Cover Image
close this bookPhotovoltaic Household Electrification Programs - Best Practices (WB)
close this folderAttaining financial sustainability
View the document(introduction...)
View the documentTerms and conditions
View the documentPricing strategies
View the documentGrants and subsidies
View the documentEnforcing repayments
View the documentFinancing battery replacements

(introduction...)

6.1 Household PV programs must be financially self-sustaining. This Chapter examines financing terms and conditions, pricing strategies to secure cost recovery, and appropriate roles for grants and subsidies. Strategies for securing repayments, financing battery replacements, and serving low-income consumers are also suggested.

6.2 The relatively small scale and marginal profitability of existing household PV programs limits suppliers' capacity to establish efficient production and assembly facilities, obtain bulk procurement discounts, and set up effective sales and service networks. The high first cost of solar home systems requires financing to make them affordable to rural populations. The financial characteristics of the four models of PV systems delivery discussed in the preceding Chapter are summarized below in Table 6-1.

Table 6-1. Financing Characteristics of PV System Delivery Models


Solar Home System Delivery Model

Financing Characteristic

ESCO

Lease/Purchase

Consumer

Cash Sales

Affordability

High

Moderate

Low

Low

Interest ratea

Low

Medium

High


Repayment period

Long

Medium

Short


Down payment/Connection fee

Low

Moderate

High

Full cost at purchase

Loan Security/Collateral

System

System

System and/or other collateral

None

Risk to lender

Low

Moderate

High


Administrative castb

High

Moderate

Moderate

Low

System Ownership

ESCO owns generation components only, rest by user

User (at end of lease)

User

User

a. Interest charged to the borrower (ESCO or customer). The ESCO passes this financing charge on to the consumer as part of its service fee.

b. Costs borne by implementor/supplier.