|The founder of the Solar Electric Light Co. (SELCO) describes the 12 years he spent promoting a business model that is brightening the lives of thousands of poor people around the world. |
by Neville Williams
In 1995, the Rockefeller Brothers Fund (RBF) invited me to co-host a small symposium on "selling" solar at John D. Rockefeller's Pocantico estate on the Hudson river north of New York City. At the time I was running a small nonprofit organization, the Solar Electric Light Fund (SELF), that had started pilot solar electrification projects in eleven countries in Asia and Africa.
These projects, funded by various philanthropic foundations, proved that if you bring solar electricity to poor people in developing countries who don't have power - and you offer them installment credit - they will purchase solar home systems (known now as SHS). The only competition was from governments that heavily subsidized rural power, which they seldom delivered. We knew solar could deliver.
26 of us gathered at RBF's intimate conference center located in the estate's renovated stables. We came from the solar industry, nonprofits, foundations, the World Bank, Greenpeace, Salomon Brothers and several developing countries. It was fitting that we were meeting in the shadow of the man who set out to "give the poor man his cheap light" - kerosene, which was Standard Oil's primary product from 1870 - 1912. We were there to talk about how to bring reliable, affordable and safe solar light to some two billion poor people around the world who were still using kerosene (or candles) as their only lighting source.
Unfortunately, we could not use John D. Rockefeller's business model to bring poor people their "cheap light" - Standard Oil gave away lamps, then sold them kerosene, which S.O. (now Exxon) distributed around the world. We could not give away photovoltaic (PV) modules, then sell the sunshine! We spent three days at Rockefeller's sylvan estate trying to figure out how to "sell solar."
A number of initiatives emerged. The representative of the Grameen Bank from Bangladesh went back home to start Grameen Shakti, a local solar company. E&Co., a development funding group, began financing solar enterprises around the world. Richard Hansen's Soluz expanded its solar utility model in the Dominican Republic and Honduras. The World Bank put up funds for solar, first in Sri Lanka, and then formed the PV Market Transformation Initiative to finance solar in Kenya, Morocco and India. Greenpeace launched a renewable energy campaign in Europe. Private investors got interested in overseas solar markets. And I, along with John Kuhns, a veteran investment banker with prior experience in renewables whom I first met at Pocantico, found the Solar Electric Light Company (SELCO) in Washington.
A Wild Ride
What a ride it has been since! The financial rewards have been slim, but the intangible reward of helping to bring solar power and light to 20,000 families, farms, businesses and institutions - reaching at least 150,000 people - has been worth the risk, the pain and the struggle.
SELCO got its start in India in 1995 under the direction of Dr. Harish Hande, its managing director and now VP of Operations for SELCO. Harish and I were walking around Bangalore one day trying to figure out how to "sell solar" in rural India, instead of just giving it away like so many donor and government programs had done. We wanted a commercially sustainable solution to the problem of rural lighting facing 100 million Indian villagers. I said, "Let's just start a company!" With the help of the Rockefeller Foundation, RBF and E&Co we raised the seed capital and SELCO-India was born.
In 1997, we launched SELCO (the international parent company) with the help of progressive Swiss and German investors, and we proceeded to form additional subsidiaries in Sri Lanka and Vietnam. SELCO, the parent based in Chevy Chase, Maryland, near Washington DC., was tasked with providing working capital for the three operating companies while representing the interests of the shareholders who had clearly taken a serious "first mover" risk by investing in this unique venture.
SELCO grew slowly but solidly, thanks to the untiring efforts of Dr. Hande and his dedicated crew in Bangalore who met the challenge of managing the first foreign-owned solar company in India. In Sri Lanka, following the pioneering activities of Dr. Priyantha Wijesooriiya, SELCO hired a former tea planter, Mr. Susantha Pinto, a man who nearly never sleeps, to manage the subsidiary - which he quickly expanded. And in Vietnam, after Mr. Shawn Luong got SELCO-Vietnam licensed and up and running as the first foreign owned solar company in that country, Mr. Canh Tranh, also a Vietnamese-American, took the helm and formed partnerships with local government to provide solar solutions to the country's rural electrification challenges.
"The Sun at Your Service"
Today SELCO has over 325 employees and has just experienced its fifth year of solid growth. Two of the subsidiaries in the SELCO group have reached profitability, accomplishing what everyone said could never be done. We have created a viable business out of selling solar PV lighting systems to poor people!
We're now generating respectable revenues, even while competing with newcomers like Shell Solar and several smaller players in Sri Lanka and India. When I heard that Shell was entering the market to sell SHS directly to rural families in some of the same markets we're in, I thought to myself, "We must be doing something right!"
And what exactly is our business? We operate a network of some 35 "solar service centers" (SSCs) that market, sell, install and maintain SHS in the rural and semi-urban marketplace. We also help customers finance their systems. We've successfully established SHS as just another "durable good" qualifying for consumer loans by local banks throughout South India, Sri Lanka and Vietnam. This part hasn't been easy, because not all rural families can qualify for loans, even if the local bank branch agrees to make them. A family can expect to pay at least $75 down plus $10-15 a month for 2-3 years before they take title of the system.
What are we selling? SELCO companies offer a range of small SHS from 2 lights and 20 peak watts (Wp) module (very few) to 35 Wp with 4 lights (very popular and affordable), 50 Wp with 6 lights and 65 Wp with 5 lights and sufficient power to operate a DC color TV (popular in Vietnam). SELCO companies fabricate locally most of their electronic components, from charge controllers to lamp fixtures, to compact fluorescent and light emitting diode (LED) lights. Major PV manufacturers, such as BP Solar (Tata BP solar in India), Astropower, Siemens Solar and United Solar, provide our modules and several carefully selected manufacturers supply deep cycle batteries.