an interest in acquiring a unit must pay a proportional and
affordable monthly contribution, irrespective of how poor they are. This payment is
proportional to how much the household spends on kerosene, candles, wood, and other
lighting materials each month. In addition, the community must donate a building for
building and storage of solar systems, and identity individuals who will be responsible for
punctually collecting the monthly fees for the solar systems. A percentage of the financial
contributions go to the barefoot solar engineers, and the rest covers the system costs. The
Barefoot model for implementation of community-owned and managed solar systems has
resulted in solar-electrification benefiting nearly 190,000 people in over 750 communities
in 16 states in India and is being replicated in 24 other countries in Africa, Latin America
and South Asia.. The scale they have achieved with their unconventional approach shows
its success. The thousands women engineers they have trained, including grandmothers
and illiterate widows, has resulted in many inspiring stories.
Website: http://www.barefootcollege.org/default.asp
Organizational Structure
The organizational structure for this venture will be very community-focused,
especially at the beginning. When entering a new village, one of the first goals is to find
and establish a relationship with a local champion. This will ideally be a respected village
leader who wants to bring solar electricity to the village. Furthermore, it will be important
to begin building local capacity right away. Therefore, early adopters will need to be
identified who have a desire to acquire a system, as well as the ability and time to be
technically trained regarding its operations. The early adopters need to be able to afford a
system, be committed to their community, and be willing to put in the time to build and
understand the system before adoption. The system will be built using locally sourced
materials to the greatest extent possible, including components of the solar panel. This will
keep prices low, benefit the local economy, and provide an opportunity for the owner to
become knowledgeable about the system.
One of the requirements for the early adopters will be that they need to participate
in the building of their systems. This is part of the training they will go through that will
teach them how to operate an SHS and perform maintenance and necessary repairs. For
example, the battery lasts a few years before needing to be replaced, so this will need to
be a part of training. Once more systems are purchased in the community, these early
adopters can provide the installation and maintenance services to others who are
interested in owning a system but may not have the time or technical knowledge to build
it themselves. Once the business model is in place, these early adopters may become
employees of the venture and perform their services for a fee. A potential community
worth exploring for this venture is in Yambiro, Ecuador. The College of St. Benedict and St.
Johns University already have an established relationship with the residents, and they
have been open to working with students and faculty on developmentally-related projects,
including the building of a greenhouse.

Budget
This is meant to be a rough
and preliminary budget. The travel
and living expenses are
approximate. Furthermore, the
components of the solar home
system were found using Google
Shopping. For these products, much
more due diligence will need to be
done in order to figure out what
specific types of components work
best with each other to obtain the maximum performance at least cost. The panels used in
this budget will be imported. However, a conclusion from this report is that additional
cost savings may be achieved by building the individual solar panels instead of importing.
Most likely the individual silicon solar cells will need to be imported but it is probable that
the rest of the necessary materials can be found at hardware or electronic stores in a
nearby city.
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Conclusions
As demonstrated in the previous case studies, this technology is viable and ready to
be distributed to the worlds poor. Solar home systems are simple, easy to install (can be
made for plug-and-play), and the most effective option in distributing power to the
worlds poor and remote. They provide better quality of light, are cleaner, more
environmentally friendly, and save money in the long run compared to non-electric
sources of light like candles and kerosene lamps. The main barriers to SHS adoption
include lack of rural infrastructure (relating both to setting up the supply chain and
financing), suspicion and lack of knowledge among rural people, lack of skilled labor for
installation and maintenance, and most significantly the high upfront cost. It is essential to
invest time to understand the needs and characteristics of the target communities.
Furthermore, microfinance must be available to make affordable the upfront investment of
a solar home system. This could be through loans from a local bank; or, a community
revolving-loan-fund could be established to provide loans. After doing an industry analysis
and studying a variety of companies operating in the field, the following best practices
have been concluded:
Door-step service and customized solutions. While it may be tempting to
standardize the product for convenience and easy production, not all rural
individuals will have the same energy needs, and the amount each family can
afford will differ. Upon greater understanding of a community's energy needs will
come the realization that more is needed than just lighting solutions. That is why
many companies eventually branch out and provide other technologies, including
solar water heaters, stoves, and wells. A one-size-fits-all approach will not work.
Community-committed solar champions. For technology adoption to be
successful in any community, it will need committed local residents. Ideally
members of the community can serve as salespeople and technicians if they
receive proper training. Local champions will understand the community and relate
to the customers better than any outsider.
Local supplies and manufacturers. Using locally sourced supplies can save money
and contribute to the local economy. Furthermore, importing solar panels from
China, the US, or Germany, as most SHS companies do, is expensive. The entire
solar home system can be simply built using most if not all materials purchased in
country. Training engineers who are community members to build the panels
further builds local capacity. Money that would otherwise end up as profit for an
international corporation stays in the local community where the need is greater.
Not many of the companies studied here employ this strategy, with the exception
of Barefoot College and to some extent SELCO Solar.
Microfinance. As discussed in depth earlier, affordable financing is essential for
making the investment in an SHS affordable. Purchasing a solar home system for a
rural villager is roughly the equivalent for an average American purchasing a new
car. Most companies have partnered with local banks and/or microfinance
organizations to provide the necessary financing. Generally, a finance plan will
require a 15%-25% down payment with the rest paid in monthly installments over
a period of 2-3 years. A strategy not employed by the larger companies, but one
that is more community-centric, involves establishing a locally managed revolving
loan fund.

The research put into this report is sufficient as an exploratory and initial feasibility
study. Much more work would be necessary for a social venture of this nature to be
successful. First of all, a target community will need to be decided on as the first location
to sell SHS. This will need to be a community in which the residents have expressed a
need and desire to acquire solar home systems. As mentioned before, the community in
Yambiro, Ecuador would be a good community to look at first because of already
established relationships and because they have been open to collaborating on projects in
the past. An important factor to consider is if there is a local champion and an early
adopter(s) willing to put in the time to learn about the technology and promote it to his/her
neighbors. Another consideration is availability of local materials within an accessible
distance to the village. Finally and most importantly an assessment of current electricity
and lighting usage will need to be done to determine if there is an adequate need for
electricity in the village. After all this is taken into consideration, seed funding will need to
be acquired from social investors, another significant hurdle.
Solar home system technology offers the epitome of sustainable development. If
implemented correctly, it will begin to lift rural communities out of poverty in an
environmentally friendly way. Furthermore, if technical training is accompanied with sales,
community members are left with greater knowledge than before, which can lead to future
jobs and greater income. This benefits local economies and creates a positive feedback
cycle that can work to light up the darkness for millions of the worlds poor.




















Footnotes
1. Soluz, Inc, Web. <http://soluzusa.com>.

2. Rogers, Everett M. Diffusion of Innovations. New York, NY: Simon & Schuster,
2003, 161.

3. Rebane et al, Knowledge and Adoption of Solar Home Systems in Rural Nicaragua,
Energy Policy, 2011.

4. John Rogers, Innovation in Rural Energy Delivery: Accelerating Rural Energy Access
Through SMEs, Navigant Consulting & Soluz, Inc., 36.

5. The welfare impact of rural electrification a reassessment of the costs and benefits ;
an IEG impact evaluation, Washington DC, World

6. John Rogers, Innovation in Rural Energy Delivery: Accelerating Rural Energy Access
Through SMEs, 69.

7. Ibid, 17.

8. E+Co, Energy Through Enterprise, Web. <http://eandco.net>

9. John Rogers, Innovation in Rural Energy Delivery: Accelerating Rural Energy Access
Through SMEs, 51.

10. Tecnosol, Energa en Sus Manos, Web. <http://www.tecnosolsa.com.ni>

11. John Rogers, Innovation in Rural Energy Delivery: Accelerating Rural Energy Access
Through SMEs, 61.

12. Basic Energy, Quetsol Solar Energy Kit, Web.
<http://www.quetsol.com/index.php?option=com_content&view=article&id=87%3
Acontent-energia-basica&catid=37&Itemid=90&lang=en>

13. Grameen Shakti Growing as a Social Business to Meet the Energy Needs of Rural
People, Web.
<http://www.gshakti.org/index.php?option=com_content&view=article&id=57&Ite
mid=77>





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