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Aug 2014

Solar Power In Rural India via Business, Not Charity

12 August 2014 | Posted by Zachary

To start a business aimed at bringing solar power to people in developing countries and to make a profit doing so isn’t particularly easy, but it’s not a unique or surprising idea these days. However, if you had that idea in the mid-1990s and mentioned it to someone, they’d probably think you were crazy. Well, SELCO Solar had such an idea back then and set up shop in India in 1995 in order to realize it.


SELCO’s website states:

"It was conceived in an effort to dispel three myths associated with sustainable technology and the rural sector as a target customer base:

1) Poor people cannot afford sustainable technologies;

2) Poor people cannot maintain sustainable technologies;

3) Social ventures cannot be run as commercial entities.

"SELCO aims to empower its customer by providing a complete package of product, service and consumer financing through grameena banks, cooperative societies, commercial banks and micro-finance institutions."

Financing over 150,000 solar systems and employing approximately 300 people, SELCO has achieved its vision, and it continues to do so.

It now offers a range of cleantech products: solar-powered indoor & outdoor home lighting; solar-powered street lights; solar thermal hot water heaters; solar inverter systems related to appliances like ceiling fans, TVs, music systems, sewing machines, and computers; and more.

A well known problem in the developing world is that a lot of money is spent on dirty fuel for lighting and electricity. Solar power is now cheaper, but the fact that almost all of the cost is upfront, and that people in developing countries generally don’t have a lot of cash on hand, makes it nearly impossible for people there to buy solar power systems. However, with a third party (e.g., SELCO) managing financing for the solar systems (and other cleantech), people can get these products and start saving money almost immediately. SELCO writes:

"SELCO has leveraged the potential of the country’s significant rural banking system to finance sustainable energy systems for poor rural households. Over the years, SELCO has forged partnerships with nine regional rural banks, commercial banks, NGOs and rural farmer cooperatives to develop financial solutions.

"SELCO helps its customers obtain the necessary credit to purchase solar lighting and thermal systems. Much like, in the urban world, when considering other large purchases such as new homes or automobiles, the presence of credit facilitates purchasing. Since an energy service to an underserved household can represent several months of income, the provision of affordable and accessible credit is essential."

SELCO could do what some companies do and simply lease these products indefinitely, but it wants to really help these people, so it simply arranges the financing and allows them to own their own systems over time.

It also helps with the installations, trains customers on how to use and manage the systems, and provides maintenance and support even after the installation.

SELCO is an all-around good company. It’s no wonder SELCO was a finalist in the 2014 Zayed Future Energy Prize “SME” category.

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