Shining examples: solar financing is setting up shop, and for the 2 billion people who still have no electricity, help may be on the way.
Until May 1996, the Ramji family of Andhra Pradesh Andhra Pradesh (än`drə prä`dāsh), state (2001 provisional pop. 75,727,541), 106,052 sq mi (275,608 sq km), SE India, on the Bay of Bengal. The capital is Hyderabad. , India had a problem that is all too common in the developing world - they lacked reliable electricity to light their home. Each month they used about 10 liters of kerosene kerosene or kerosine, colorless, thin mineral oil whose density is between 0.75 and 0.85 grams per cubic centimeter. A mixture of hydrocarbons, it is commonly obtained in the fractional distillation of petroleum as the portion boiling off for lamps that shed only dim light and coated their walls with soot. When they tried to obtain power by illegally stringing a cable from a power line in the nearby town of Nizamabad, they discovered that the state electricity system was prone to frequent black-outs; the Ramjis' "unofficial" electricity was hardly better than no electricity at all.
In the summer of 1996, one of the Ramji daughters was to be married, and her father wanted to ensure that the wedding festivities fes·tiv·i·ty
n. pl. fes·tiv·i·ties
1. A joyous feast, holiday, or celebration; a festival.
2. The pleasure, joy, and gaiety of a festival or celebration.
3. would be lit. As Mr. Ramji asked around, he learned of a possible replacement for his sooty soot·y
adj. soot·i·er, soot·i·est
1. Covered with or as if with soot.
2. Blackish or dusky in color.
3. Of or producing soot. lamps - a small array of photovoltaic The generation of voltage by a material that is exposed to light in the visible and invisible ranges. See photoelectric and photovoltaic cell. (PV) cells, the wafer-thin silicon chips that directly convert sunlight into electricity. A local solar-service company called SELCO SELCO Southeastern Libraries Cooperating
SELCO Ships Electronic Configuration File was beginning to market such systems, but they were dauntingly daunt
tr.v. daunt·ed, daunt·ing, daunts
To abate the courage of; discourage. See Synonyms at dismay.
[Middle English daunten, from Old French danter, from Latin expensive: about $540 for what the Ramjis needed, well beyond the reach of their modest income from selling the sugarcane, corn, and vegetables they raised on their six hectares of land.
In order to afford solar electricity, the Ramjis needed something that is readily available to middle class families in industrial countries who are considering major purchases such as homes or automobiles: a loan that would allow them to spread the cost over a period of months or years rather than having to pay the entire bill up front.
Fortunately, India's Syndicate Bank Syndicate Bank, established in 1925 in Udupi (in Karnataka, India) by Upendra Ananth Pai, Vaman Kudva and Dr. T. M. A. Pai, is one of the oldest and major commercial banks of India. had begun offering credit for solar systems just a few months earlier. The Ramjis got a loan that let them put $54 down and pay $11 per month over a period of 48 months. They were skeptical about how the solar system would work, but as Mr. Ramji told Damian Miller Damian Donald Miller (born October 13, 1969 in La Crosse, Wisconsin) is a professional baseball catcher for the Milwaukee Brewers. Miller attended Viterbo University in La Crosse, Wisconsin and as a senior, was named the NAIA District 14 Player of the Year and helped lead his team , a Cambridge University Cambridge University, at Cambridge, England, one of the oldest English-language universities in the world. Originating in the early 12th cent. (legend places its origin even earlier than that of Oxford Univ. PhD candidate studying the commercialization of solar systems in developing countries, if the system didn't work he could stop paying his monthly installments and dump the panel at the bank's branch office, a kilometer away. He decided to buy.
Within days, the Ramjis had become mavericks in their tiny tribal hamlet of Tamda. Local electricians mounted a shiny silicon panel on a pole outside their front door, pointed it toward the sun, then ran copper wires to a battery located just inside the home. Connected to the battery were compact fluorescent lightbulbs that would provide light for the daughter's wedding as well as ongoing illumination for their three rooms.
The down payment and monthly installments on the Ramjis' solar system were well above their earlier expenditures on kerosene, but the high quality light and independence were worth it. The wedding proved a success, and soon, neighbors were asking how they might acquire a similar system. A pleased Mr. Ramji told Miller, "With solar we need not depend on others. We have our own power." Soon, he was planning the next step: "Now I want a TV."
Around the world, an estimated 400,000 families have installed solar home systems over the last decade, allowing children to read in the evening and providing parents with additional opportunities for supplemental income, such as sewing or weaving. But another 2 billion people - one-third of the world's population - still lack access to any electricity at all. The great majority of these people, like the Ramjis, could not afford to pay cash for a solar home system. If they are to get electricity anytime soon, they will need the same service that builders of massive coal and hydro plants have counted on for decades: affordable financing.
Since Thomas Edison started the world's first power company in Manhattan in 1882, thousands of cities have been connected to electric lines. These power "grids" link consumers to increasingly distant and progressively larger power plants - often smoke-emitting, coal-fired generators, or gigantic hydropower hy·dro·pow·er
Hydroelectric power. stations that harness the energy of falling water. Rural areas are generally the last to get electricity.
In recent decades, developing countries have joined the electrification e·lec·tri·fy
tr.v. e·lec·tri·fied, e·lec·tri·fy·ing, e·lec·tri·fies
1. To produce electric charge on or in (a conductor).
a. bandwagon, as governments have sought to provide power for communications and education, as well as to boost the productivity of industry and agriculture. For politicians, providing electricity for voters is often seen as the surest route to re-election. As a result, an estimated 1.3 billion people have received power in the last 25 years. About 75 percent of China and 80 percent of Argentina, Colombia, and Brazil, for example, are now fully electrified, supplied with power for such amenities as refrigerators and washing machines, as well as lights, television, and radio.
Although billions of dollars have been spent on these efforts, with the support of the World Bank and other development assistance agencies, rural electrification rural electrification
Project of the U.S. government in the 1930s. As part of the New Deal, the Rural Electrification Administration (REA) was established (1935) to bring electric power to farms, thereby raising the standard of rural living and slowing the migration of farm has run out of steam in many countries. In Africa, there were 100 million more people without electricity in 1990 than there were two decades earlier, and in South Asia This article is about the geopolitical region in Asia. For geophysical treatments, see Indian subcontinent.
South Asia, also known as Southern Asia 140 million more.
Electrification has been slow in coming to many people for a number of reasons. Rural areas are always more expensive to serve than cities are. In the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. , it was only after the government established the Rural Electrification Administration Rural Electrification Administration (REA), former agency of the U.S. Dept. of Agriculture charged with administering loan programs for electrification and telephone service in rural areas. in 1935 to provide low-cost financing for rural electric cooperatives that most farmers received power.
Many developing countries now have similar programs, but as the frontier of electrification has moved to increasingly remote and mountainous areas, the cost of hooking up new customers has grown exponentially. The World Bank estimates that in places like Western China, the Amazon or the Himalayan foothills, where the population density is low, the cost of hooking up new rural customers can be 70 cents per kilowatt-hour - seven times the rate in cities.
To make a bad situation worse, state-owned power systems have been badly mismanaged in many countries. With little incentive to be efficient, they have poorly maintained their power plants and lines and have looked the other way as potential customers steal electricity by surreptitiously sur·rep·ti·tious
1. Obtained, done, or made by clandestine or stealthy means.
2. Acting with or marked by stealth. See Synonyms at secret. tapping into nearby power lines. Graft and corruption in the state-owned power companies in developing countries have in many instances worsened the situation, leaving the national electricity systems all but bankrupt, and making blackouts increasingly common.
Sunlight to the Rescue
In India, the public power system is now so prone to blackouts that many urban factories and other businesses have begun at great cost setting up their own private systems as the only practical way to obtain reliable power - usually based on diesel engines that run on natural gas, propane, or fuel oil. Rural families like the Ramjis do not have access to these fuels. What they do have - sunlight - doesn't have to be delivered, and is always free. In most tropical countries, the energy contained in the sunlight that falls on a rooftop exceeds the electricity needed by the occupants within. The problem is how to harness it.
Ironically, the solution to the energy problems of the rural poor may lie in what is arguably the most sophisticated energy technology yet developed. Solar photovoltaic cells are semiconductor devices made of silicon - similar to but far less expensive than the chips used in computers - that convert the energy from sunlight directly into electricity, avoiding any need for the costly and environmentally compromising mechanical turbines and generators that provide most of the world's electricity today.
The precursors of the modern solar cells used by the Ramjis did not emerge until 1954, when a small team of scientists at the Bell Laboratories in New Jersey built a cell made of silicon - found in common quartz (silicon dioxide silicon dioxide: see silica.
(SiO2) A hard, glassy mineral found in such materials as rock, quartz, sand and opal. In MOS chip fabrication, it is used to create the insulation layer between the metal gates of the top layer and the silicon elements below. ) and sand - that converted 4 percent of the sunlight that strikes it into electricity.
The first silicon solar cells cost more than a thousand times as much as power from conventional plants, not because of the cost of the material, which is cheap, but because of the initial difficulty of fabrication fabrication (fab´rikā´shn),
n the construction or making of a restoration. . After building a few prototype solar panels, Bell Labs decided that no commercial applications were within reach. The new technology was saved from obscurity, however, by the U.S.-Soviet space race in the 1960s. In the rush to find a practical way to power satellites, U.S. space scientists dusted off the solar cell, and poured millions of dollars into additional research. Within a decade, the price of solar cells was cut by 90 percent, but was still too high to compete on earth.
The 1973 oil embargo Oil embargo may refer to:
Some of this growth was spurred by Japanese electronics companies, which demonstrated the versatility of the technology when they came up with a particularly ingenious application in the mid-1980s - attaching tiny solar cells to small consumer devices such as handheld pocket calculators. These require only a trickle of electricity - well within the capability of a small solar cell. In recent years, the Years, The
the seven decades of Eleanor Pargiter’s life. [Br. Lit.: Benét, 1109]
See : Time Japanese have sold an average of about 100 million such devices annually.
Experts believe that solar cells eventually can be made so inexpensive that they can provide economical power even for consumers who are already hooked up to conventional power grids. That will require cutting the price of solar power to a quarter of what it is now, or lower. This is a big challenge, but one that is not unfamiliar to the semiconductor industry, which for several decades has been able to double the amount of digital information that can be imprinted on silicon computer chips every 18 months.
Several companies have already developed roof tiles and shingles shingles: see herpes zoster.
or herpes zoster
Acute viral skin and nerve infection. Groups of small blisters appear along certain nerve segments, most often on the back, sometimes after a dull ache at the site; pain becomes made of solar cells that are intended to be used on standard suburban homes, thousands of which have already been installed in Europe, Japan, and the United States - thanks to government subsidies that reduce the cost to consumers. In progressive areas of California, Germany, and Switzerland, consumers are actually opting to pay higher utility bills if their power company will mount solar panels on their rooftops.
White Sun Rising
Although not yet economical for most middle-class families in industrial countries, solar technology is already the best buy in electricity for millions of households in the developing world.
During the 1980s, government aid agencies and non-governmental organizations developed several schemes to bring solar electricity to the developing world. They distributed scores of solar water pumps, and electrified villages by wiring all the homes to a large bank of solar panels. Most of these systems failed shortly after the experts who had installed them went home, however, since no one had been trained to service the communal systems, and spare components were not available.
During the 1990s, a different approach to solar electrification has taken hold, driven less by government planners and more by the desire of individual families like the Ramjis to meet their own needs for electricity services. In more than a dozen countries, solar power is now reaching thousands of families one-by-one - avoiding the interminable wait for government planners to deliver the promised electricity.
Solar home systems are typically tiny - less than a square meter Noun 1. square meter - a centare is 1/100th of an are
centare, square metre
area unit, square measure - a system of units used to measure areas in size. Many have a generating capacity of just 20 to 100 watts - the amount of power typically used by a single conventional (incandescent) lightbulb or small television in the United States This article is about television in the United States, specifically its history, art, business and government regulation. Information about television technologies is covered in the main television article and elsewhere. . But 50 watts is enough to power four small fluorescent bulbs and a 15-inch black-and-white-television for up to five hours a day, and for rural villagers that can be life-transforming. Women and children often benefit particularly, not only because the added reading light and television exposure increases their chances of closing the education gap, but because the new system eliminates the health hazards of kerosene fumes fumes
odorous gases and other volatile materials; inhalation of irritating fumes causes coughing and, if sufficiently severe, irreversible pulmonary edema. that otherwise fill the rooms where they spend much of their time doing domestic work.
One place where solar power has proved popular is Kenya, where the state power company is on the verge On the Verge (or The Geography of Yearning) is a play written by Eric Overmyer. It makes extensive use of esoteric language and pop culture references from the late nineteenth century to 1955. of bankruptcy, and many rural dwellers have given up on ever getting electricity. But meanwhile, eight domestic companies have emerged to market, install, and maintain solar home systems. With little government or international assistance - and in the face of import taxes as high as 30 percent for the imported modules - these companies managed to electrify e·lec·tri·fy
tr.v. e·lec·tri·fied, e·lec·tri·fy·ing, e·lec·tri·fies
1. To produce electric charge on or in (a conductor).
a. 20,000 rural households between 1987 and 1992 - 3,000 more than the state power company did during the same period.
Other private suppliers have sprung up in electricity-poor regions from South Africa South Africa, Afrikaans Suid-Afrika, officially Republic of South Africa, republic (2005 est. pop. 44,344,000), 471,442 sq mi (1,221,037 sq km), S Africa. to Sri Lanka Sri Lanka (srē läng`kə) [Sinhalese,=resplendent land], formerly Ceylon, ancient Taprobane, officially Democratic Socialist Republic of Sri Lanka, island republic (2005 est. pop. . Most of the silicon panels are manufactured in the United States, Japan, and Europe, though a few developing countries such as Brazil, China, and India are now producing their own. But even when the modules must be imported, much of the rest of a solar home system, including batteries, wiring, switches, controllers, and fluorescent lamps, can be assembled locally. Lead-acid batteries are used to store the solar electricity for use at night, and these are already available in many rural areas. Since solar panels have no moving parts Moving parts are the components of a device that undergo continuous or frequent motion, most commonly rotation. "Parts" only include the mechanical components which does not include fuel, or any other gas or liquid. , maintenance is relatively simple, and the systems are likely to last at least 20 years, with occasional cleaning of panels and replacement of batteries. And local people can be trained to install and maintain them. Yet, despite these advances, only one of every thousand potential beneficiaries of solar electricity has yet been served. For the other 99.9 percent, few have access to solar-service companies. Those who do face the same hurdle that just a year ago confronted the Ramji family: lack of credit.
Consumer credit has been one of the most momentous financial advances of the twentieth century, leading to wide ownership of homes, automobiles, and appliances that the average person cannot afford to purchase outright. For example, many young couples in the United States purchase homes valued at $150,000 or more. Although that figure may be ten times a couple's financial net worth, almost any local bank can offer them a home loan that breaks the purchase down into a long series of monthly payments of about $900 - well within their financial reach.
According to according to
1. As stated or indicated by; on the authority of: according to historians.
2. In keeping with: according to instructions.
3. Neville Williams Neville "Chappy" Williams is an elder of the Wiradjuri Nation, in Western New South Wales. Known as "Uncle Chappy" to those who follow indigenous Australian customs, he is a regular at the Aboriginal Tent Embassy in Canberra and a key opponent of the Barrick Gold Corporation's gold , president of the non-profit Solar Electric Light Fund Solar Electric Light Fund (SELF) is a non-profit organization set up to promote, develop, and facilitate solar rural electrification and energy self-sufficiency in rural areas, especially in developing countries. (SELF) in the United States, millions of families in the developing world could afford solar power tomorrow, "if they could just get a loan to pay for it." Williams points out that a 50-watt solar home system would cost roughly $550 to $600, or six months of income for even well-to-do rural families in countries such as Mexico or the Philippines. However, if bank loans were available to finance such systems, they could be paid for with a $50 to $100 downpayment and $10 to $20 monthly installments. This is competitive with the amounts many people are already paying for batteries that are regularly carried to nearby towns for recharging, says Williams. It's also competitive with kerosene; a survey of two villages in Senegal found that the cost of lighting with kerosene averaged $8 to $14 per month per family. In a few countries, private financial institutions have begun to provide loans like the one provided to the Ramji family by the Syndicate Bank in India. However, in most developing countries, credit is only available for large companies and wealthy individuals; most poor consumers and businesses are still left behind.
To fill this gap, the Solar Electric Light Fund is working to set up revolving credit Revolving Credit
A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. funds to finance solar home systems in several developing countries. In Vietnam, it has joined with the Vietnam Womens' Union to electrify 240 homes and five community centers in three remote provinces. To cart PV panels made in Troy, Michigan Troy is a city in Oakland County of the U.S. state of Michigan. It is a suburb of Detroit. As of the 2000 census, the city had a total population of 80,959, the 12th largest city in Michigan by population. to the community of Long Hoa, deep within the Mekong Delta
The Mekong Delta (Vietnamese: đồng bằng sông Cửu Long , SELF consultants travel five hours by car from Ho Chi Minh City Ho Chi Minh City, formerly Saigon, city (1997 pop. 5,250,000), on the right bank of the Saigon River, a tributary of the Dong Nai, Vietnam. , then four hours by boat along the Mekong River Mekong River
Chinese Lancang Jiang or Lan-Ts'ang Chiang
Longest river of Southeast Asia. Rising in southern Qinghai province, China, it flows south through eastern Tibet and across the highlands of Yunnan province. ; to travel from one house to another in this community, local technicians navigate waterways and clamber clam·ber
intr.v. clam·bered, clam·ber·ing, clam·bers
To climb with difficulty, especially on all fours; scramble.
A difficult, awkward climb. over narrow, bamboo "monkey bridges." In one of its most ambitious projects, in the arid western Chinese province of Gansu, SELF has provided electricity for 1,000 families via the Gansu PV Company, a local enterprise for which it provided capital, with assistance from the Rockefeller Foundation Rockefeller Foundation, philanthropic institution established (1913) by John D. Rockefeller, Sr., to promote "the well-being of mankind throughout the world." During its first 14 years the foundation received $183 million from Rockefeller. . Many of the purchasers of these systems are semi-nomadic Tibetan herders, who carry their solar modules across the steppes on their yaks.
In India, SELF has gone a step further, to form a commercial Solar Electric Light Company (SELCO) to market and install solar home systems through a network of five service centers in the southern states Southern States
government of 11 Southern states that left the Union in 1860. [Am. Hist.: EB, III: 73]
popular name for Southern states in U.S. and for song. [Am. Hist. of Karnataka and Andhra Pradesh. After partnering with the Syndicate Bank to provide loans to customers like the Ramjis, SELCO had sold over 500 systems by early 1997. It hopes to have 4,000 such systems in place by 1998, and to have 25 to 30 service centers within the next few years.
The challenge now is to develop broader financing schemes that allow millions of additional families to afford solar home systems. Two model programs - in Indonesia and the Dominican Republic Dominican Republic (dəmĭn`ĭkən), republic (2005 est. pop. 8,950,000), 18,700 sq mi (48,442 sq km), West Indies, on the eastern two thirds of the island of Hispaniola. The capital and largest city is Santo Domingo. - offer lessons.
Indonesia is the world's fourth most populous country, with 200 million people spread across an archipelago of more than 3,000 inhabited islands, most of them mountainous. More than 60 percent of the country's rural households, with 60 million people, still rely on kerosene lamps or batteries for lighting.
As the Indonesian economy boomed in recent years, the government aimed to increase the share of villages with electricity from 49 percent in 1994 to 80 percent in 1999. But Indonesia's geography will not allow this goal to be reached solely by extension of existing electrical grids. Only Java and Bali, the two most populous of Indonesia's islands, have extensive electrical grids, and even they do not extend to many mountainous areas.
The Indonesian government has been interested in solar electricity since 1979, when the first solar water pumping The pumping of water is a basic and practical technique, far more practical than scooping it up with one's hands or lifting it in a hand-held bucket. This is true whether the water is drawn from a fresh source, moved to a needed location, purified, or used for irrigation, washing, or demonstration project was funded by the German government. Beginning in 1990, a government program called Banpres worked to install more than 3,000 household solar systems through village cooperatives. By 1992, the program was complete, and R&S, the Dutch manufacturer that had supplied most of the systems, withdrew from the market.
Rob DeLange, the former managing director of R&S, came to the conclusion that he could make a business of installing solar home systems directly to villagers - if he could just establish a workable financing mechanism. He bought the local solar operation of R&S, and used its assets to form a company called Sudimara, which purchases solar modules from an Italian firm and then assembles them into solar home systems in Indonesia.
Sudimara sells the solar home systems through a network of about 50 regional service centers, which provide marketing, installation, after-sales service after-sales service n (BRIT) (COMM) (for car, washing machine etc) → servicio de asistencia pos-venta
after-sales service n → service m , and credit. A standard one-panel, 50-watt system with 6 lights sells for about $450 (including delivery, installation, and service). Sudimara also offers larger two- and three-panel versions for wealthier families, but they comprise just 10 percent of the market.
About 10 to 15 percent of Sudimara's sales are in cash; the rest are purchased through various credit plans that cover periods ranging from one to four years. For instance, a customer can purchase a 50-watt system with a $110 down payment and $12 per month over 4 years. DeLange points out that if a dealer provides consumer financing, it opens a second stream of revenue based on the interest payments.
By October 1995, Sudimara had satellite offices in West and Central Java Central Java (Indonesian: Provinsi Jawa Tengah) is a province of Indonesia. The administrative capital is Semarang. It is one of the six provinces of the island of Java. Central Java is both a political entity and a cultural concept. , as well as Lampung. Its total portfolio of 5,000 loans was valued at $1.4 million, and had a remarkable payback rate of 100 percent. By July 1996, the customer list had grown to 8,000, and there still had been no defaults.
As Sudimara expands, it is redesigning its systems to make installation and positioning of solar cells as aesthetically pleasing as possible, and to incorporate them into an integrated service with energy-efficient radios and TVs. To expand to its full potential, though, Sudimara says it will need additional capital.
In contrast to the thousands of scattered islands of Indonesia Indonesia occupies most of the Malay Archipelago and extends into western Melanesia, as well. The country has 17,508 islands officially, with about 6,000 of those inhabited. , the Dominican Republic covers just the eastern two-thirds of one island, Hispaniola, which it shares with Haiti in the Caribbean. It is a relatively tiny country, with its 8 million people occupying an area about the size of Switzerland. Nonetheless, the government has had difficulty supplying electricity to most of its rural population.
In 1984, former Westinghouse engineer Richard Hansen saw that the electricity needs of the country's rural dwellers could be met through solar energy solar energy, any form of energy radiated by the sun, including light, radio waves, and X rays, although the term usually refers to the visible light of the sun. . He launched Enersol Associates, Inc., a U.S.-based nongovernmental organization nongovernmental organization (NGO)
Organization that is not part of any government. A key distinction is between not-for-profit groups and for-profit corporations; the vast majority of NGOs are not-for-profit. (NGO NGO
Noun 1. NGO - an organization that is not part of the local or state or federal government
nongovernmental organization ), and a Dominican counterpart, Asociacion para el Desarrollo de Energia Solar (ADESOL), to help finance solar system purchases through revolving credit funds.
Today, there are five NGOs in the country that provide revolving credit for the purchase of the $400 to $800 solar home systems. The arrangements typically include a 25 percent downpayment, a one to three year payback period Payback Period
The length of time required to recover the cost of an investment.
Calculated as: , and an 18 to 25 percent annual interest rate. Monthly installments work out to about $40 to $50.
Hansen and six Dominican partners also started a local PV equipment business, Industria Electrica Bella Vista Bella Vista (Spanish meaning "beautiful sight") is the name of several places in the world:
Still, census data indicate that some 400,000 Dominican homes remain without electricity. Hansen decided that a better financing scheme was needed, and came up with the idea of leasing solar home systems to customers. In June 1993, Hansen, with help from the Rockefeller Foundation, formed Soluz, a U.S.-based commercial affiliate of the IEBV PV supply business.
The rationale for leasing was to make solar home systems even more affordable by eliminating the need for a down payment, lowering the monthly charges, and allowing customers the flexibility to discontinue payments if necessary. The average monthly per capita income Noun 1. per capita income - the total national income divided by the number of people in the nation
income - the financial gain (earned or unearned) accruing over a given period of time in the Dominican Republic is $110, but a Soluz survey in the province of Puerto Plata Puerto Plata, city (1993 pop. 85,042), N Dominican Republic, on the Atlantic Ocean. It is the major northern port of the country, serving Santiago de los Caballeros and other inland towns. Dairy and cacao products are made there. showed that over half the households spent more than $6 per month' on kerosene lighting. Over 90 percent indicated an interest in renting solar panels.
Since it launched the leasing program in 1994, Soluz has installed and now services 750 solar home systems in 40 communities in the north coast province of Puerto Plata, where the principal industries are sugarcane and tourism. The monthly payment is $20 for a 50-watt system, and less for smaller systems. Families or businesses interested in leasing a system place their names on a waiting list. When enough people in a community have signed up, Soluz sets up a payment collection point and begins installations. Each household signs its own lease with the company and deposits its rent each month at the local collection point. If there is a problem with the system, the customer can leave a message at this collection point for the Soluz technicians who provide full servicing.
One customer, Santos Rodriguez, who owns a small general store in the community of Arroyo Seco Arroyo Seco (Spanish: "dry creek") may refer to:
Throughout Puerto Plata, hundreds of solar panels can now be seen sprouting from poles next to simple thatched thatch
1. Plant stalks or foliage, such as reeds or palm fronds, used for roofing.
2. Something, such as a thick growth of hair on the head, that resembles thatch.
3. Dead turf, as on a lawn.
tr.v. homes. In some communities, Soluz has achieved market penetration Noun 1. market penetration - the extent to which a product is recognized and bought by customers in a particular market
penetration - the act of entering into or through something; "the penetration of upper management by women" rates of up to 90 percent. Soluz now wants to reach 5,000 customers in the next two years, but to expand, it, like Sudimara, needs more long-term capital.
Banking on the Future
With the demand for electricity in much of the developing world now doubling every eight years, and with many national utility companies near collapse, many governments are racing to attract private capital from industrial countries for their power projects. But most of the money that has come their way so far has been directed into massive coal and hydroelectric projects, with price tags ranging from $1 to $10 billion.
Although many of these projects come at enormous environmental cost, industrial country investors continue to channel billions of dollars from North to South to keep the smokestacks rising. Private lenders such as Chase Manhattan Bank The Chase Manhattan Bank, now part of JPMorgan Chase, was formed by the merger of the Chase National Bank and the Bank of the Manhattan Company in 1955. The bank is headquartered in New York City. or ING in the Netherlands stand ready to provide large loans, while project developers such as Switzerland's ABB n. 1. Among weavers, yarn for the warp. Hence,
Noun 1. ABB - an urban hit squad and guerrilla group of the Communist Party in the Philippines; formed in the 1980s or the U.S.-based Enron Corp can provide equity capital - often backed with loan guarantees from export credit agencies Export Credit Agency
An agency established by a country to finance its nation's goods, investment, and services, often offers political risk insurance. such as the U.S. Export-Import Bank Export-import Bank (Ex-IM Bank)
The U.S. federal government agency that extends trade credits to U.S. companies to facilitate the financing of U.S. exports. . And waiting in the wings for projects that are less creditworthy cred·it·wor·thy
Having an acceptable credit rating.
credit·wor are the World Bank and other public sector lenders, which loan over $10 billion for power projects each year.
While the power markets of the 1990s seem awash in capital, virtually none of this money is directly available to the 2 billion people who still lack electricity. Both private banks and international aid agencies seem more interested in financing energy projects that increase dependence on fossil fuels and damage the environment - and typically benefit only urban populations - than in financing small-scale solar systems that could help the rural poor. One reason is the relative ease with which private capital is attracted to large projects. At an international conference on climate change last September, Rockefeller Foundation President Peter Goldmark Noun 1. Peter Goldmark - United States inventor (born in Hungary) who made the first TV broadcast in 1940 and invented the long-playing record in 1948 and pioneered videocassette recording (1906-1977)
Goldmark, Peter Carl Goldmark assured lenders that "in its present state, PV is strong enough to bet on today." He lamented the fact that money continues to flow to large fossil fuel plants, which he described as "all too financeable in the conventional capital markets."
Goldmark was referring to the huge debts incurred in the construction of a large power plant, which can often be converted into registered securities that large investors such as insurance companies and pension funds will buy. In contrast, companies such as Sudimara or Soluz, which provide solar home systems, have difficulty obtaining money from banks or investors who may still question the appeal of the technology or the creditworthiness Creditworthiness
The condition in which the risk of default on a debt obligation by that entity is deemed low.
Eligibility of an individual or firm to borrow money. of village customers. In response, manufacturers are working to standardize the quality of solar home systems, and service providers are developing an accreditation system to certify technicians who install and maintain the systems.
Perhaps the biggest problem facing solar-service companies is that their tiny size makes them uneconomical for large investors to support on an individual basis. A project of any scale will have fixed transaction costs Transaction Costs
Costs incurred when buying or selling securities. These include brokers' commissions and spreads (the difference between the price the dealer paid for a security and the price they can sell it). ; larger ones yield larger returns and are therefore more attractive to investors. The current PV production level is small - a single large power plant often exceeds 500 megawatts, whereas all the PVs shipped from manufacturers worldwide last year barely reached 90 megawatts. Christine Eibs-Singer of E&Co., the Rockefeller Foundation subsidiary that funds start-up costs for renewable energy Renewable energy utilizes natural resources such as sunlight, wind, tides and geothermal heat, which are naturally replenished. Renewable energy technologies range from solar power, wind power, and hydroelectricity to biomass and biofuels for transportation. projects, is frustrated by this catch-22: "Renewables won't make a big dent in the market without private investors, and yet renewables are now too small to attract private funds."
However, if the right financing mechanisms can be assembled, small companies should be able to tap the global markets. A U.S.-based investment advisory firm, Environmental Advantage, has studied existing solar-service companies and NGOs to describe how an ideal financing scenario might work: To offer customers a workable financing plan, a rural solar electricity vendor would approach a commercial bank or finance company for a loan or an equity investment. The bank or finance company would gather the individual solar loans into solar portfolios and sell them to an investment bank. The investment bank would bundle these into securities and sell them to insurance companies and other large institutional investors.
A handful of visionaries working at nonprofit organizations, private foundations, investment firms, and the World Bank have been trying in recent years to bridge this financial chasm. For instance, the World Bank has started to ask governments to eliminate tariffs on solar panels, reduce subsidies on grid electricity, and asking public utilities to cooperate with local solar-service providers, where they exist. A recent $44 million World Bank loan to Indonesia is the first to solely target solar home systems. Recognizing that local dealers such as Sudimara can channel credit to rural households, the Bank designed this "200,000 Solar Home Systems" project as a credit line to be offered by the Indonesian government specifically to dealers. The Bank's financing includes a $25 million grant (which does not need to be repaid) from the Global Environment Facility (GEF GEF Global Environment Facility
GEF Guanine-Nucleotide Exchange Factor (biology, biochemistry)
GEF Global Environment Fund
GEF Generic Extensibility Framework
GEF Graduate Education Foundation
GEF Global Ejection Fraction ), which can be tapped for projects that mitigate global warming global warming, the gradual increase of the temperature of the earth's lower atmosphere as a result of the increase in greenhouse gases since the Industrial Revolution. . (Solar technology, of course, offers an alternative to coal- or oil-fired power plants that emit large quantifies of carbon gases.)
The World Bank's private sector lending affiliate, the International Finance Corporation (IFC (Internet Foundation Classes) A class library from Netscape that provides an application framework and graphical user interface (GUI) routines for Java programmers. IFC was later made part of the Java Foundation Classes (JFC). See JFC, AFC and AWT. See also ICF. ), aims to bolster the solar market by directly providing incentives and funds to the private sector. Dana Younger, the GEF coordinator in the Environment Division at the IFC, describes the coming year as a period of "experimentation and evolution," with three major efforts likely to be channeling money into the PV market between mid-1997 and early 1998.
The IFC's GEF-funded PV Market Transformation Initiative (PVMTI), formerly referred to as the "Green Carrot" competition, will competitively award $30 million to companies that propose innovative business plans to boost sales of PV systems. If approved, this "carrot" will be dangled in three countries with promising markets for PVs - $15 million in India, $5 million in Morocco, and $5 million in Kenya - and is designed to leverage additional sources of private capital. For instance, SELCO India might propose the expansion of its distribution and service infrastructure, or a Kenyan company that currently makes cash sales sales made for ready, money, in distinction from those on which credit is given; stocks sold, to be delivered on the day of transaction.
See also: Cash only might devise a fund for consumer loans. The top three to five proposals from each country will be awarded the concessional funds, which are to be used alongside the company's own capital. The IFC expects that this stimulus could increase solar home system installations from 80,000 per year to at least 125,000 per year.
Another IFC project, the Renewable Energy and Energy Efficiency Fund (REEF), is targeted not only at solar home systems but more generally at small renewable-energy and energy-efficiency projects. Whereas the PVMTI is a package of concessional funds to be selectively offered in a few countries, REEF will be a global, primarily commercial debt and equity fund initially capitalized at $150 to $240 million. If only IFC and commercial capital were involved, REEF would likely focus on larger wind, biomass, or industrial energy-efficiency projects, which have lower transaction costs and are less risky than small solar home system projects. But a $20 to $30 million grant from the GEF to be deployed by REEF's fund managers also will allow smaller and riskier projects to be financed. For instance, a solar-service company could be made more attractive to investors if GEF funds were used to guarantee the consumer-finance schemes - such as loans or leasing programs - that would support the company's business.
While REEF will fund a variety of renewable energy and energy efficiency projects, the proposed Solar Development Corporation (SDC SDC Silver Dollar City
SDC Security Door Controls
SDC Student Development Center
SDC San Diego Chargers
SDC Science Data Center
SDC System Development Charges
SDC Studebaker Drivers Club
SDC San Diego, California (border patrol sector) ) will focus specifically on individual solar businesses. With initial start-up capital mobilized by the World Bank, IFC, U.S.-based private foundations, and others, the SDC would provide business development services to local entrepreneurs, and financing both to the entrepreneurs and to potential purchasers of solar home systems.
The SDC concept has developed quickly since March 1996, when U.S. foundation presidents met with World Bank President James Wolfensohn James Wolfensohn AO KBE (born December 1, 1933) was the ninth president of the World Bank Group. Early life
Wolfensohn was born in Sydney, Australia. According to The World's Banker to discuss potential areas of cooperation. Led by Rockefeller's Goldmark, four of the foundation heads with experience in funding PV projects argued that to achieve an order-of-magnitude increase in the number of PV systems installed, entrepreneurs and end-users must have access to serious financing. According to the foundations' estimates, about 200,000 PV units (of which about 80,000 are solar home systems) are now being installed each year. The SDC aims to scale that figure up to between 2 and 5 million units per year by 2002.
Michael Eckhart, the former president of U.S.-based United Power Systems, is championing another solar-financing initiative called the Solar Bank. Eckhart's effort is modeled on a government-backed financial institution called Fannie Mae Fannie Mae: see Federal National Mortgage Association. , developed in the United States in the 1950s The 1950s are noted in United States history as a time of both compliance and conformity and also, to a lesser extent, of rebellion. Major U.S. events during the decade included:
verb aim for, desire, pursue, hope for, long for, crave, seek out, wish for, dream about, yearn for, hunger for, hanker after, be eager for, set your heart on, set your sights on, be ambitious for be a "Sunny Mae," supplying financing for consumers to purchase solar home systems. In the eyes of many experts, developing country markets are not yet mature enough for financing as sophisticated as Eckhart envisions. Nonetheless, in early 1997 he began to raise funds from institutional investors in Europe and the United States, with the hope that governments would be able to approach the World Bank for loans to supplement capital raised through the Solar Bank.
As these efforts begin to take shape, one private Dutch investment bank, Triodos Bank Triodos Bank N.V. is a bank based in the Netherlands with branches in Belgium, the United Kingdom and Spain. It is a pioneer in ethical banking. Triodos Bank finances companies which they think add cultural value and benefit both people and the environment. , has already begun to lower the cost of solar electricity for rural households by providing loans for the purchase of solar home systems to solar-service companies, credit institutions, NGOs, and village cooperatives that have already proven successful. In 1995, Triodos extended a $52,000 loan to a solar home system provider in Uganda, and in 1996 loaned $390,000 for a similar project in Swaziland. The debtors pay back the loans with the money they receive from lease or interest payments on the systems of their individual customers. Based on the success of these pilot loans, Triodos launched a Solar Investment Fund in late 1996 that is currently negotiating 10 solar loans in Africa, Asia, and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. .
This extraordinary alphabet-soup proliferation of efforts to finance a market for solar home systems clearly represents a turning point - not only for the adoption of an important renewable energy technology, but also for the movement of developing nations into roles of greater economic and ecological leadership.
In recent years, many experts have warned that for global development to become sustainable, poor countries will need to find ways to avoid simply mimicking the patterns of the industrial countries, and repeating their mistakes on an ever-more-ominous scale. The hope has been to persuade newly industrializing countries that they can "leapfrog" many of the more damaging practices - including the adoption of heavy dependence on fossil fuels. The jump directly to solar technology can be made, but only if domestic and international financing can be made available to the 2 billion people who still lack electricity.
Christopher Flavin Christopher Flavin is the President of the Worldwatch Institute, an independent research organization based in Washington, DC. He is also a founding member of the Board of Directors of the Business Council for Sustainable Energy and is a member of the National Academy of Sciences is Senior Vice President for Research and Molly O'Meara is a staff researcher at the Worldwatch Institute The Worldwatch Institute is a globally-focused environmental research organization. Based in Washington, D.C., the institute was founded in 1974 by Lester Brown. Christopher Flavin is the current president. .