Solar lighting (was: New members, please introduce!)

[Manu Sharma]

On Fri, Jul 30, 2010 at 2:20 PM, amit beriya <beriy...@gmail.com> wrote:

 

Selco is one of the high scorers because it has done a really great work by actually reaching the masses and developing confidence for solar energy in them. Selco has entered the market in a time when rural people where not at all willing to accept solar solutions because of failure of some previous goverments projects on solar lighting.

 

Dlight has developed lantern for Rs. 500, but for this the quality is compromised. The battery life is not satisfactory. The illuminated area by the lantern is very less. Moreover, I have come across some compplaints regarding thier after sales service. Solar lighting is realtively new thing for the masses and if proper after sales service is not provided, the rural people or anyone for that matter will lose the confidence on the technology itself.  My comments are meant only as constructive criticism. Dlight has ofcourse reached people more than any other company has, for which they should be applauded.

 

Hi again Amit,

Appreciate your comments on this. I have a somewhat different opinion. I believe that the attention that Selco gets as the poster boy of India's solar lighting success is largely undeserved. For one, I don't think they have been able to demonstrate that their model is sustainable and can be replicated across the country. If you look at their account books, they are still in the red and are only sustained through international aids and grants which can only take a business so far. 

I'm very interested in scale and while they have made inroads because they were early and they worked hard at it but the model has not really expanded as it could have because of the obvious high costs. Which brings me to the second point, why should a poor family in a hut be made to pay 20,000 or above for lighting. 

This is a huge issue of equity as us city dwellers get to pay a fraction for it. Sure, one could argue that with low interest loans it turns out to be cheaper than Kerosene but it's still electricity a very high cost. Solar lighting systems costing $450 for people who ear $2-3 a day does not make a lot of sense.

Also, the transaction cost of collecting those loan instalments over the five years end up being so high that it doesn't work. It's easy to "sell" these units through the loans and the project appears "successful" on paper but the ground realities are different. Who will collect Rs.10/day from these people over the next five years? 

I've expressed some of these reservations with Harish Hande (Selco founder) and his supporters and have never received a satisfactory answer.  

This is why D.light lantern seems very attractive to me due to its affordability and ability to scale it up its adoption within a short period. I don't know how severe or widespread are the issues of quality and service that you recount but I'm sure they can be addressed. 

I think we may have a representative of D.light on Green-India (though I can't find a reference) who might like to respond. 

Thanks,

Manu

[Kartikeya]

Hi folks,

I'm working on finalizing a case study report based on a field survey
I conducted of SELCO lighting systems that were distributed in Kolar
Dist, Karnataka. I can't wait to share it with you (once I get some
more comments back from folks at SELCO and other places). Initially I
have to say that yes, it seems their products are a little bit on the
expensive side, and a lot of their customers were small hotel owners
or provision store owners.... which makes that pill easier to
swallow. However, i think the high cost might be due to their 5-year
post-sales maintenance and support service that they offer (which I
believe is unmatched by any solar home lighting system company). I
believe they are currently operating out of a few states both in the
South and now in Gujarat as well (with the help of SEWA).

Still, there are cheaper quality systems out there. So, if anyone
else has any info on the economics of SELCO (Manu do you?) I would
appreciate it for the case study report (in case I don't get it from
SELCO).

Cheers,

Kartikeya Singh
Master of Environmental Science Candidate
School of Forestry & Environmental Science
Yale University

On Jul 30, 8:10 pm, Manu Sharma <orangeh...@gmail.com> wrote:

[Manu Sharma]

On Sat, Jul 31, 2010 at 8:39 PM, Kartikeya <kartikey...@gmail.com> wrote:

if anyone else has any info on the economics of SELCO (Manu do you?) I would appreciate it for the case study report (in case I don't get it from SELCO).

Hi Kartikeya,

As a private limited company SELCO is not required to release their financial information and given what it shows, I'd be very surprised if they parted with it even for research. The sources of my information are people close to the company. Two independent individuals have conveyed this. 

Thanks,

Manu

[Manu Sharma]

In any case, please do share your case study with the group whenever it's ready.

Thanks,

Manu

[amit beriya]

Dear Manu,

Appologies again for the delay in reply. I have mentioned my comments in blue below.

Appreciate your comments on this. I have a somewhat different opinion. I believe that the attention that Selco gets as the poster boy of India's solar lighting success is largely undeserved. For one, I don't think they have been able to demonstrate that their model is sustainable and can be replicated across the country. If you look at their account books, they are still in the red and are only sustained through international aids and grants which can only take a business so far. 

You are right that they had the advantage of one of the first to have achieved some success into solar industry. I am not aware about their aids and grants, but as far as I am aware they have raised VC funding from abroad. I guess you are not confusing between VC funding and aid.

 

I'm very interested in scale and while they have made inroads because they were early and they worked hard at it but the model has not really expanded as it could have because of the obvious high costs. Which brings me to the second point, why should a poor family in a hut be made to pay 20,000 or above for lighting. 

This is a huge issue of equity as us city dwellers get to pay a fraction for it. Sure, one could argue that with low interest loans it turns out to be cheaper than Kerosene but it's still electricity a very high cost. Solar lighting systems costing $450 for people who ear $2-3 a day does not make a lot of sense.

Also, the transaction cost of collecting those loan instalments over the five years end up being so high that it doesn't work. It's easy to "sell" these units through the loans and the project appears "successful" on paper but the ground realities are different. Who will collect Rs.10/day from these people over the next five years? 

The points you mentioned are valid. But, thats where the micro-finance people come into play. Selco was one of the first to use this methodology of introducing poor people to micro-financing for solar systems. The subsequent companies have just adapted the method from Selco. Another important point is before Selco entered into the market, government made and attempt to provide solar systems to people in certain parts of the country but  as usual the policy was not executed properly. For any new technology it is very important to educate the people about it and win their trust which Selco has done making it easier for subsequent companies to enter the market. Moreover, Selco is constantly working on costomised solutions for different professions of people for different requirements of people.

 

I've expressed some of these reservations with Harish Hande (Selco founder) and his supporters and have never received a satisfactory answer.  

This is why D.light lantern seems very attractive to me due to its affordability and ability to scale it up its adoption within a short period. I don't know how severe or widespread are the issues of quality and service that you recount but I'm sure they can be addressed. 

As far as I am aware Dlight is active in only few states of the country and Selco is also present in few states. Also, Selco had tried a franchisee format of business, but they had to stop it because the after sales service was not provided upto the mark by the franchisee holders. [As mentioned by Dr. Harish Hande in one of the interviews]

 

I think we may have a representative of D.light on Green-India (though I can't find a reference) who might like to respond. 

 

All these information I have from articles published in media only. So, I really am not sure of the ground realities.

 

Regards,

Amit

--
Amit Beriya
Renault-Nissan Technology and Business Centre India
----------------------------------------------------------
BTech. in Energy Engineering
Indian Institute of Technology, Kharagpur
email: beriy...@gmail.com

[Manu Sharma]

Hi Amit,

Please find my reply below yours. 

On Tue, Aug 3, 2010 at 6:36 PM, amit beriya <beriy...@gmail.com> wrote:

 

I am not aware about their aids and grants, but as far as I am aware they have raised VC funding from abroad. I guess you are not confusing between VC funding and aid. 

No, I'm not confusing VC funding with aid. Two out of three "investors" of Selco are foundations (charities). There's nothing wrong with that, of course. After all, Selco is performing a social service even though they are a for-profit organisation. But such grants/ aids obscures the argument that their business is feasible and scalable. 

The points you mentioned are valid. But, thats where the micro-finance people come into play. Selco was one of the first to use this methodology of introducing poor people to micro-financing for solar systems.

With interest rates up to 14%, one might add. 

Selco's biggest expansion drive in Karnataka happened under the UNDP project which provided 5% interest loans for up to five years. 

It remains to be seen how well their system would perform in the absence of such favourable conditions  -- aids / grants and low interest finance. 

Thanks,

Manu

[amit beriya]

Manu,

This information is something new to me. Thanks for providing the same.

Regards,

Amit

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[Manu Sharma]

On Tue, Aug 3, 2010 at 7:23 PM, Manu Sharma <orang...@gmail.com> wrote:

 

Two out of three "investors" of Selco are foundations (charities). [...] Selco's biggest expansion drive in Karnataka happened under the UNDP project which provided 5% interest loans for up to five years. 

Correction: I meant, UNEP project. More details about it can be found in the UNEP press release and this report by Ishani Mukherjee of Worldwatch Institute. 

On Tue, Aug 3, 2010 at 8:55 PM, amit beriya <beriy...@gmail.com> wrote:

Manu,

This information is something new to me. Thanks for providing the same.

Thanks, Amit. A lot of people have such notions about the company reinforced by media which rarely has the ability or the opportunity to dig deeply and analyse such issues. 

It's also aided by our natural inclination to instantly like something that seems to be helping the poor. And in the words of the Wworldwatch reporter: "transforming the lives of approximately 100,000 people living in poverty-stricken rural region." 

Who would question something like that?

Thanks,

Manu

[Mohan Sundaram]

SELCO works largely on aid and grants. one recent initiative which is
not just solar but solar+cookstoves combo is setting up a whole
village with these devices and funding them largely thro' long term
carbon credit sales.

SELCO as a company is certainly not financially attractive as a
for-profit for investors. They have been around for 15 years and their
numbers do not do much justice. Now, Dr.Hande and Thomas have both
stepped back from their operations/ running the company. It remains to
be seen how they perform. Their major failing has been in having a
business model capable of scalability, in my opinion.

Their brand equity is very good and PR is pretty good.
-- Mohan Sundaram

[Manu Sharma]

Dear Mohan Sundaram,

Thank you for your note about Selco. This confirms my position on the company as expressed in this thread. About Harish Hande stepping back from operations, wasn't aware of this. Thanks.

The solar+cookstoves initiative you mention, is that also by Selco or another company? Please send more details when possible. 

I didn't get a chance to respond to your introduction. It's a privilege to have such an experienced member on board. Look forward to your continued participation in discussions.

Thanks,

Manu

[Mohan Sundaram]

Remember them going with someone unable to recall. Saw it in industry
reports. Am attaching a couple of them of similar nature.
-- Mohan Sundaram

[Kartikeya]

I believe they're partnering with Shell on this. I also just found
this link: http://www.business-standard.com/india/news/shell-selco-tieto-supply-green-stoves/351009/

On Aug 4, 11:09 am, Mohan Sundaram <mohan....@gmail.com> wrote:
> Remember them going with someone unable to recall. Saw it in industry
> reports. Am attaching a couple of them of similar nature.
> -- Mohan Sundaram
>
>
>
> On Wed, Aug 4, 2010 at 11:14 AM, Manu Sharma <orangeh...@gmail.com> wrote:
> > Dear Mohan Sundaram,
> > Thank you for your note about Selco. This confirms my position on the
> > company as expressed in this thread. About Harish Hande stepping back from
> > operations, wasn't aware of this. Thanks.
> > The solar+cookstoves initiative you mention, is that also by Selco or
> > another company? Please send more details when possible.
> > I didn't get a chance to respond to your introduction. It's a privilege to
> > have such an experienced member on board. Look forward to your continued
> > participation in discussions.
> > Thanks,
> > Manu
>

> > On Wed, Aug 4, 2010 at 7:23 AM, Mohan Sundaram <mohan....@gmail.com> wrote:
>
> >> SELCO works largely on aid and grants. one recent initiative which is
> >> not just solar but solar+cookstoves combo is setting up a whole
> >> village with these devices and funding them largely thro' long term
> >> carbon credit sales.
>
> >> SELCO as a company is certainly not financially attractive as a
> >> for-profit for investors. They have been around for 15 years and their
> >> numbers do not do much justice. Now, Dr.Hande and Thomas have both
> >> stepped back from their operations/ running the company. It remains to
> >> be seen how they perform. Their major failing has been in having a
> >> business model capable of scalability, in my opinion.
>
> >> Their brand equity is very good and PR is pretty good.
> >> -- Mohan Sundaram
>

> >> On Tue, Aug 3, 2010 at 11:01 PM, Manu Sharma <orangeh...@gmail.com> wrote:
> >> > On Tue, Aug 3, 2010 at 7:23 PM, Manu Sharma <orangeh...@gmail.com>

> >> > wrote:
>
> >> >> Two out of three "investors" of Selco are foundations (charities).
> >> >> [...] Selco's biggest expansion drive in Karnataka happened under the
> >> >> UNDP
> >> >> project which provided 5% interest loans for up to five years.
>
> >> > Correction: I meant, UNEP project. More details about it can be found in
> >> > the
> >> > UNEP press release and this report by Ishani Mukherjee of Worldwatch
> >> > Institute.
>
> >> > On Tue, Aug 3, 2010 at 8:55 PM, amit

> >> > beriya <beriya.a...@gmail.com> wrote:

>  Rural Electricity Newsletter V57.pdf
> 192KViewDownload
>
>  MercomSolarReport02Aug2010.pdf
> 435KViewDownload

[Swapan Mehra]

Dear Mohan,

I'm at the moment advising a client NGO on a solar cookstove distribution project in Rajasthan. My role is to help them access carbon finance and also build the distribution channels. My client has executed a pilot based solely on funds raised via grants overseas. Based on my experience so far with this project my observation is that a) Carbon finance can provide for a very small part of the project cost b) Scalability of these projects will always face twin challenges of financing and social acceptance. Some technologies are very expensive and others not very suitable. We also observed that due to NREGA, in many areas, women members of the family work during the day and do majority of the cooking post sunset. This  limited the interest in these cookstoves to a large extent. Will go through the two reports you sent in a later mail so get some cues on implementation of similar projects.

Regards,
Swapan