Electrifying India with sun and loans
Costly solar power coupled with cheap financing is helping villages reduce kerosene use
NEW YORK: A few years ago, the hundred or so residents of Paradeshappanamatha, a secluded hamlet in Karnataka, gathered along the central pathway between their 22 densely clustered homes and watched as government workers hoisted a solar-powered streetlamp.
As the first display of electricity in the town, it was an object of mild interest, but, being outside, the light didn’t help anyone cook or study, and only attracted moths.
Still, when B Prasad arrived two years later to encourage people here to abandon kerosene lighting for solar-powered home systems, people had some idea what he was talking about. What sounded preposterous to the village residents was the price. Prasad, an agent for Solar Electric Light Co, or SELCO, was selling a panel and battery that would power three lights and an attached socket for phone charging for approximately ₹12,800.
“There was no way we could afford that,” PC Kalayya remembers thinking. Kalayya earns almost ₹200 a day and half his wage is withheld by his employer as repayment for various loans.
And yet, despite what seemed on its face an impossibly high cost, SELCO agents succeeded in persuading Kalayya and 10 other village households to make the switch.
The idea behind SELCO, and other companies like it, is to create a business model that will help some of the 1.2 billion people in the world who don’t have electricity to leapfrog the coal-dependent grid straight to renewable energy sources.
About a quarter of the world’s off-the-grid people, or 300 million or so, live in India, mostly in remote, rural communities or in informal urban settlements. Hundreds of millions more get electricity for only a few hours a day. Prime Minister Narendra Modi has pledged to achieve universal electrification in India by the end of 2022. His main effort is adding hundreds of new coal plants, which have contributed to near-apocalyptic pollution levels.
Solar power accounts for just 1% of India’s current electricity production, mostly through large plants that contribute power to the grid. “Why is it always about a grid?” asked Harish Hande, a co-founder of SELCO India. It was one of the first of more than 40 companies now offering solar home systems in India. Since its inception in 1995, SELCO has sold 318,400 solar home systems, and has provided power systems to almost 10,000 schools, hospitals and other institutions, almost all in Karnataka.
“Solar home systems have been around for a long time by now, and they are a successful model,” said Robert Stoner, the director of the Tata Centre for Technology and Design at MIT. “Their challenge is that they cost a lot — far more than the average person has, even a relatively well-off person.”
So if it is difficult to persuade a middle-class family in an industrialised country to invest in solar, how do you persuade a family that lives on a couple dollars a day?
For two decades, SELCO has worked to persuade a network of banks to provide financing options to poor people who were typically seen as too risky. As Mohan Hegde, the company’s operations manager, noted, “The idea is to take a poor man to the bank and see if what he can afford to pay per month is acceptable to the lenders.”
The sales presentation, once it includes assurance of financing from a bank, is much more palatable to potential customers: Pay the bank monthly installments of roughly the same price you’d spend on kerosene, and in a few short years, you’ll own the system and your basic energy needs will be fulfilled by the sun.
Without financing, renewable energy could never compete in with kerosene, which is cheap because the government subsidises its sale at a cost of more than $5 billion (over ₹33,000 crore) a year. Use of kerosene contributes to carbon emissions, but also to more personal and immediate hazards such as skin irritation, respiratory problems and a significant fire risk. Ultimately, it provides only dim, flickering lighting.
“When we say free, their ears prick up,” Prasad said.