SELCO-India is a private business which provides photovoltaic (PV) solar-homesystems to provide power for lighting and small appliances, and other solar services, to low-income households and institutions in South India. It works from a head office in Bangalore with a network of local sales and service centres. The underlying conviction of SELCO is that solar energy is cheap for the poor but expensive for the rich – that is, poor people can afford to buy solar systems, because they pay so much for other forms of energy like kerosene and batteries. What is essential is to have suitable systems and appropriate financing. SELCO is committed to providing high quality systems, and in order to provide an effective backup service it will sell systems only within a two-hour motorcycle trip from a service centre. SELCO as a whole has a very focussed business approach. In addition, each service centre must be financially viable, thus centres are opened only where there is real demand for systems, and also where local financial institutions are able to provide customer finance.

SELCO won a 2005 first-prize Ashden Award for enterprise, in recognition of its success in building up, over ten years, a thriving business which supplies poor people with high-quality PV systems. At that time it had 170 employees and 25 services centres, and had sold 48,000 solar home systems, serving around 220,000 people. One benefit of the Ashden Award was to raise the profile of SELCO with microfinance organisations, resulting in three new financial partners, five additional services centres and the sale of over 23,000 more systems. This growth has taken place despite a 47% increase in the price of small PV modules on the world market – an unfortunate side-effect of the enormous demand for PV in Europe and Japan.

The most significant new partnership is with the Self Employed Women’s Association (SEWA) bank in Gujarat. By opening new service centres directly linked to bank branches, SELCO has the opportunity of working with the over 300,000 female customers of the bank. These centres will provide a range of energy services, not just PV, and have already sold over 3,000 efficient stoves.

Most people who buy systems from SELCO need loan finance from a bank or microfinance organisation, and are required to make a down-payment of typically 15% of the cost. As a pilot, SELCO has used part of the Ashden prize money as a ‘down-payment guarantee’ so that banks will sell to customers who cannot provide upfront capital. This is proving very successful.

Like many small and medium sized businesses, SELCO grew by focussing on its core market of home systems. Although staff were actively encouraged to contribute ideas to the company, there was insufficient time to develop these very far. SELCO therefore used some of the Ashden prize money to set up a small innovation department at its head office, tasked with looking at new ways of providing people with solar and other energy services, and in particular at how to promote income SELCO-INDIA Harish Hande generation. New solar-related businesses which the innovation department has helped with technology, business planning and securing finance include: PV-powered battery-charging businesses which supply single-lamp systems for both streetvendors and poor homes; PV-power for sewing machines, to increase the productivity of sewing businesses; PV-powered soldering irons for TV repair; and small PV-powered silk looms. In all cases, the increased income resulting from the use of PV has to be sufficient to cover the repayments on the capital cost of the PV system.

The 2005 Ashden Award raised the international profile of SELCO. Harish Hande has been invited to lecture on the SELCO business model at university business schools in the USA, India and Singapore, and has hosted many visits and studies from academic groups. To help continued development, SELCO also used part of theAshden prize money to prepare a 5-year business and investment plan, with the aim of reaching a further 200,000 customers by 2010.

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The Ashden Awards for Sustainable Energy