We are pleased to bring you this #ThrowbackThursday blog post, which was originally published as a Box in the The State of the Microcredit Summit Campaign Report, 2009. Grameen Shakti (GS) announced at the end of 2012 that it had reached its first landmark of one million Solar Home Systems (SHS) installed in the rural areas of Bangladesh. In the press release, they said, “Grameen Shakti replaces millions of litres of kerosene by these 1 million SHS and reduces CO2 emission substantially. On an average, GS installs over a thousand solar home systems per day, working with a workforce of 12,000 young people. We are looking forward to witness the signpost of the next million by 2016.”
Dipal C. Barua, Managing Director, Grameen Shakti (www.gshakti.org)
The First Steps to Break the Energy Divide
Grameen Shakti (GS) was created in 1996 to reach rural people with clean, affordable energy through renewable energy technologies.
Bangladesh is rich in sunshine. That is why Grameen Shakti’s first initiative was to popularize Solar Photo Voltaic (SPV) technology. By owning a solar home system (SHS), a rural family can enjoy lights, television, radio, and can power their mobile phones. The up front costs are high, but once they are paid, there are no additional costs, load shedding, or ever increasing electricity bills. This makes a huge difference in the quality of life and income generation in a country where 80% of the people still do not have access to electricity.
A Business Model Suitable for Rural People
Government initiatives to meet the energy needs of the rural people have failed in most developing countries. Grameen Shakti, in contrast, was successful in taking the world’s most up to date technology to the rural people.
The first challenge was to acquire start-up funds and build a network to reach rural people. GS depended on soft loans and grants to start its program. GS also worked with local and international engineering institutions to recruit and train engineers to develop its in-house capacity. Currently more than 50% of GS staff are engineers and they are deployed all over Bangladesh. In addition, local technicians and users were also trained. This means local jobs, community support and efficient after-sales service at reduced costs.
The second challenge was to develop a financial and technical package suitable for rural people. Innovative application of microcredit made a SHS affordable at the same cost as kerosene while ensuring income generation and new business opportunities such as mobile phone vendors and televisions in shops. Special Packages such as a Micro-Utility Model allowed one system to be shared by many shopkeepers, linking the technology with income generation.
Initially GS engineers had to make door to door visits to demonstrate the effectiveness of the solar home systems. Once the villagers became aware of the multiple benefits of a SHS, the system sold itself.
Increased sales have decreased overhead costs which helped GS provide further credit options to the rural people. Local production of solar accessories has further reduced costs. GS reached break even point in 2002. This success drew the attention of the World Bank and other funding institutions and GS was able to source soft loans through the Infrastructure Development Company limited (IDCOL).
Future Vision: Creating 100, 000 Green Energy Entrepreneurs by 2015
Grameen Shakti also has a thriving Biogas and Improved Cooking Stoves Programs (ICS). Biogas plants are providing cooking gas, light, electricity and organic fertilizer to rural people with livestock. Poultry owners have especially benefited. They get rid of poultry wastes, reduce energy costs and earn extra income by renting biogas. ICS are popular with rural women because they can cook in smoke-free kitchens and cut their fuel cost in half. GS plans to construct 500,000 biogas plants and 10 million ICS by 2012.
To reach these goals, GS plans to create 100,000 Green Energy Entrepreneurs by 2015 and has set up 30 local Grameen Technology Centers to train rural women as technicians and entrepreneurs.
GS’s vision was to empower the rural people by giving them access to renewable energy technologies. In the next decade, GS will further this vision by creating green jobs and green businesses at the rural level to bring light, income, health and clean energy to rural people.
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Center for Financial Inclusion | Janet Redman (Institute for Policy Studies) | June 19, 2015