By broadening his perspective and embracing not just technology but the socio-economic needs of the community, 2011 Ramon Magsaysay Awardee Harish Hande has successfully used solar energy to empower the poorest of the poor. Over 120,000 households to be exact.
Solar energy is environmentally desirable, but it is very expensive and only the rich can afford it. Thus goes the common belief surrounding solar energy, shared by experts and the ordinary layman alike.
But, by thinking out of the box, Harish Hande, recipient of the 2011 Ramon Magsaysay Award, has turned this piece of conventional wisdom on its head. As a result, poor people in rural India have been able to afford the benefits of electricity powered by clean solar energy. Since 1995, the company he co-founded, Solar Electric Light Company (SELCO), has installed solar panels providing light and electricity in 120,000 rural Indian households, improving the quality of life for half a million Indians.
Born in 1967 in Karnataka but raised in Orissa, Hande studied at the Indian Institute of Engineering before proceeding to the University of Massachussetts for a masteral and later a doctoral degree in energy engineering.
When he started at the University of Massachussetts, he was a self-described “geek with equations in my blood,” but this narrow focus changed when professor Jose Martin became his adviser and mentor. Professor Martin encouraged him to broaden his perspective to embrace not just technology but also the socio-economic needs of the community. Thus, Hande focused on rural electrification for both his masteral and doctoral coursework. This kind of research was particularly tailored to his country’s needs, because in India more than 57 per cent of the population is either without electricity or else connected to an unstable power supply. The absence of electrification in rural areas has deleterious effects on both quality of life and economic development – the use of kerosene lamps for illumination exposes users to the toxins caused by the burning kerosene as well as the possibility of accidental fires, curtails the ability of children to study at night and inhibits opportunities for income-earning activities.
A second turning point for Hande came when he visited the Dominican Republic, where he saw that the poor were using solar power. Unlike conventional energy systems with a centralized source of power such as oil or coal-fired plants or hydroelectric dams, solar power using solar photovoltaic systems can be decentralized to the end-user and customized to suit his needs. The problem was how to make solar power affordable to underserved communities, because the installation costs were indeed more than impoverished rural families could afford. Yet Hande observed that in the Dominican Republic, the poor were able to pay for the solar energy that they were using.
Following this experience, Hande made solar energy for rural electrification the subject of his postgraduate work. Co-founding SELCO became the natural consequence of his studies.
The fledgling enterprise, capitalized at 13,000 rupees, was set up in Karnataka. Hande had considered his home state, Orissa, but finally decided on Karnataka for a very simple reason – he had more relatives in whose homes he could stay while he set up the fledgling enterprise. The choice of Karnataka was serendipitous for another reason, although he was not aware of it at that time – the state had a better network of rural financing that would be crucial both to SELCO and to its prospective customers.
Hande faced a host of challenges, not the least that of introducing a new technology to skeptical customers. His first success involved a wealthy areca-nut farmer who was initially reluctant to try out the unfamiliar technology. However, the farmer’s mother, who had overheard the conversation between the two, secretly gave Hande 15,000 rupees to install the solar panels on the sly. That night, there was a power outage; but the farmer saw his fields lit up. His initial skepticism turned to enthusiastic support.
However, the majority of Hande’s customers consisted of the poor who could not afford the initial installation costs, even if the per day cost of using solar power was cheaper than using kerosene lamps. When he approached banks, he was informed that they could only finance income-generating activities within specific time frames.
Another problem was collection. While daily wage earners could afford to repay 10 rupees a day, paying 30 rupees every three days was difficult. On the other hand, regular rural banks did not have the staff to do daily collections of small amounts of money. Finally, a microfinance institution, the Malaprabha Grameen Bank, in 1996 agreed to finance the installation of 100 solar power sets. Still, it took three years to build a network of institutions to provide door step financing for the acquisition of solar power. At present, SELCO has partnerships with rural and commercial banks, NGOs and farmer cooperatives.
Another challenge was to find technicians in the rural areas. While Hande personally installed the first 500 solar systems in the first two years, riding on buses to remote areas and sleeping in his aunt’s house during periods of no work, he still needed a staff to build SELCO. He literally went door-to-door at bicycle and TV repair shops in Indian villages, recruiting school dropouts to train as technicians. Even today, only a handful of his staff are engineers; most have only a grade-school education.
Nevertheless, the staff is well trained to carefully analyze the customer’s needs and customize the installation accordingly. Hande gives an example of a farmer who said that he need a three-light system, but then retreated when he realized the cost. A technician visited his house and broke a part of his wall so that two rooms would be lit by the same light. According to Hande, he needed light in three rooms; he didn’t need three lights. A typical power company would not have gone to the extreme of visiting the customer’s home to see what alternative could be made possible.
SELCO’S flexibility has allowed many of its customers to improve their productivity or embark on income-producing activities not possible before. SELCO designed solar-powered headlamps for rose pickers, who harvested the flowers at night and brought them to market before they wilted in the daytime heat. An auto rickshaw driver who installed solar panels on the roof of his house charges 30 small batteries during the day and rents these batteries to vendors at night. This sideline has doubled his income.
Customization of the product according to the customer’s needs is one of SELCO’s strengths; another is prompt service. One of SELCO’s initiatives was to create a service network using local youth that would enable them to provide service within 24 hours.
All this was achieved without the environmental pollution that accompanies other kinds of energy generation. Hande estimates that each household solar system installed offsets global warming by more than five tons of carbon dioxide that the household would have otherwise produced if fuel fossils had been used for electrification, or if they had used inefficient lighting sources such as kerosene lamps.
After five years, SELCO started to earn a profit. However, this prompted Hande’s co-investors to push for a rapid expansion of a dealer network. The premature expansion in search of profits diverted the company from its social mission. And in 2004, a sudden increase in German demand for solar equipment caused Indian companies to divert production from the smaller modules which were the backbone of SELCO’s business to bigger ones for export. Domestic prices soared, and delivery times lengthened.
These developments strained the company’s finances. Faced with the imminent collapse of the company, Hande separated from his partners and refocused on its social mission and its core strengths – customized products, doorstep financing and doorstep maintenance. It also secured financial assistance from the International Finance Corporation and fresh capital from investors attuned to its social mission. At present, SELCO, headquartered in Bangalore, has more than 25 branches in Karnataka and Guajarat and, while it continues to be a for-profit enterprise, its social orientation – to serve India’s most underserved citizens – remains the uppermost consideration in its operations and any future expansion plans.
For his pioneering work in environmentally sound and sustainable technologies, Hande has won several awards: the Ashden Award for Sustainable Energy 2005 and the Tech Museum Award 2005. He also received the world’s leading green energy award from Prince Charles in 2005. In 2007, SELCO INDIA won the Outstanding Achievement Award from Ashden Awards, which was presented by former US vice president Al Gore.
In 2007, Hande was named the Social Entrepreneur of the Year by the Schwab Foundation for Social Entrepreneurship and the Nand & Jeet Foundation. He was also the featured speaker at the Clinton Global Initiative 2007. The following year, he was chosen by Business Today as one of the 21 Young Leaders for India’s 21st century. In the same year, India Today named him one of the 50 Pioneers of Change in India.
Many skeptics, among them the World Bank, had always said that solar [lighting] does not make sense for the poorest of the poor. Haresh Hande has proven them wrong.