In May, the Asian Development Bank started a major drive to promote solar power across the region. Last year, the Indian government approved an ambitious National Solar Mission, which seeks a huge increase in the country’s solar-energy capabilities. Bangladesh, with the support of the World Bank, is aiming to have one million remote rural homes supplied with solar panels by the end of 2012.
And in India, where nearly 40 percent of households have no access to electricity, companies like Selco Solar and Orb Energy have helped tens of thousands of families and small entrepreneurs purchase solar panels.
All worthy causes. So worthy and sensible, in fact, that you may well ask why on earth they did not take off much earlier.
The answer, as is so often the case, is political support — or, until relatively recently, the lack of it — and, inevitably, cost.
“The upfront costs of installing solar-electricity-generating farms, plus high borrowing costs and the fact that developing nations struggle to access long-term capital, have inhibited the growth of solar energy until recently,” said Seethapathy Chander, chairman of the committee on energy issues at the Asian Development Bank in Manila.
“It takes a long time before investment costs are recouped, and you need long-term financing until that stage is reached.”
That also applies to small, single-household roof panels that provide enough electricity for a few extra hours of lighting, which can make a huge difference — adding study time for children and extra hours for making and selling goods.
Rooftop solar energy can replace kerosene, which generates smoke and poor-quality light and eats heavily into the scarce resources of the poor.
“A street vendor in India might make 800 rupees a month — that’s about $16,” said Harish Hande, founder of Selco Solar in Bangalore. “But he might have to spend as much as 210 rupees of that on kerosene or candles.”
By contrast, the modest electricity produced by rooftop panels is effectively free, recouping the initial investment after a few years. But even a 15 percent down payment on a loan for a small solar home lighting system — which typically costs 8,500 to 11,000 rupees — is beyond the reach of many families, Mr. Hande said.
In developing nations like Sri Lanka or India, said Damian Miller, an American-British citizen who set up Orb Energy in 2006, the cost of a panel can be 20 percent of the annual income of a poor off-grid household.
In terms of the scale of the investment, he said, “it’s similar to a Western household buying a car.”
Banks were long reluctant to lend to the poor. Increasingly, however, companies like Selco and Orb Energy have been able to convince some local banks that low-income earners are creditworthy and that solar-related credits bring in solid business in much the same way that car financing does.
“The trick to making it work commercially is to make it affordable: To allow for bite-size financing that the poor can pay for, on a monthly basis, rather than in large chunks,” said Mr. Miller.
On the large-scale level — big solar farms that feed the overall electricity grid — activity also is picking up.
“Many parts of Asia have three or four times the amount of sun that Germany gets,” said Mr. Chander of the Asian Development Bank. “It makes a lot of sense to deploy solar-based electricity generation facilities here.”
At the same time, governments have become more willing to promote alternative energies and, because of falling costs, more able to do so. Courtesy of NY Times Read full article
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