Chasing the Sun Around the World

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.

The Beginnings
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.

Our SHS carry the SELCO brand, which has come to mean quality, reliability and service. Without service, you don’t have a business. When we launched SELCO, we decided that customer service would be our main product, not technology. The technology was already there and proven, but service was not. Service in rural areas, where families in need of electricity are disbursed over wide areas (most do not live in villages as is commonly believed) is not an easy business. In fact, the company motto is “The Sun at Your Service.”

Growing the Business
SELCO-India is the company’s flagship. Operating in the southern state of Karnataka, SELCO-India perfected solar finance by developing relationships with dozens of rural banking institutions that make loans to its customers. A retired senior banking official sits on the board. The U.S. Agency for International Development (USAID) sponsored him to train rural bankers.

While specializing in SHS, SELCO-India, with its sister concern, Anand Electronics, also manufactures solar streetlights and inverters, and installs institutional and industrial PV power plants up to 10 kilowatts (kW). In addition, it sells solar water heaters. Urban people buy a solar water heater from SELCO, then nearly always come back to purchase a SHS as a back-up electric system to use during the daily power cuts.

SELCO-India also takes on special projects, including electrifying 1500 houses for a community development non-governmental organization last year, and bringing indoor and outdoor solar lighting to Tibetan refugee settlements, including a new residence and temple built for the Dalai Lama in Mungod, Karnataka. Altogether, SELCO-India has installed over 14,000 SHS in South India.

In 1991, I organized the first solar finance program through Sarvodaya Economic Enterprises Development Services (SEEDS) in Sri Lanka. In 1993, I was part of the World Bank’s first mission there to set up what became, five years later, the first successful World Bank- funded solar project (things don’t move too quickly at the Bank). Sarvodaya, SEEDS sponsor, is the country’s largest rural development organization.

Today, SEEDS uses World Bank funding to make hundreds of household solar loans a month and local solar companies receive a subsidy from the Global Environment Facility for each SHS installed. SELCO and two other companies can barely keep up with demand. In 2002, SELCO-Sri Lanka installed 250-350 SHS a month through its islandwide operations. Solar electricity is now a big business in Sri Lanka.

Vietnam has turned out to be the most difficult market. It is still a poor country, and it is actively communist, although would never know it to look at booming Hanoi and Saigon – a scenario similar to the situation in China. Unlike Sri Lanka, which depends on unreliable hydropower for 98 percent of its power generation, or India, which has a failed grid and a hundred thousand megawatt countrywide shortfall, Vietnam has plenty of power for its cities. It can’t, however, afford to reach six million families scattered in remote rural areas – about 30 million people.

Only “rich” farmers in Vietnam can afford to buy a “SELCO”, and they also want color TV and a VCR, so they buy our largest SHS. And even they need a loan from the Vietnam Bank for Agriculture and Rural Development. Development subsidies are in the offing, however, wich would allow whole communities to “go solar.”

Last year SELCO-Vietnam received the U.S. Department of State’s Award for Corporate Excellence in a ceremony featuring a live satellite video hook-up between the U.S. Consulate in Ho Chi Minh City and the Dean Acheson Auditorium in Washington. Both countries’ Ambassadors attended the ceremony. Our dedicated Vietnamese staff were so very proud! Most of them hadn’t been born when I covered the war as a correspondent in 1968-9. I felt like our company was somehow making amends, even though we are there on a strictly business basis. Despite the recognition, Vietnam continues to be a tough place to do business.

Satisfied Customers
As tough as it is to operate remote solar companies doing business in rural areas around the world, there is no end to the opportunity. And frustration is easily overcome by the satisfaction of visiting a rural household, far from anywhere that lives on cash crops like cocoanut, betel nut, cashews, rice, coffee or pepper. The delight in the faces of everyone, from the smallest children to the oldest grandparents, when they first turn on the wall switch that lights up their house or powers their small TV is a rich reward.

Our customers often buy the system on faith that it will produce electricity – they have no idea how it works. They marvel that there are no power lines or poles, only this strange glass panel on their roof which, we remind them, they must keep clean. They soon learn to manage their power consumption so they never run out even during the grayest rainy season.

Satisfied customers make us happy. To wit, from Mr. R.R. Amarasinghe in Maha Aragama, Sri Lanka: “I can’t quantify the joy and light I get from this SELCO system. My two children are studying under these lights. That joy is felt deep in my heart. Let this valuable light spread to our entire village.”

With a limitless market for household electricity in the developing world, and no clear alternative to satisfy subsistence home power needs, the solar electric solution cannot fail. SELCO’s steady growth through the Asian financial crisis, the dot.bomb, stock market and corporate corruption debacles and the global economic downturn, is proof enough. After all, you can buy electricity in India from SELCO, but you can’t buy it from Enron.

I’ve decided to step down after five years running SELCO. I started the company too late in life to see it beyond its initial five years. It is time to turn it over to younger people who have the time, energy, commitment, and business know-how to take SELCO into the future and finally get rid of all those smoky, CO2-emitting, dangerous kerosene lamps in millions of households around the globe.

A new CEO, Mr. Benjamin Cook, joined the company in January 2003. He worked in the international solar field in the 1990s, and was part of SELCO initially, before leaving to earn his MBA at Stanford and find employment in the world of Big Power Finance for a period. He has returned to his first love, solar PV.

With the leadership and vision of people like Mr. Cook and Mr. Hande and SELCO’s committed managers and staff – all of whom are driven by a heartfelt mission to make their countries and the world a better place – SELCO will continue to grow and a successful player in a post fossil-fueled world. After oil, solar (and wind) is all there is.

++++

Neville Williams is the founder of Solar Electric Light Company (SELCO) and was its chairman and CEO from 1997 to 2003.
Contact him: nwilliams@selco-intl.com www.selco-intl.com


FROM Solar Today, a SustainableBusiness.com Content Partner

(Visited 37 times, 1 visits today)

Post Your Comment

Your email address will not be published. Required fields are marked *