India’s Solar Sahelis, an IFC Case Study

SOLAR POWER

India’s Solar Sahelis, an IFC Case Study

IFC Case Study

This article briefly outlines the details of the case study carried by International Finance Corporation (IFC) to develop a network of women entrepreneurs known as Solar Sahelis.

Project Overview

Every year worldwide, poor households spend $37 billion on kerosene for lighting, biomass for cooking, and other unsustainable and unhealthy fuels. This fuel use represents a substantial opportunity for private sector advances—chief among these, the development of solar lighting systems.

Building markets for solar lighting, particularly among a widely distributed, low-income customer base, requires technical and business-model innovation. IFC’s Lighting Asia/India accomplished both by partnering with solar distributors in India, such as Frontier Markets, to develop a network of women entrepreneurs known as Solar Sahelis. This network helped to overcome the cost and awareness challenges of selling in last-mile (i.e., remote) markets. As a result, the partnership was able to increase sales by 30 percent, opening up the market for solar lighting products.

Project Objectives

Lighting Asia/India, part of IFC’s Lighting Global program, accelerates access to clean and affordable energy in rural India by promoting modern off-grid lighting products, home systems, and mini-grid connections. The program works with the private sector to address barriers to growth by providing market intelligence, fostering businessto-business connections, strengthening last-mile access, and raising consumer awareness of quality-assured lighting products in the states of Uttar Pradesh, Bihar, and Rajasthan.

Challenges

In India, 400 million people do not use grid electricity as their main source of lighting, a gap that disproportionately affects women. The lack of efficient energy connections places increased burdens on women’s time by adding to their household responsibilities, which in turn reduces their opportunities to earn income. Women are also more exposed to health risks from kerosene oil and other fuel-based lighting sources.

Despite its vast potential, the market for modern off-grid solar products in India is severely underdeveloped, with IFC assessments estimating a 5 percent to 7 percent penetration rate. Two key barriers to market development are building demand among last-mile customers and ensuring delivery to them.

The population in rural areas is least likely to have access to safe forms of lighting, yet it also presents sales challenges for two reasons: First, last-mile customers typically have low incomes, and because of their remote locations, cost more for the private sector to serve reliably. Second, these customers tend to have limited access to information and networks, decreasing their participation in energy markets. In India, the early entry of low-quality solar lighting also meant that potential customers were wary of spending money on likely faulty products. Lighting Asia/India knew that persuading customers to adopt solar lighting would require creative approaches.

Gender-Smart Solutions

Lighting Asia/India overcame the challenges associated with last-mile sales and built the market for off-grid solar lighting by focusing on women as distributors and customers. For distribution, Lighting Asia/India partnered with Frontier Markets, a clean-energy-products company, to develop a network of Solar Sahelis. The network is made up of a group of self-employed women recruited from self-help groups. These women-run alliances provide access to funds and technical assistance to help women in local villages improve their lives and start their own businesses. Based on initial results, Frontier Markets plans to expand the Solar Sahelis network from 250 women to 20,000 between 2016 and 2020.

Solar Sahelis promoted awareness of the benefitsof high-quality solar lights through the Suryoday, or“Sunrise,” campaign. The campaign highlighted theeconomic savings and health benefits of solar lighting. It also improved customers’ ability to identify high-quality solar products, ensuring that substandard goods did not discourage the adoption of more reliable products. The awareness campaign particularly targeted women, reaching 56,000 across three states through self-help group meetings.

The Business Case

At the end of the 18 months’ partnership between IFC and Frontier Markets, the Solar Sahelis network accounted for 30 percent of all sales. To date, Frontier Markets has sold 115,000 solar lamps and torches and 12,000 solar home-lighting systems—bringing the benefits of clean, safe, and affordable light to the homes of approximately 630,000 people. This was possible because the network helped overcome the cost and awareness challenges associated with last-mile distribution. Specifically, gender-smart solutions helped to build distribution networks, increase customer trust and market access, and enhance public awareness and recognition.

  • Last-mile distribution: Buying solar products is a longer-term, one-off financial investment, making it impractical to maintain a full-time, dedicated sales staff in remote communities. By working through independently employed women, Lighting Asia/India and Frontier Markets gained a flexible network that was also deeply tied to local communities. At the same time, Solar Sahelis earned an average of $35 per month for part-time work, a substantial addition to what was typically a low or nonexistent income.
  • Customer trust: While high-quality solar lighting delivers cost savings in comparison to fuel-based lighting over time, in the short term, it can be a substantial investment for rural customers. Having a network of Solar Sahelis embedded in local communities and available to answer post-sales inquiries built the trust needed to purchase off-grid solar lighting.
  • Market access: Studies across markets show that women are key decision makers in energy purchases, influencing what type of lighting products to buy and how much is spent on them. Working with a network of female entrepreneurs facilitated sales in a market segment that male agents might not have been able to access.
  • Public awareness: Coordinated campaigns and an active network of entrepreneurs produced results: Consumer knowledge of the availability and benefits of high-quality solar lighting jumped from 25 percent to 60 percent among consumers in the target area.
  • Public recognition: Frontier Markets recently won the 2016 Ashden Award for Clean Energy for Women and Girls.

IFC’s Lighting Global program

Lighting Global is the World Bank Group’s platform to support sustainable growth of the international off-grid solar market as a means of rapidly increasing energy access to the 1.2 billion people without grid electricity.

The Lighting Global program supports market development by working with private companies to lower first-mover risk and mobilize private sector investment through market intelligence, quality assurance, business support services and consumer education.

Lighting Global program impact

  • More than 131 million people have benefited from using Lighting Global quality verified solar lighting products (as of June 2017)
  • Nearly 40 million people have had their basic lighting needs met by Lighting Global quality verified solar lighting products (as of June 2017)
  • More than 26 million Lighting Global quality verified solar lighting products have been sold since 2008
  • More than 1.75 million tons of GHGs avoided annually; CO2–equivalent of taking 375,000 cars off the road for a year, as a result of replacing kerosene use with Lighting Global quality verified solar lighting products

Lighting Asia

The World Bank Group provides lighting programs in six countries and regions throughout Asia.

  • Afghanistan
  • Bangladesh
  • India
  • Myanmar
  • Pakistan
  • East Asia Pacific – Papua New Guinea
| Article published on 15/05/2018 by Rashmi Nargundkar

 
 
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