Sri Lanka

9. Approaches used to disseminate solar home systems include sales through the private sector and NGOs, and government-sponsored programs (often with international donor financing). Three firms are active in the private sector: Solar Power & Light Company (SPLC), Sunpower Systems Ltd., and Vidya Silpa. Two NGOs have undertaken solar home system initiatives: SoLanka Associates, modeled after Enersol in the Dominican Republic; and Sarvodaya Jathika Sangamaya. Three government-sponsored programs have taken place in Sri Lanka, the first in 1983, and subsequently the Pansiyagama and the Mahiyangana projects. The latter two projects are administered by the National Housing Development Agency and executed by private firms. The Pansiyagama project is a 1,000-household solar PV project while the Mahiyangana project provides PV systems for health care and water supply applications. There have been about 4,500 solar home systems installed in Sri Lanka, a small fraction of the 2 million households, or 63% of Sri Lanka's population, that does not have access to grid electricity service.

10. The private sector sells PV systems directly to individual consumers, NGOs, local village cooperatives and government programs. SPLC is the sole domestic manufacturer of PV modules, importing the PV cells and fabricating them into finished panels. Other solar PV firms, NGOs and government programs purchase these modules at wholesale prices. All the solar PV suppliers offered warranties competitive with solar PV markets in other countries. Adequate spare parts were stocked by the company or local technician for system repairs. Battery replacement is the responsibility of the user.

11. The SPLC has a comprehensive after-sales service arrangement. The program consists of regionally-based trained technicians, scheduled household visits and reports, and brochures summarizing proper maintenance techniques and system use. SPLC devotes an unusually high percentage of its revenue to marketing, which involves provincial dealers, radio and TV advertisements, demonstration and training programs, and after-sales service. This program addresses issues overlooked by other distributors, but has problems with lead times for maintenance calls. SPLC is finding that providing these support services are difficult and costly due to limited sales.

12. The NGOs have adopted a more informal approach, relying on village-based technicians who work on commission. The NGOs offer maintenance and support services at the village level and promote the manufacturing of some components at the village level to supplement the income of their technical field staff. NGO projects are characterized by active local participation in project design, maintenance, and collection of loan payments. Such close ties with the local communities has allowed for good communication between program organizers and solar home system users.

13. The government-sponsored Pansiyagama solar PV project initially made no provisions for system maintenance. Later due to poor technical performance and fee recovery problems, a private firm was contracted for one year to make monthly service and fee-collection visits to each household. The firm conducted routine system performance tests and educates users on operation and maintenance. The Pansiyagama project also suffered from inadequate communication and coordination with the electric utilities, NGOs, local credit institutions and potential solar home system users. Based on the success of the one-year contract, a five-year system maintenance contract has been issued to provide continued maintenance and support services.

14. Typical solar home systems consist of a PV module (18-, 35-, or 50-Wp), support structure, wiring, a lead-acid automotive battery, a battery-control unit, a 12V outlet, and 3 to 6 fluorescent tube lights. The cost of a small 18-Wp system in Sri Lanka is Rs. 13,322-15,500. Overall, the systems were reliable, of reasonable quality, and provided adequate service. However, the poor quality of locally-made batteries has led to unreliable performance. Some of the systems at Pansiyagama used untested, poorly designed or defective components which contributed to a significant failure in initial installations.

15. Private sector sales are financed by cash, bank credit, or hire-purchase agreements. However due to limited access to affordable credit, 80% of sales have been cash sales. Bank credit at market interest rates (22%) with a 5-year loan period is available but few households have accessed these lines of credit due burdensome security guarantees and limited promotion by the banks. NGO programs rely on revolving funds with concessional rates and extended loan periods, but funds are limited. Such loans typically have 8-10 year payback periods, with 7-10% interest rates. Systems sold under the Pansiyagama PV project required no down payment, modest monthly installments, no interest charges and a 20-year payback period. The government program resulted in a high default rate due in part to poor technical performance leading to user dissatisfaction. The repayment problems were compounded by the perception that government loans need not be repaid.

16. Due to limited availability of credit, most of the households that obtained PV systems were the rural upper and middle classes. The more affluent households self-selected themselves by their ability to pay for the systems. NGOs and government programs were designed to reach the poorer classes by offering easier access to credit. Nevertheless, the lowest income households in these rural areas would not be able to purchase PV systems in the absence of large subsidies.

17. Monthly payments for the 3-light solar home systems are Rs. 320 when financed at a 22 percent interest rate. It is higher than the monthly payment for grid service (Rs. 245) or battery and kerosene use (Rs. 275). While the government has removed the subsidy on kerosene, making solar home systems more financially attractive, there are still major subsidies for grid electrification. The battery replacement cost of Rs. 2,000 may be difficult for rural households without some means for regular savings towards this purchase.