Category Selling Solar

100 Million Solar Homes Fund

The 100 Million Solar Homes Fund (‘the Fund’) would take the same approach as the Million Solar Homes Initiative (MSHI) discussed earlier. But it would do so at a much larger scale.

We have seen in earlier chapters how important a market infrastructure is to solar diffusion. Furthermore, we saw how a grant per unit installed provided an excellent incentive for firms to build this market infrastructure in countries like Sri Lanka, Bangladesh and China, leading to a rapid increase in diffusion. The grant per unit installed therefore becomes the first pillar on which the Fund would rest.

The Fund would use a straight grant of US$150 per unit installed. This is equivalent to roughly 25 per cent of the retail price of an average 50-watt, five – light system...

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Can Carbon Trading Accelerate Solar Diffusion?

When customers in emerging markets buy solar systems, they reduce emissions of carbon dioxide (CO2) that would have otherwise been generated. In the case of an unelectrified home or business, those customers displace kerosene for lighting, the charging of batteries or diesel generators that would have other­wise been used. Under carbon trading arrangements that we will go on to discuss, it is possible to turn those carbon savings into a commodity that can be bought and sold.

Of course, this might seem a little odd. After all, compared to other commodity markets, where actual goods are bought and sold, in the carbon market the commodity being bought and sold does not exist: it is the certified absence of carbon dioxide that is being traded...

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Will Market Forces Deliver?

Solar in emerging markets sits within a broader global solar industry, where the majority of demand comes from the industrialized markets. These markets have historically been led by Germany and Japan, but now a host of industri­alized countries have announced policies to support solar. Could it be that the growth of industrialized markets will help to drive down the price of solar, such that diffusion is advanced in the emerging markets as well? To answer this question, we first examine the growth of the German and Japanese markets.

Interest in solar technology was strong in Germany throughout the 1980s and early 1990s. When the political landscape changed, and the red-green coalition came to power, the scene was set for a revolutionary set of solar poli­cies.

The 100,000 roofs programm...

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Will bilateral aid agencies step into the breach?

Bilateral aid agencies were among the earliest supporters of solar in the emer­ging markets. This support has continued over time, and if anything has grown. Examples include the 9 million euro Netherlands aid packages to the Philippines for 15,100 solar home systems and the 23 million euro package (of which 13...

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A Big Push from the World Bank?

The World Bank has had tremendous success in lending for solar. We traced the roots of this success in Chapter 6, and many of our policy recommenda­tions in Chapter 7 emanate from that effort. But the key question remains whether the World Bank can now build on this, and scale up its lending for solar so as to drive diffusion to 100 million solar homes by 2025. The fate of an earlier initiative – the Million Solar Homes Initiative (MSHI) – would suggest that, without some outside intervention, the World Bank would have little internal drive to do so.

The MSHI emerged around the time of the World Summit on Sustainable Development (WSSD) in Johannesburg in 2002. It was an initiative that came from the private sector, and was quickly adopted by the GEF...

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Solar Tomorrow: 100 Million Solar Homes

So far we have mainly considered solar’s past: why it was slow to diffuse in the 1980s and 1990s, and why around the turn of the century it started to diffuse more quickly. In this chapter we turn now to consider solar’s future – solar tomorrow – and the international forces at play that may or may not lead to a dramatic acceleration in solar diffusion in emerging markets.

To give ourselves a benchmark for what accelerated diffusion might look like, we can turn to the objective set by the G8 at the start of the new millen­nium. At the Okinawa Summit in 2000, the G8 called for the formation of a task force to assess barriers and recommend actions to accelerate the diffusion of renewable energy technologies in emerging markets...

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Establish an Independent Agency and Monitor

Once a grant and lines of credit are in place and being deployed in the market, it is then imperative that the deployment be monitored. Without this, cust­omers are likely to suffer – such as those in Kenya. It is estimated that about one-third of the solar systems in Kenya are not fully operational because of a lack of enforced installation and design standards, mixed quality of compo­nents, and lack of customer awareness.46

Specifically, standards of product quality and service need to be set and enforced. But in terms of what to standardize, policymakers should go for a minimalist approach...

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If There Is No Rural Finance, Target Smaller System Sales Instead

Financing solar remains the ideal, because it allows customers to buy bigger systems that meet more of their energy needs. Finance takes a bigger solar system, and breaks it into smaller, more affordable chunks, paid for over time. It’s a bit like buying a bigger house in a better location with a mortgage, rather than buying a house on a cash basis and living in something very small and far away from the action.

But there are some emerging markets where it would appear that no banks or MFIs are willing to finance solar. In such cases the trick for the policymaker is to make the product more affordable by making the product offering smaller...

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