Lessons in Renewable Replication from SELCO

05-05-2014, Vienna, Austria

During a recent visit to a number of branches, laboratories and projects of SELCO Solar Pvt. Ltd. And the SELCO Foundation in Karnataka, India, REEEP´s DG Martin Hiller tried to test the notion of replicating SELCO´s business model. This social enterprise has been built its success over twenty years, and elaborated a detailed understanding of the market for distributed solar power for India’s poor in rural and urban contexts.

During a recent visit to a number of branches, laboratories and projects of SELCO Solar Pvt. Ltd. And the SELCO Foundation in Karnataka, India, REEEP´s DG Martin Hiller tried to test the notion of replicating SELCO´s business model. This social enterprise has been built its success over twenty years, and elaborated a detailed understanding of the market for distributed solar power for India’s poor in rural and urban contexts. SELCO today serves 160,000 households, overwhelmingly from poor, very poor and abject poor backgrounds, and Hiller noted three elementary components of the SELCO model.

One of the main challenges SELCO encountered was to establish financing between local bank managers and very poor clients. “Trust needs to be built with each head of a local bank, and that trust emerges when a bank has started to loan to very poor people on recommendation of SELCO, and they really pay back regularly,” says Dr. Harish Hande, founder and President of SELCO. “The first component of our business model is the trusted relationship between banker and SELCO branch head, in each of our 41 branches.”

A second element is the understanding of each specific community and their needs. SELCO makes it a specialty to go into communities and develop a management and finance system that is affordable and advantageous for each community. SELCO sometimes works with a local entrepreneur who rents out solar lamp systems while recharging batteries in a central station, in doing so keeping track of each client’s payments. In other cases, a cooperative system may work better, allowing individual systems to be sold, which can include a lamp or lamps, a radio, and a fan.

Thirdly, it is the old fashioned concept of good value for the money, which guarantees long term success. SELCO insists on providing good customer service over the long term, even beyond the five-year warranty of a solar home system. People come away with sustainable solutions offering between 20 and 300 times more light (compared to a kerosene lamp) at a low price, and the option to expand the system for phone-charging and other electric uses. More reliable light opens up numerous possibilities, from longer working hours to aiding studying to improving safety. In interviews, smallholder farmers, fishermen and city slum workers all say that better and more light has improved their ability to make choices.  “One long-term solar entrepreneur and client and partner of SELCO, who lives in a slum near Udipi in southern Karnataka, is now even studying for a law degree,” says Hande.

SELCO celebrated its 20th year recently and launched a series of short film documentaries, which will be published on the web, and allow interested partners to study the details of the SELCO model. REEEP will keep you posted. 

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