I've seen Harish Hande, the founder of India's SELCO (Solar Electric Light Company) twice now, both times at MIT, most recently on October 7.
In operation since 1995, SELCO has installed solar lights for 105,000 clients, has 25 centers in the state of Karnatika, and makes a profit. As the poor spend 10-12% of their income on energy services, Hande says solar is expensive for the rich but affordable for the poor. SELCO arranges the financing. The solar is paid at 12-14% interest and the cost for solar is less, on a daily basis, than the fuel it replaces, usually kerosene. Need is customized while want is standardized.
However, it's not the technology, it's what it provides. Higher productivity does not lead to higher income unless the market expands. SELCO helps make the connections that can lead to that market expansion.
http://www.sramanamitra.com/...
The whole philosophy of Selco is to provide a reliable energy service at the doorstep of the underserved.
http://www.sramanamitra.com/...
We believe our product is a mix between technology and financing.
How flexible you are to the need of the end user with technology should be mirrored in financing. This philosophy also helped us look beyond just solar in terms of energy services, and from there we were able to launch ourselves as a one stop energy services organization. We look at a house and think of it as a black box, and then look at it in terms of what energy services we can deliver to it.
http://www.sramanamitra.com/...
We asked them what they would do if they had more light, and they told us they were very good basket makers.
The problem was that they did not have the time during the day to make baskets, and there was not enough light at night to work then either. I asked them how much they sold the baskets for, and they told us 30 rupees, and that they could make two or three per night.
I asked them if they would be willing to give 5 rupees per basket to pay for the light, and they said absolutely. We connected them to somebody who was willing to wholesale the baskets made by these 98 homes. The clients paid 5 rupees per basket for the loan, and in four years they had paid off the loan for the lighting. If you consider it, this is 300 rupees per month for them, which is $7 per month for a light. That is what THEY paid, it was not subsidized by someone else.
The moral of the story is if you can create a product which matches their needs, it does not matter how poor they are. World Bank has always said that solar does not make sense for them because they were too poor, but here you can see if the need is matched, then it is a productive fit.
We have not done anything extraordinary, we have just been a catalyst between two resources. The idea came from them, and we had tools to link them to the market. Other than that, we did nothing else. There is enormous potential if you just look at the whole chain, find the weakest link and strengthen it. It may be a financial link, where they cannot afford the margin money so you work with the financial institution to get the margin money financed.
This point on the conflict between the developed and developing world markets for renewables is especially interesting:
http://www.sramanamitra.com/...
Plain and simple, the German market killed us. I always bought solar panels and solar products from India. When Germany suddenly implemented a subsidized program, it sucked up the world's production.
Manufacturers in India had a shortage of modules needed to build the products I used.
Second, manufacturers changed and stopped building the smaller modules so they could make larger ones for Germany. My lead times increased, and for a small company like me it went from 15 days to 90 days. The cost of the panels increased by 47% over 18 months. Both of those issues hurt us very badly.
All of the manufacturers were getting much larger orders from Germany, and they are getting cash orders from Germany. People always say when volumes go up, costs go down, but in our case it was the exact opposite. My argument is that if sustainable channels of energy are not supported in the developing world, it is a much greater threat to climate change. People will continue using kerosene and other forms of energy that are bad for the environment, because they have no option.
