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In India rural, low income populations continue to be underserved in terms of access to energy, despite rapid economic growth at the national level. The aim of the SELCO Solar Energy Access project – a joint initiative between SELCO Solar Pvt (SELCO) and Natural Capital Partners – is to enhance energy access, primarily for bottom of the pyramid households by distributing an array of solar products, including solar lighting, solar water heating and solar PV. With the support of carbon finance, the project aims to empower users by providing a complete solution package; including products, servicing and financing. In its first year, the project distributed 18,222 solar lights, 1,452 solar water heating systems, and 207 grid-connected solar PV systems, reaching 9,300 households. In subsequent years it is anticipated that the project will improve energy access for a least 20,000 households each year.

A step forward: Energy access is an essential step towards moving out of poverty. With a reliable source of energy, more time can be spent on education and income generating activities.

Project type: Renewable energy; household devices

Region: Asia

Standards:

India: SELCO Solar Energy Access

©SELCO India

Customised solutionsEssential to the project’s success is the customising of solutions to ensure they meet the specific needs of individual communities. As SELCO Founder, Harish Hande says, “We cannot come with solutions and try to fit a problem to it.”

The project works to identify a need and then develops a customised solution to meet specific energy requirements, whether for a household, institution or tribal community.

All solar solutions distributed by the project – solar lighting, solar water heaters and solar PVs – are modular, so can be tailored to provide the best solution for a given requirement. In the case of solar lighting, individual systems have their own solar panels and battery charging station, while collective systems such as the “Light for Education” programme use centralised solar panels and central charging stations, able to charge 25 batteries simultaneously. Being modular in nature, additional lights can be added and it also allows users to charge other devices (e.g. mobile phones). In the case of solar water heaters, different tank sizes are available for residential and commercial use, to store sufficient amounts of water to meet demand. While solar PV systems are largely targeted at schools and community centres, smaller systems are available for household installation.

Following the sale of the solar products, SELCO services and maintains these systems to ensure they function for the span of time which is promised, some 20 or more years. Carbon finance can help to subsidise the cost to users (less than 5 USD a year) for this servicing package and to fund the network of service technicians.

Emission reductionsPrior to the implementation of the project, kerosene lamps were used as a light source, hot water was provided through electric boilers, and if electricity was available it was sourced from the national grid. By providing access to sustainable, on-demand energy, the project delivers emission reductions by displacing previous energy sources which rely on fossil fuels and emit harmful pollutants into the atmosphere. In addition to the emission reductions, a reliable source of energy enables users to spend more time on income generating activities and allows children to study at home in the evening.

The projectAcross India more than 230 million citizens have no access to electricity1. Even households that are connected to the grid suffer regular blackouts due to severe shortage of supply. The SELCO Solar Energy Access project works to overcome this issue by providing affordable solar energy products, primarily to rural low-income households who largely remain disconnected from the grid.

Innovative financingTo support the distribution of solar products to communities where cost is a key barrier in accessing energy, SELCO has developed an innovative financing model. Working with regional rural banks the project arranges appropriate financing terms on an individual basis, allowing users to structure a payment plan over three to five years subject to their disposable income - the usual monthly payment is less than 3 USD. While this arrangement works for some, those at the bottom of the pyramid are often considered too ‘high risk’ for banks to agree loan terms. In these cases, carbon finance can provide additional support to those unable to obtain bank finance.

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The project aims to improve energy access for a least 20,000 households each year with a tailored solution package; including solar products, servicing and financing

©SELCO India

Contribution to sustainable developmentThe project contributes to sustainable development in several areas:

Energy accessDespite an ambitious electrification programme, in some states fewer than 25% of households are connected to the electricity grid. Severe shortages of electricity mean that even those that are connected experience regular blackouts, which can last from several hours to days in certain areas. Largely targeting rural, low income households, the project aims to enhance energy access by distributing sustainable, affordable and tailored clean energy solutions to meet the needs of underserved households and communities. During its first year the project improved energy access for more than 9,300 households, and aims to reach at least 20,000 each year.

Financial securityThe greatest hurdle in the distribution of these various clean energy products is the users’ lack of access to finance. By working with regional rural banks, the project supports low income households to obtain agreeable finance terms so they may secure a reliable source of energy. However, with a strong focus on the most disadvantaged households and communities, micro-finance institutions and carbon revenues are often needed where banks will not lend. The project aims to align the repayment schedule both with savings made on fuel purchases and users’ income structure (e.g. weekly or monthly wages), reducing the risk to lenders, thus enabling increased access to loans and other banking services for those that would not have had access previously.

With the support of appropriate finance, households which previously relied on kerosene lighting can reduce or eliminate fuel costs following the installation of solar alternatives. Additionally, with an improved and reliable source of energy, more time is available to be spent on income generating activities, supporting the transition out of poverty.

Education and skillsThe project includes a specific “Light for Education” programme which involves distributing solar lamps to students to facilitate evening study at home. The lamps are charged at a central solar unit on school premises, thereby encouraging student attendance. In its first year, the project supported 65 schools and distributed 2,666 lamps.

The project also supports solar PV installations at schools, promoting equal access to digital education for children in rural areas. Generally linked to IT suites, this enables schools to teach computer science independent of the erratic national grid.

Micro-finance institutions and carbon revenues are critical in enabling energy access for those at the bottom of the pyramid

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The “Light for Education” programme distributes lamps to students which are charged at a central solar unit on school premises to promote attendance

©SELCO India

harnessing micro-finance to diversify and extend income generation. Provided with a solar panel and charging unit for their stalls, they offer a hub for slum residents to rent solar lights on a weekly or monthly basis.

Through its network of regional sales offices, the project is supporting development in new rural areas by creating new channels and new markets for clean energy products.

Infrastructure development Through the distribution of clean energy products, the project helps improve the quality and functionality of buildings with sustainable, on-demand lighting and hot water, particularly for previously un-electrified households. The additional capacity of battery units also supports improvement of communication services by allowing users to charge mobile phones and other devices.

Project partnersSELCO and Natural Capital Partners have been working together since 2002, when they first developed two pioneering voluntary emission reduction projects before independent carbon standards had been developed. These solar projects benefitted 27,000 households in rural Karnataka over the ten-year lifetime. This new Solar Energy Access project has been developed to increase the scale and impact of the partners’ previous work. It has been registered with the Verified Carbon Standard (VCS).

Health and well-beingAccording to the United Nations Environment Programme (UNEP), kerosene combustion is inefficient and polluting, and can have a number of negative impacts on health and well-being. This includes injuries from burns, health impacts from inhalation of particulate matter, and insufficient illumination for studying2. By replacing kerosene lighting with solar lamps in participating households, the project improves living conditions and so reduces possible negative health impacts.

Women’s empowermentMany villages across India have established women’s ‘self-help’ groups, where female residents gather to discuss how they might support the improvement of village life. The project uses these groups as a key marketing channel for its clean energy products and a large share are distributed through them. To support distribution, micro-finance institutions have links with the groups, using group participation as a basis for offering finance terms.

Economic growthWith a reliable source of energy, rural low income households can spend more time on income generating activities and education outside daylight hours, enhancing productivity and the capacity to move out of poverty. Prior experience has shown that even a few extra hours of light can improve earnings by 20-30%. In slum areas, entrepreneurs are

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By replacing kerosene lamps, households can eliminate fuel costs, living conditions are improved, and respiratory ill-health is avoided

Entrepreneurs are harnessing micro-finance to diversify and extend income generation, by renting solar lights or providing battery charging services for mobile phones

©SELCO India

SELCO is a social enterprise which was established in 1995 with a mission to enhance the quality of life of underserved households in India through sustainable energy solutions and services. Focused on the needs of the people, SELCO aims to empower its customers by providing solutions which are customised to their specific circumstances and requirements. In addition to the products, SELCO delivers service support to ensure prompt maintenance, and provides consumer financing options for households which often have limited cash flow, by using grameena banks, co-operative societies, commercial banks and micro-finance institutions.

The region India ranks 135 out of 187 countries globally in the Human Development Index – a comparative measure of life expectancy, literacy, education, standard of living and quality of life, indicating ‘medium’ standard of human development alongside countries such as Bhutan and Cambodia3.The country has a GDP per capita of $1,626 per year (2014), with approximately 21.9% of the population living below the poverty line4.

GUJURAT

ARABIAN SEA

INDIAN OCEAN

TAMIL NADU

ANDHRA PRADESH

TELANGANA

GARH

ORISSA

CHHATTISGARH

MADHYA PRADESH

Bangalore

Mumbai

MAHARASHTRA

KARNATAKA

The project is implemented in Karnataka, Maharashtra and throughout India.

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London: 167 Fleet Street, 3rd Floor, London, EC4A 2EA United Kingdom T +44 (0)20 7833 6000 sales@naturalcapitalpartners.com

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With a reliable source of energy, rural low income households can spend more time on income generating activities and education. Even a few extra hours of light can improve earnings by 20-30%

Location The project is implemented in Karnataka, Maharashtra and throughout India.

1. IEA (2015) World Energy Outlook 2015, Available from http://www.worldenergyoutlook.org/, Accessed on 05/01/2016 2. Wikipedia (2015) Electricity Sector in India, Available from https://en.wikipedia.org/wiki/Electricity_sector_in_India, Accessed on 05/01/2016 3. UNDP (2014) 2014 Human Development Statistical Tables, Available from http://hdr.undp.org/en/statistics/, Accessed on 05/01/2016 4. World Bank (2015) India Data, Available from http://data.worldbank.org/country/india, Accessed on 05/01/2016