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

Terms and conditions

6.3 The financing terms and conditions of existing household PV programs vary from country to country and depend on the local cost of funds, the degree of risk to the lender, and loan processing and administration costs. Connection costs for ESCO customers and down payments for borrowers range from zero in a government-sponsored program in Sri Lanka to 50 percent under a loan scheme offered by one private supplier in Indonesia. Repayment terms can be lenient—twenty-year, no-interest loans—or stringent—two-year loans with 34 percent interest. Not all programs are sustainable, with a full cost-recovery basis. Table 6-2 compares the financing terms available for solar home systems in the United States and the four country programs reviewed by ASTAE. In general, the high interest rates and short repayment periods under consumer financing are the most onerous to the borrower. Government/donor-sponsored programs and NGO-run initiatives usually have more favorable financial conditions. Government programs may be heavily subsidized (for instance, the BANPRES project in Indonesia and the 1,000 Solar Home System Project in Pansiyagama, Sri Lanka). NGO projects often receive investment capital in the form of an initial grant from local or foreign donors. Examples include the ADESOL and ADESJO projects in the Dominican Republic and the Solar Electric Light Fund (SELF) support for Solanka in Sri Lanka. SELF has also supported local NGOs in China, Vietnam, India and elsewhere. Donor funds are used to seed a revolving fund to facilitate the purchase of PV systems. As participants repay their loans the fund is replenished and additional loans can be made.