Financing Solar Power in the Developing World

At the show, presentations were made by participants in the Solar For All contest, which sought “innovative low-cost photovoltaic systems and customer financing schemes,” according to the organization’s website.  The contest, which was sponsored by Canopus Foundation of Munich, Germany, closed on April 30th.

Several of these entrepreneurial projects were focused on the development of centralized battery charging stations, others involved the sale of solar lights or individual panels, and at least one was based on tracking the carbon footprint reduction of its solar customers.

While all these developing world solar projects still rely on market-based sales for revenue, they vary in terms of the way their organizers are seeking capital to initially fund the projects. If carbon credits alone were more broadly utilized in such ventures, some $8 billion worth of funding could be harnessed for micro-financed clean technology, according to April Allderdice, the CEO of Microenergy Credits. Unfortunately, the U.S. market for carbon credits is still being formulated, but thankfully, Europe is leading the way in this initiative.

One stand-out among these projects is Green Light Planet, a for-profit enterprise that has found others to subsidize its relatively low-cost SunKing brand solar LED lamp sales. Green Light received financial help from the Rotary Club Bombay Queens and distribution help from an NGO. The lamp provides up to 16 hours of light on one day's charge. The product is being widely accepted in India -- in Maharashtra, Karnataka, Bihar and some eastern States -- because the economics make it more practical than competing kerosene lamps, according to Mayank Sekhsaria, a Green Light Planet co-founder. The company relies on a pervasive distribution network to be successful, targeting market towns, where distributors find a resident from a feeder village who is interested in becoming a customer and then who may then become a master salesman for that village. Green Light Planet has offices in Mumbai, and Riverside, Illinois.

Bright Green Energy Foundation, founded by Dipal Barua, taps his long experience in micro-financing at Grameen Bank.  The foundation helps 20,000 rural families in Bangladesh per month to purchase a home solar panel through mid-term financing. His group charges as little as 15 percent down with a three-year financed period. Dhaka-based Bright Green Energy not only sells the panels, but also helps women, primarily, to get training to repair and maintain the panels as new entrepreneurs. "We have set up 45 Grameen Technology Centers to train 5,000 rural women as solar technicians and 50,000 women from user families on simple trouble shooting," he recently told an interviewer.

To help fund his enterprise, Barua tapped the International Finance Corp., the World Bank's private sector lending arm, for a "long-term soft loan." In 2009 Barua also won the Abu Dhabi government’s Zayed Future Energy Prize, along with $1.5 million, for bringing renewable energy technologies to rural people. Barua said that the Bangladesh government is interested in providing a loan for residential solar systems at a rate of 10 percent, which he believes should drop to a rate of only five or six percent.

[For more on Dipal Barua’s Bright Green Energy Foundation, read RenewableEnergyWorld.com’s feature story, Women Solar Entrepreneurs Transforming Bangladesh.]

Kaito Energie AG, of Freiburg, is developing village-centric solar charging stations to recharge batteries, including those that power other solar devices. The organization has set up pilot projects in three villages in Senegal, and has contracts pending in another 50 villages. Apart from revenues from charging stations sold to individuals, Kaito enters into cash-crop purchase agreements with villages to help them collectively finance the purchase of a charging station. The contractual delivery of the crop serves as security for the station cost.

[Renewable Energy World magazine highlighted Kaito Energy AG in its story, Senegal Solar:  Uninterrupted Power for Vital Medical Care.]

Finally, Microenergy Credits International (MEC), of Seattle, is utilizing the established carbon credit market in Europe to finance its work in a wider number of countries, with a potential market base of 30,000 already. This group has targeted the customers of thirteen micro-finance institutions in 10 countries for the purchase of clean technology, be it solar systems, cooking stoves or other products.

MEC's business model is based in part on the use of GPS tracking in cell phones to enable the micro-finance organizations to call and identify the location of clean energy tech users. The organization monitors continued use on a quarterly basis, then uploads the information to MEC for carbon credit auditing. To finance the development of clean tech product lines among the micro-finance institutions, MEC secured a carbon purchase agreement with EcoSecurities Group PLC, which provides "a predictable price for an unlimited quantity of credits for a fixed term," the company said.

EcoSecurities, which is traded on the London stock exchange, encompasses a network of offices and representatives in over 20 countries on five continents. The company is working on 213 projects in 27 countries using 17 different technologies, with the potential to generate more than 130 million carbon credits, a company report indicates.