Area of work:
More than 70% of sub-Saharan Africa has no access to electricity, and in rural areas this generally exceeds 95%.
The Rural Energy Foundation (REF) has met this need by turning local communities on to solar. Recognising that the products are nothing without the local entrepreneurs to promote and install them, REF has trained local networks of budding entrepreneurs.
More than 70% of people in sub-Saharan Africa have no access to electricity. In rural areas this generally exceeds 95% and people spend much of their income on kerosene and candles for lighting, and batteries for small appliances. Solar photovoltaics (PV) can provide the small amounts of off-grid electricity needed for these and other needs, but many people are not aware of the benefits of solar PV or do not have sufficient money to buy solar products. Added to this, rural entrepreneurs lack the technical, commercial and financial capacity to start or grow a business in solar systems.
The Rural Energy Foundation (REF) recognised the crucial role that local solar entrepreneurs play in making PV electricity available to the people who would most benefit from it. It has helped to establish effective supply chains in sub-Saharan Africa through training PV entrepreneurs and technicians, stimulating demand, and facilitating access to loans for entrepreneurs and their customers.
REF is a not-for-profit organisation based in the Netherlands, and has been running the SolarNow programme since 2007. It identifies retailers and distributors, trains them in solar energy technology, marketing, sales and business administration, and helps them start up and expand businesses selling solar energy products. Entrepreneurs who complete training, meet the REF quality requirements, and sign an agreement that they intend to develop a rural solar business are allowed to use the ‘SolarNow’ branding. This improves their visibility enabling them to benefit from large-scale SolarNow awareness campaigns.
REF has a Country Coordinator and a small team of local staff in each of the nine countries in sub-Saharan Africa where it currently operates: Burkina Faso, Ethiopia, Ghana, Mali, Tanzania, Uganda, Senegal, Mozambique and Zambia. There are a total of 32 employees.
In 2009 REF had an income of approximately US$700,000. To date REF has been grantfunded by the Dutch lottery (DOEN Foundation) and the Dutch Ministry of Foreign Affairs, as well as several individuals and Foundations. The medium term objective is for REF local offices to become more self-financing through providing consultancy and other services.
You can start with the lanterns: they’re cheap, and it only takes around minutes to sell one to the customer. Then when they’ve got a taste for solar, they want more power, so then you can sell them a small solar home system.
Gildo Ongom, in training as Solar Now retailer, Moroto, Karamoja
REF does not charge for its services, but monitors its operating costs in relation to the value of the sales made by SolarNow retailers. In 2009, the REF operating cost was only about 5% of the value of sales. This shows that supporting supply chain development can be a very cost-effective way of providing access to PV electricity.
REF primarily works with solar home systems (SHS) and solar lanterns.
An SHS consists of a PV module, which generates electricity from sunlight; a rechargeable battery, which stores electricity so that it can be used during both day and night; a charge controller, which prevents the battery from being over-charged or deep-discharged; lamps; wiring and fixtures. The SHS promoted by REF use PV modules from 11 to 50 Wp rating. Depending on size, systems can support other small electrical appliances like mobile phone chargers, radios, fans or black and white TV.
A solar lantern has the lamp and battery combined in one portable unit. The 1 to 10 Wp PV module is sometimes incorporated in the unit, but is often detachable.
The best form of marketing is to show people how solar works. So they can see that it’s charging their mobile; they can see the TV’s switched on. Then they really feel solar works!
Gildo Ongom, in training as Solar Now retailer, Moroto, Karamoja
REF does not specify prices, but gives general guidance to SolarNow retailers. As a starting point, they suggest that a 11-20 Wp SHS should sell for about US$250-440 and a 21-50 Wp SHS for US$360-630. The solar lanterns sell for US$25-90, depending on size and quality. REF encourages retailers to learn about the market and understand what is affordable for their customers.
The customers pay the full price for the system, usually up front in cash. SHS are increasingly made to be easily expandable, so that users can start with a small system and increase the size when they can afford to.
REF encourages micro finance institutions (MFIs) to make finance available for customers to buy solar products. REF has a guarantee fund to stimulate loans to potential customers and entrepreneurs. Four financial institutions are taking part in a pilot project whereby REF guarantees 50% of the repayment of the customer and retailer loans. The customers typically repay these loans in 12 to 24 monthly instalments. The pilot projects are taking place in Tanzania, Uganda and Burkina Faso for retailers and micro-entrepreneurs and in Uganda, Ghana, Mali and Burkina Faso for customers of solar products.
PV modules and charge controllers for the products sold by SolarNow retailers and importers are manufactured in China, USA and Europe. The systems are assembled and installed by local technicians trained by REF. Batteries are often manufactured locally. REF does not mandate any particular brand, although they do advise retailers on the best options. If a retailer repeatedly sells poor quality products, they can lose their SolarNow status. REF feeds back information to importers as a way of trying to improve the quality.
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REF gives retailers and technicians a four day training course on the technology, marketing and sales aspects of their work. There is also informal training through regular visits by REF staff and technicians to check their work, demonstrate new products and talk through any problems. All technicians contracted by SolarNow retailers are eligible for REF training.
Retailers market the products through live demonstrations using a demonstration kit. Retailers can borrow this kit from REF for three months to test its effectiveness, and then return or buy it. REF is also starting to design specific kits (based on discussions with retailers), which could be used to start up solar-powered businesses. For example, there is a bush barbershop kit and a mobile phone charging kit, and REF is currently even designing an off-grid internet café kit.
REF trained me in solar technologies, marketing skills and so on… Some people come to the shop because they know me; others see the Solar Now signs in the window and come in… Otherwise it’s all about going out to markets and making people aware of us.
Floyd Owori, energy shop owner, Tororo
REF-supported shops are branded in the SolarNow colours, including banners and posters. By making the brand SolarNow more visible, REF can promote it, benefitting retailers and importers.
REF initiates large-scale marketing campaigns to raise awareness of solar products. Further up the supply chain, REF works on making importers aware of the potential of the retail market and then helps link them up to retailers.
REF encourages retailers to not only provide proper warranty, but also to offer after sales services via a service contract. These contracts include one or two visits from a technician and an interim phone call. Customers get initial advice and a simple instruction sheet to use as a reference.
Since 2007, retailers of SolarNow products have sold over 57,000 solar home systems and 36,000 solar lanterns. With four or five people per household, this means that REF has helped over 455,000 people gain access to electricity. There are over 200 SolarNow retailers operating in nine African countries, and a similar number of technicians contracted to install and service systems.
Replacing the use of kerosene cuts greenhouse gas emissions. REF estimates that the average household using a solar lantern or SHS saves about one litre of kerosene per week. This represents a reduction of about 0.13 tonnes/year of CO2 emissions. The systems sold to date are therefore reducing use of kerosene by 4.9 million litres a year and cutting emissions by about 12,000 tonnes/year CO2.
Replacing kerosene lamps and candles with solar energy also improves air quality in households and reduces fire risks.
PV electricity improves the quality of life in rural areas. People have better access to communication and information through radio and mobile phones. Children are able to study in the evening with better quality light, and light allows people to spend more time on both income-generating and leisure activities. Improving quality of life in poor, rural areas can reduce migration to often over-populated urban centres.
The use of PV for lighting is cheaper in the long term than kerosene and batteries. REF estimates that an average household saves 30% on its energy expenses, and that the payback period for a SolarNow system is only one to three years, after which replacement costs are low.
Selling PV systems has increased business for the 200 SolarNow retailers. It has also brought employment for about 200 local technicians, since on average each retailer employs one full-time technician to assemble and install systems. Selling and servicing SolarNow products gives retailers increased visibility, more security and a better chance of accessing lines of credit.
Despite the success of SolarNow, there are still millions of people in Africa without electricity, and many see no prospect of getting it in their lifetime. However, there are many rural entrepreneurs that could become SolarNow retailers in the future.
REF wants to expand its operations to work in more countries in Africa. It is increasing its range of solar PV products, and also running pilot schemes with other renewable energy technologies, including pico hydro systems and efficient stoves. Increasing the availability of both retailer and customer finance is a major area which REF seeks to expand.
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