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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

Financing battery replacements

6.14 Batteries are a major replacement cost in solar home systems. Customers unable to afford new replacement batteries purchase poor-quality or reconditioned substitutes instead. ~ If these components do not function well, users are likely to become dissatisfied and leave the program, jeopardizing its sustainability. Where users' ability to buy replacement batteries is a concern, an arrangement to finance battery replacements should be considered. An Indonesian supplier operates a successful three-year battery replacement plan for its customers.

6.15 Setting up a battery replacement fund is worth considering under ESCO or leasing models. The scheme can include a small monthly charge, held in escrow, to pay for replacement batteries. For example, placing $1.50/month in an escrow account for three years will generate the $50 necessary to purchase a new battery. Should the battery need to be replaced in less than three years, the consumer can pay the difference; if the life of the battery exceeds three years, the consumer can receive a rebate. This approach offers several advantages: it finances only high-quality batteries; it allows for volume discounts from suppliers; and it facilitates care of batteries and battery recycling.

6.16 Increased affordability should never be based on cost reductions achieved by lowering the quality of the equipment or decreasing support services. Instead, smaller high-quality units can be offered. For example, a 10-Wp solar lighting kit provides lighting equivalent to that of a kerosene mantle lantern and can be offered instead of a 50-Wp solar home system. Customer satisfaction, and hence loan repayment, requires that users be aware of the lower level or service they will receive from smaller systems, and that they have the option to obtain larger systems in the future.

6.17 In summary, the financial sustainability of household PV programs requires:

· Selecting qualified customers (those with the ability and willingness to pay);
· Offering high-quality products and responsive service (see Chapter 7);
· Matching consumer expectations with the level of energy service the program will provide;
· Establishing a pricing strategy that covers all costs and insures judicious use of any grants or subsidies; and
· Creating simplified administrative procedures for financing, fee collection, and disconnecting customers in case of non-payment.