The sunny South

Donor solar

Large amounts of development assistance have been invested in several large-scale solar projects implemented by companies such as BP and Shell. The results have often been disappointing. Goals for installed capacity have not been realized, and many systems have been stolen. According to Preben Maegaard, director of the Nordic Folkecenter for Renewable Energy, the problem is that donors look at solar projects as if they were ‘typical’ power projects. But the top-down exercise of building a hydro dam is completely different from organizing the decentralized installation of solar power systems in rural areas. ‘After all these years, the fundamental character of the technology is still not understood’, Maegaard says.

Harish Hande – expert on solar energy for developing countries and who has received international awards for his social entrepreneurship in green technologies – also points at the importance of local applicability. ‘We need customized rather than standard products. But there seems to be little patience to create products that are based on the actual needs of users. The subsidies involved in donor projects kill the incentive to create innovative needs-based products. Companies that implement these projects promote only products that are eligible for subsidies’.²

Faulty financing

Frank van der Vleuten of ETC Energy, the Netherlands, criticizes another aspect of the top-down intervention strategies: the dominant donor practice of providing long-term end-user financing.

With such models, commonly used in large donor projects, the panel that is installed on a person’s roof remains the supplier’s property. With a monthly fee it is paid off in four years; with a fee-for-service plan it takes 20 years. ‘But this is not thinking from the point of view of the customer’, says Van der Vleuten. The average African household does not want to be in debt or have to pay monthly fees. Most Africans would rather invest once and pay cash for a smaller system themselves when they can, and have no worries later.

Hande is less optimistic about poor people having money ready to spend on solar systems. He thinks that donors should look at the financing mechanisms used in South Asia. The lack of door-step financing, through rural financial institutions, has caused many projects in Africa to fail, he argues. Rural banks in India and Bangladesh, by means of customized loans and microfinance, have enabled tens of thousands of people to enjoy the benefits of solar cell electricity.³

Market development

How can a self-sustaining local market for solar energy be developed? That, says Van der Vleuten, is the priority question if poverty alleviation is the objective. ‘The local markets consist of small and micro enterprises, run by one or two people. ‘Their reality is the here and now. These entrepreneurs do not operate with long-term theoretical business plans’, says Van der Vleuten. ‘Furthermore, experience shows that often the major obstacle to local market development is the limited involvement of and support for such entrepreneurs. Therefore it is better to work within the reality of existing entrepreneurial networks than to demand entrepreneurs to adopt “alien” business models supposedly needed to become effective in the solar sector’.

The American Energy Access Foundation and ETC Energy’s Energy Access programme provide innovation funds for entrepreneurial development and case studies of best practices that prove delivering needs-based solar systems is possible. ‘Close coaching of solar entrepreneurs appears to be one of the key factors of success. Market development, in Africa especially, is a matter of perseverance, flexibility and being capable of taking setbacks’, says Van der Vleuten. But it is certainly also helped by progressive government policies, such as exempting PV products from VAT and import taxes, which Mali and Kenya have done. A local solar market has developed in Kenya over the past 10-15 years. Up to 30,000 solar systems are sold each year, and some 5000 Kenyans earn an income from them. But market development, says Hande, is not helped by subsidized donor products that create a false impression to end users about the capital cost of solar systems.⁴

Still in the future

Solar systems give rural Africans a light in the evening and help them charge their precious mobile phones. But is there room for more ambition? Industrial opportunities for Africa are a long way away. Setting up a solar panel manufacturing plant with foreign capital would give jobs to a few people, but its relevance for economic growth ‘is mostly theory’, says Van der Vleuten. Silicon and solar cells have to be imported and large-scale production for solar panel export to Europe is not likely to happen. These panels are manufactured on high-tech, fully automated production lines in Europe, the US, Taiwan and China.

Innovative applications of solar, such as seawater desalinating (experiments are going on in the Gulf), is still a very expensive solution for the Sahel. But it is highly relevant. In many dry areas, pumping water is an environmental hazard. What about putting solar energy to productive use in agriculture? Small electric grinders for household use can run on solar power. Water pumps, depending on how deep the well, require 16 panels of 60W each. But for large-scale applications like ploughing fields, solar is not yet suitable. This requires integrated renewable energy policies: a smart and combined use of wind, biomass and solar energy. Since Africa has all of these in abundance, there is still a world to gain.

Footnotes