Deploy a Grant per Unit Installed on a Consistent Basis

Most, if not all, rural electrification programmes around the world have been funded through subsidies, often cross-subsidies from segments of the population who pay a bit more for electricity than rural inhabitants. The rationale for having to subsidize is quite clear, as World Bank studies have recognized This is because rural settlements are among the most expensive to serve by traditional grid extension, often containing the smallest individual loads, and customers are least able to pay -...

Public Sector Diffusion

Different public sector entities became involved with solar. Utilities at first, because it seemed it might fit well with their existing operations - though ultimately it didn't. Aid agencies, because it was deemed to be complementary to their missions. Government departments, because it was part of a broader social welfare objective. We will review each of these in turn, and then consider in depth the case of the Indian Government's approach, and its drawbacks. Given their existing...

Accelerating a Renewable Energy Future

As promised at the outset, the story of Selling Solar offers some 'big picture' lessons. Specifically, five lessons can be distilled to accelerate a renewable energy future. These lessons are primarily intended for policymakers with an interest in renewable energy in emerging markets. But it would not hurt for policymakers in industrialized countries to absorb these lessons as well. Lesson 1 Entrepreneurs are central to diffusion, so support them Entrepreneurial ventures are never easy. But...

Market Infrastructure Perspective Is it Available

The market infrastructure perspective instructs us to consider the presence of local diffusion agencies that are actively propagating an innovation, as well as providing installation and after-sales service. In the case of solar in rural areas of emerging markets, we can imagine why such an infrastructure would be important. Unelectrified households tend to live in more remote locations, where existing support infrastructure of all kinds is weak. Many would not even be aware of solar as a...

If There Is No Rural Finance Target Smaller System Sales Instead

Financing solar remains the ideal, because it allows customers to buy bigger systems that meet more of their energy needs. Finance takes a bigger solar system, and breaks it into smaller, more affordable chunks, paid for over time. It's a bit like buying a bigger house in a better location with a mortgage, rather than buying a house on a cash basis and living in something very small and far away from the action. But there are some emerging markets where it would appear that no banks or MFIs are...

Introduction to the Entrepreneurs

The first case study comes from India. By the early 1990s, India had developed a strong manufacturing and distribution base installed production capacity of 18 megawatts per annum, 5 cell manufacturers, 8 module manufactures, and 50 system integrators who designed, installed and sold total systems.41 But none of these players were particularly interested in selling directly into the rural markets. The reason for this was that they preferred selling into the Government programmes Government...

Prologue

The windows were down and I was travelling along a single-lane road between the small towns of Bible and Ampara on the eastern side of Sri Lanka. It was a sunny day and the breeze felt good. This was March 2005, three months after the tsunami had laid waste to much of the country's southern and eastern coasts, and it was the first time I had been back in Sri Lanka since the tsunami had struck. I was then working for Shell - the oil and gas company - which at the time was engaged in the global...

Rural Solar Applications

At first, aid agencies tried to put solar to work for unelectrifed populations. In some projects, these agencies tried an approach that would have seemed intuitive at the time - they centralized the solar panels in the middle of a village, or on its outskirts, strung distribution wires to each home, and then transported the solar power to the local families or enterprises. This has since come to be known as a solar 'mini-grid', and its track record in terms of sustainability and...

Entrepreneurs in India

The American entrepreneur had already launched a successful project in Sri Lanka to demonstrate the viability of solar systems and the capacity and willingness of rural unelectrified customers to pay for them. But when it came to India, he said I had no immediate plans to enter India with a solar power project, because the size of the place intimidated me, and I wasn't sure how or whether to start. India was a bit scary.2 It was in January 1993 that the Indian entrepreneur arrived at the...

The REEF and the SME fund

In the late 1990s, the IFC established the REEF to offer both equity and debt financing to commercial enterprises for a range of renewables, both on and off grid. By November 2001, US 65 million of equity plus debt had been placed with the REEF. Of this, the IFC stipulated that 20-30 per cent should be invested in the off-grid sector, of which 20 per cent should be in deals under US 5 million, and that no proposal would be too small to finance. In the rural solar sector, the REEF's investments...

The Economic History Perspective

Whereas the communication perspective explains diffusion by the adopters' perceptions of the risks and benefits of an innovation, the economic history perspective treats all adopters the same - as rational economic agents - and instead explains diffusion by the improvements made to the innovation itself over time A better understanding of the timing of diffusion is possible by probing more deeply at the technological level itself, where it may be possible to identify factors accounting for both...

The Market Infrastructure Perspective

Of all the four perspectives, the market infrastructure perspective comes the closest in integrating the impact of entrepreneurs on the diffusion process. The perspective itself is most closely associated with the discipline of geography, and its essence is summed up best by Brown when he writes Unless some government, entrepreneurial or non-profit organization makes the innovation available at or near the location of the potential adopter that person or household will not have the option to...

Communication Perspective Is it Attractive

The communication perspective demands that we enquire more deeply into how customers perceive the risks and benefits of buying a solar system, and ask whether overall they find it an attractive proposition. There is no doubt that households in emerging markets value electricity. However, a demand for electricity does not necessarily translate into a demand for solar. From the household's perspective, electricity from a reliable grid is often preferable in terms of service.1 Take the example of...

The Historical Role of Entrepreneurs in Innovation Diffusion

Historically, it is recognized that commercial firms are 'but one agent for the diffusion of technology'. In many countries, governments and non-profit organizations have been, and continue to be, equally active in promoting innovations - for example rural extension agencies in the US promoting new seed varieties. That said, the historical impact of commercial firms on technology diffusion is widely recognized to be an important one.60 A firm built on an innovative technology serves as an...

Perspectives on Innovation Diffusion

When we try to explain the rate of diffusion of an innovation, we are basically concerned with the time that it takes for more people in a society to start using it. Obviously, when it comes to our concern with renewable energy, we would ideally like societies to start using a lot more renewable energy technologies a lot more quickly, and that is why literature on innovation diffusion is relevant to the challenge. But of course, it is not just people interested in renewable energy that can...

Q Millions of people relying on biomass Figure Millions without electricity and relying on biomass for cooking

Homes and small enterprises in the village, and diesel fuel is brought in the usually long distances to power a generator at fixed times each day. Not surprisingly, due to the remote location of these systems, the electricity provided tends to be both unreliable and expensive, and thus it has not provided an ultimate solution for emerging market governments in their campaigns to bring electric power to their citizenry.7 Of course, in the absence of a solution from their government, people don't...

Figure What enables entrepreneurs to influence innovation diffusion

World who think of opportunities as quite structurally determined. For example, the arrival of the internet created a massive opportunity for the delivery of new goods and services more directly to the customer. The management theorist, Michael Porter, is often deemed to fall into this more deterministic camp, for example in using the five forces model to explain why it is that some firms are able to grow.80 However, there are others, such as Edith Penrose, who, before Porter, took a more...

Damian Miller

Damian Miller is a leading expert on solar energy in emerging markets. He was born and raised in New York City, before moving to Britain where he completed his schooling. He holds a PhD from the University of Cambridge Trinity College , where he was based at the Judge Business School, and his dissertation addressed the role of entrepreneurs in the diffusion of solar photovoltaic technology in Asia. After finishing his PhD in 1998 he put his research findings into practice, becoming Shell...

Diffusion Theory and Entrepreneurship

It can be hard to know where to begin when explaining the diffusion of an innovation. There are so many variables that it is easy to be paralysed by the different possible explanations. For this reason, we use this chapter to introduce some theories from the weighty literature on innovation diffusion. But as we shall see, these theories are better at identifying the factors affecting diffusion than they are at explaining what enabled key actors - such as entrepreneurs - to influence them. Here...

If There is No Rural Finance Do Not Do Feefor Service

From a policymaker's point of view, fee-for-service can sound ideal. A customer can access a solar system for a fraction of the price they would otherwise pay. Instead of paying on a cash basis, or taking out a loan, a customer simply pays a monthly fee. This fee is intended to cover the cost of the solar system, as well as regular servicing and the replacement of essential components such as batteries and electronics. It seems an ideal customer offer, with the potential for high rates of...