Bringing Electricity to Off-The-Grid Communities by Micro-Financing

by Sharon Ha

According to a New York Times article published in January 2016, there have been several solar power companies hoping to provide renewable energy to the 300 million people in rural India who do not have access to electricity. The article focuses on the efforts of Selco, a solar power company that is targeting the rural village of Paradeshappanamatha in Southern India, and urban settlements in Bangalore. By utilizing creative financing solutions, Selco, which was founded in 1995, hopes to disprove the myth that only wealthy people can purchase or use solar energy.

Indeed, the company partnered with a local bank near Paradeshappanamatha to create a micro-financing plan for the villagers. A basic solar power system costs $129, which was way out of the locals’ price range; they make around $3 a day. But by creating a joint liability loan with the bank, in which all of the villagers act as guarantors for each other, the bank was able to trust that the villagers are invested in making payment deadlines and not defaulting on their loans and enabled them to participate in solar energy.

Currently, Selco is figuring out how to configure price models for urban locations, such as Banaglore, where they are located. They are prototyping a model in which they loan small business owners solar panels so that the owners can sell electricity to local customers. However, this comes with some caveats: business owners might not be able to or willing to pay off the solar panels, the system might get stolen, or robbers might target the store.

Despite these problems, the demand seems high and customers are optimistic. In Paradeshappanamatha, a family is making larger payments to settle their loan as soon as possible, so that they can buy another solar power system. The family has noticed that electric appliances can make life much easier and electric lighting is much preferable to dim kerosene lighting. In the city, a small business owner attracts customers who prefer to charge their phones at his convenient stall, rather than traversing long distances and interacting with distrustful shopkeepers.


Bearak, Max. “Electrifying India, With the Sun and Small Loans.” The New York Times, January 2, 2016. ( (




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