Experts Say For-Profit RE Possible in Developing World

Recently I interviewed three solar experts in Colorado who have experience in the developing world and was surprised to find abundant confidence in village renewable energy (RE). There are many groups who do non-profit RE development around the world, but my fundamental question was this: is a for-profit model viable in poor communities?

There are more companies already doing solar in the developing world than I knew. Blake Jones, president of Boulder, CO's Namaste Solar, claims there is a thriving RE industry in Nepal--15 companies doing PV, dozens of solar hot water contractors, 50 biogas contractors, and more--all making profit.

"The list is actually huge," notes Laurie Stone, International Program Director for Solar Energy International. Some of the more successful ones are Lotus Energy in Nepal, Suni Solar in Nicaragua (pictured below), Soluz in Honduras, and the Solar Electric Light Company (SELCO) in India.

Stone also recognizes Grameen Shakti--a branch of the Grameen Bank in Bangladesh--for its successful micro-financing programs for renewable energy. Financing is one of the major obstacles to for-profit village RE. That's because, while solar may pay off in the long run, poor communities lack the capital to pay for their energy up-front--even while they spend money for batteries, kerosene, or even propane.

Zeke Yewdall, chief engineer for the Colorado division of Standard Renewable Energy, made his solar debut with Engineers Without Borders in Mauritania. "The village of Lemrevaig had applied to the US Embassy for funding for a solar water pump... since their existing propane-fired pump was old, expensive, and the water line [a cheap fire hose] had to be replaced every two years," he says.

The capital problem is often surmountable. "Lack of income is the biggest problem," Yewdall admits; "however, after we installed this [solar] water pump in Lemrevaig, the chief's brother-in-law was thinking about how he could sell part of his date orchard in order to buy another [solar water pump]" to irrigate what was left. It would take him years to save the money, but he knew it was worth it. "That was a small amount of money for the value it gave."

But that story is not universal. "In general, RE projects in Africa are plagued by a very high failure rate," Yewdall says. The reason he cites is a lack of community buy-in and participation. If a community doesn't ask for solar--and if it has no training in how to use or maintain it--then it usually abandons the system in a few years and scraps it for parts. This type of failure may actually be more common in the non-profit--or "donation model"--sector. When a community pays for solar or provides the labor to install it, even when financed through grants or micro-loans, it is more likely to want it, use it, and care for it.

That's not to say that NGOs don't have an important role in village RE. "Often times it takes non-profits to help kick-start an industry," notes Blake Jones. They help prove concepts and they take risks the private sector isn't willing to take. "A lot of places where I've seen industries get started in developing countries," he says, "was where foreigners came and brought with them the expertise." Then, they hand it off to for-profit companies, whose business model may ultimately be more sustainable.

Jones previously worked for Lotus Energy, a Nepali PV company. And even though Lotus is a successful, for-profit venture, sustainability was still a constant concern. Wherever he went, someone had to be learning right along with him. "We wanted to arrange my role such that I wasn't always doing the work," Jones says, "but instead was helping others learn how to do it so it wouldn't create a dependency."

Jones has also consulted for the Himalayan Light Foundation, which, through their Home Employment Lighting Program (HELP), helps communities develop micro-enterprises using solar electricity. They give people a solar home system as well as training in certain crafts. Then, the family pays for the system with the income from their crafts, plus they can use the electricity for other home appliances.

Ultimately, I found three things that help make a village solar project successful. Being conscious of dependency is one. Proper planning, naturally, is another, as the job site may be two days by bus and five more on foot from the nearest supply store. Finally, it takes someone on the ground, working from inside a community. Jones agrees: "nothing compares to living in a country."