Solar reaches low-income Indians

Bangalore, India-based social venture SELCO India said it raised growth financing to expand its program to provide renewable energy to low-income homes and businesses in India.

The amount of funding was undisclosed and was led by an equity investment by Swiss-registered nonprofit Good Energies Foundation, which shares ownership with global venture capital firm Good Energies. The Lemelson Foundation and nonprofit E+Co also contributed.

SELCO India, short for Solar Electric Light Company, has sold, financed and serviced solar power units to 100,000 homes in India through microfinance and other models. About two-thirds of its customers  survive on less than $4 a day. The company is also working on cleaner versions of cookstoves, solar-powered water pumps and wireless communication.

Richenda Van Leeuwen, a founding board member of the Good Energies Foundation, said SELCO India has become a pioneer in providing solar to low-income families through brokers, microfinance or traditional lending since it was founded in 1994.

"If you're poor you cannot afford the upfront cost of the solar home system," she said. "People can pay 3 or 10 rupees a day but they cannot pay a lump sum."

According to India’s Central Electrical Authority, the country currently has the capacity to produce 130,000 MW of electricity every year but has a peak energy shortage of more than 15 percent (see Clear Skies Solar signs $8M India deal).

Solar is seen as one solution to India's fragile electric grid (see Plug Power tests fuel cells in India and American Superconductor moves into Indian market). Cambridge, Mass.-based Promethean Power Systems secured angel funding last year from the Quercus Trust to build a prototype of a solar-powered fridge to test in India in 2009 (see MIT spin-off develops fridge for rural India).

SELCO India has also created a market for solar-powered rechargeable batteries. Van Leeuwen said entrepreneurs rent out the batteries for street vendors to use in their booths to improve visibility and profits.

Van Leeuwen said SELCO India has a strong focus on research and development. The company is exploring clean-burning versions of cookstoves to reduce the amount of indoor pollution from the devices.

According to the World Health Organization, indoor air pollution from solid-fuel use is responsible for more than 1.6 million annual deaths, including 800,000 children younger than five. Almost half the world's population cooks daily meals indoors with biomass-fueled fires. Up to 20 percent of the biomass is converted into toxic substances like carbon monoxide, benzene and formaldehyde.

Fort Collins, Colo.-based nonprofit Envirofit International is developing biomass cookstoves that can be financed through microlending (see Envirofit ramps clean-cooking line for India).

The Good Energies Foundation was founded in September 2007 to provide energy access to the poor and support climate change mitigation. Van Leeuwen estimated that 1.6 billion people are without access to power, mostly concentrated in the regions of South Asia and Sub-Saharan Africa.

Companies such as SELCO India fulfill the foundation's mission to ramp up long-term, sustainable business models that stimulate the marketplace by making customers pay what they can afford, Van Leeuwen said.

In 2006, the Good Energies Foundation committed $2.7 million to a solar project in the rural village of Rema in Ethiopia (see Ethiopia powers up with solar energy). The village was too remote to extend the electric grid, so a subsidized solar program has been implemented for several villages there, Van Leeuwen said.

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