Solar Products for Poor Rural Communities as a Business: Lessons from a Successful Project in Uttar Pradesh, India

Abstract

Can sales of solar products and services be a commercially viable business in poor rural communities? Although enthusiasm for off-grid electrification among researchers and practitioners is widespread, the determinants of commercial success in this domain remain poorly understood. This article reports results and lessons from a successful field project in Uttar Pradesh, India. In collaboration with a local social entreprise, Boond Engineering and Development, a small investment of USD 5,000 was made to establish an energy center in the Unnao district of the state. The energy center became profitable immediately and generated seven dollars of business in solar home systems for every dollar invested during the 6-month evaluation period. Factors contributing to the success of the project included robust marketing, a strong banking partnership, the high quality of products, and continuous evaluation of staff performance. Challenges included a bias in sales toward large solar home systems, the limited access to finance for poor households, and access to working capital. Overall, the energy center model holds considerable promise for alleviating energy poverty in rural India on a large scale.

Keywords: solar home systems, demonstration effects, rural electrification, off-grid electricity, energy access, energy poverty, India