Source: Finucane (2005), p8

Source: Finucane (2005), p8

The overall objective of this policy was 'poverty alleviation'. The World Bank staff made it clear that the only way they could secure a second follow-on project was to demonstrate to the World Bank's Board that the second project would not only address solar diffusion, but poverty alleviation as well - by reaching poorer and poorer homes. As we will see, this confusion of objectives, to which we will return in Chapter 8, actually led to a distortion in the marketplace that would not serve the interests of long-term solar diffusion.

As reported by a World Bank consultant to the project, the effect of this change in policy was to shift most sales to smaller solar systems:

With the removal of the $70/Wp grant for systems larger than 40 [watts], the distribution of the products sold changed dramatically. Based on the available sales reports, sales of systems [of] 40 Wp capacity and smaller had taken, on a monthly basis, 78 per cent of the market by March 2005.

Before this shift in policy, sales of systems of 40 watts and less represented only 40 per cent. The consultant's study goes further to cite 'reports of the companies' sales staff that the higher-income-profile customers, who could have afforded a bigger system, were also shifting to the 40-watt capacity systems' (see Figure 7.1). This was subsequently bolstered by a detailed market research study, based on which the World Bank consultant concluded:

In terms of household ownership of assets, income and expenditures, the results appear on balance to support a conclusion that better-off customers have migrated from the 50-60 Wp to the smaller 35-40 Wp systems.12

90.0% 80.0% 70.0% 60.0% 50.0% 40.0% 30.0% 20.0% 10.0% 0%

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