The supply of decentralised solar systems is making progress in Africa, but the existing economic concepts often suffer from not being able to reach remote households: The costs and effort involved in offering these low-income households a solar supply on a purely commercial basis are too high. Although the widespread concept of financing via loans (pay-as-you-go) has led to a considerable increase in the use of solar energy, it has failed to achieve the goal of offering a purely commercial model for remote households.

If the off-grid industry really wants to leave no one behind, concepts that combine the commercial approach with an intelligent subsidy mechanism must be used more intensively. The intelligence of these concepts lies primarily in two points:

• More than just providing access to (solar) light and mobile phone charging for households, but at the same time sustainably stimulating local solar SMEs.
• Subsidised models must not hinder existing markets or prevent new ones from emerging. On the contrary: they should foster economic development.

A model for supplying energy to remote households: the solar village model

The Solar Home Systems (Tier 1) are installed free of charge in a selected village and initially remain the property of the operating company. Each household pays a subsidised usage fee. After a fixed period of time, the SHS becomes the property of the household. This transition to personal ownership is a crucial aspect for the households. It strengthens personal responsibility and promotes motivation for development.

So far, however, the solar village concept is nothing special. So what makes it a game-changing model?

More than just access to light

• Community-approach: A special aspect of a solar village project is the desire to promote the development of the village. Therefore, it is not individual households that are supplied with SHS, but a village community. In line with the “leave no one behind” principle, all households are given the opportunity to become “sun-connected” with a basic supply. The user fee for the SHS is therefore set in terms of amount and duration according to what the poorest families in the village can afford. In this way, no one is left behind and every household has the same opportunity to start using solar energy.
• Flexibility: The Tier 1 SHS offers a subsidised basic supply that is initially sufficient for many households. However, demand is often greater or increases over time. Larger SHSs or other applications (e.g. TV) can therefore be purchased flexibly from the installing solar company as required. However, the prices of these additional solar applications are not subsidised.
• Promotion of local solar SMEs: Information about the technical options of the SHS, the conditions for participating in the solar village project, installation of the SHS, handling of payments as well as maintenance and service are carried out exclusively by local solar SMEs. These in turn are accompanied and supported by an experienced mentor during implementation. The project is interesting for the solar SMEs in several respects:

• • • • It offers a training opportunity for the company’s own employees with regard to customer service, installation and payment processing.
      • It is a reference project that can be used to enhance the company’s reputation and attract new customers.
      • It serves as a proof of performance, not only in terms of professional installation, but also in terms of maintenance and customer service. After all, satisfied customers are the best advertisement for a company.

Training, market development and the promotion of local solar SMEs are the aspects of a solar village that go far beyond a concept that is merely limited to the installation of SHS in households. A solar village offers an opportunity to develop a village community and an instrument to promote local solar SMEs. These are the backbone of any sustainable supply of decentralised solar energy, especially in remote areas and with low-income households.

Key experiences

We have now realised 20 solar villages, mainly in Ethiopia, Kenya and Uganda. The model has proven itself as a hybrid concept of financial support and local economic development. Our key experiences from these 20 solar villages:

• The right choice of village to become a solar village is important for success. A solar village must be selected and designed in such a way that it promotes further economic development and does not hinder it.
  This is because subsidy-driven projects always bear the great risk of damaging or hindering existing opportunities for solar companies. This would be of little relevance in terms of an impact pact that only measures the number of installations in the short term. However, more is needed for a sustainable and reliable development of the opportunities for economic, social and entrepreneurial development offered by solar energy.
• A good size for a solar village is 100 households. This is large enough to enable village development and at the same time serve as an accelerator for the local solar market.
• Even if the basic concept is always the same, each solar village should be individually designed and realised. This is because every village has a special living, working and challenge situation.
• The self-confidence and personal responsibility of households is promoted especially when the SHS becomes the property of the household after a certain period of time.
• Supplying the village with solar energy also provides the stimulus for communal development. This option has often been taken up in our solar villages, but its scope and permanence depends on the activity of the respective village head.
• All solar villages have succeeded in giving the local solar SME involved a sustained boost in its economic development. This is because successful project implementation has always led to an enhanced reputation and credibility, thus increasing demand and contributing to more stable business development.

As a concept of solar power supply for low-income households in remote villages with simultaneous support for local solar SMEs, the solar village model offers a proven opportunity for economic and social development in our experience.