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Rental system for solar home systems (SHS)
In Laos, nearly three quarters of the population live in the countryside in remote areas without access to public infrastructure, which means that access to roads is difficult and they are not connected to grid-electricity. Despite the fact that the villagers are very much aware of the importance of electricity for their livelihood, their only opportunity to access energy is via independent decentralized systems, i.e. solar panels.
However, solar lighting has some problems for benefiting poor rural households: Initial costs are beyond reach for most people, the servicing has to be assured over many years, and, in Laos, the lack of longterm credit does not allow villagers to invest.
It has been seen that the demand for solar home systems (SHS) is high, if only the initial high investment requirements can be broken into small regular installments. Therefore the idea was explored for providing SHS on a fee-for-service basis and a rental service was initiated. The household pays for the electricity on a regular basis, but the installed equipment remains in the property of Sunlabob. The household thereby pays for electricity only when electricity is actually forthcoming. Sunlabob therefore has an interest to keep its installed systems always well-functioning. The rent covers all costs including technical servicing, replacements and amortizations, and the operational costs of the service. It also was found that renting equipment to Village Committees, who would then sub rent to individual households, might be a breakthrough for cutting down on the transaction costs of rent-collection. Village Committees are a strong local body at the village level in Lao PDR, and are capable of enforcing social discipline in the rent-payments.
Furthermore, a network of franchised small entrepreneurs throughout the country was established, who are trained by Sunlabob to be capable of installing and servicing the solar equipment of Sunlabob in their towns and villages. These Village Technicians are independent of Sunlabob but they are in a franchise-agreement for the provision of kits for installations and for the continuous upgrading of their skills. They act as local sales-agents of Sunlabob and can assure the required fast local servicing of the installed equipment. Read more: concept papersWhy Ban Sorg?
In autumn 2003, Ban Sorg in Vientiane Province was selected as one of four pilot villages to install a rental system for renting out SHS. Due to its closeness to the capital Vientiane, a good accessibility was given and the electrification plan of EDL (Electricite du Laos), the state owned energy provider under the Ministry of Energy and Mines, stated that Ban Sorg will not be connected to the main grid until 2020. The village expressed a positive wish to receive electricity through solar energy and, with a stable average-household income of 300 USD per year and inhabitants willing to test the rental system, the pilot project found an optimal starting situation. Despite the fact that villagers first were lacking a clear understanding on solar home systems in general and rental systems in particular, once introduced, the demand for rental systems shot up dramatically.
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Progress
During a five day workshop (21.10. – 25.10.2003) a curriculum for training the Village Committees in managing the rental systems was developed together with five Master Trainers. The training involved a practical exercise in one of the pilot villages, where the whole rental system was explained in a village meeting as a test-run.
After the general agreement between the villagers and Sunlabob, which was achieved at the beginning of November, the detailed implementation had to be contracted, whereby implementation steps, schedules, financial procedures and general rules had to be discussed. Based on this discussion the contracts were drafted and signed by the village committee and Sunlabob.
To guarantee public awareness, promotion material in the Lao language was developed, i.e. a Video and a Leaflet to explain the general idea of the rental system, but also Posters, a TV-documentary, Radio-trailers and many more.
In order to ensure a smooth implementation of the rental scheme, it was essential that the involved villagers had a decent understanding how to manage the system and that all involved villagers agreed on the rules and regulations. The collection of the monthly fees and the maintenance of the systems are easy to manage when all villagers feel confident with the scheme. Therefore, all villagers and especially the village committees were trained in management and basic technical issues during several workshops in December 2003.
The whole project started with the installation of 34 SHS in Ban Sorg during 2004.
Achievements
Rural electrification has been shown to have immediate and deep-running effects on the wellbeing of villagers. In total, the village Ban Sorg has changed a lot during the last four years, since it has been chosen as a pilot village for the installation of solar systems on a rental basis. New modern houses have been built up, new shops and small businesses opened and a couple of pick-up-trucks are driving though the village.
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During the last three years about 170 SHS have been installed, so more than 200 households in Ban Sorg rent a SUNLABOB solar home system by now, which represents nearly two thirds of the 1500 people living in the village. Most of the households rent a smaller SHS, but the amount of the bigger versions rented out is steadily increasing.
People now use the energy, generated with the SHS, mostly for the illumination of their houses and their entertainment, i.e. watching TV or listening to the radio.
To boost up their income, many households produce bamboo sticks for incense, which they then sell to Thailand, especially during the dry-season. The electric light enables them to utilize more hours per day for productive use, and helps the villagers to allot their time more flexibly.
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But there are also new entrepreneurs in the village, opening small businesses. For example, Mrs. Khambai: She lives in a household together with five people and their main income was, and still is, as for most of the villagers in Ban Sorg, agriculture. In the harvest season her family is spending most of the days in the rice fields. Three months ago Mrs. Khambai opened her shop in Ban Sorg. The opening of her own small business was a long conceived wish of Mrs. Khambai, but she was unsure if it would be a success. The accommodation with electricity, facilitated by the installation of a small 20 Wp SHS, simplified her decision: Now she is not only selling snacks, i.e. cookies and chips, and small things for daily needs, but also offering soft drinks and beer. Other villagers or visitors from surrounding villages as well as the ricemill truck drivers come to her shop, to spend a chummy evening, meeting people, talking and playing cards. Than the business woman switches on the TV or the CD-player, whatever her customers like, and she is sure: “They come for that reason!” In her opinion, the entertainment with music and television stimulates the people to stay longer and, even better, to drink more!
The start of her business went quite satisfyingly, Mrs. Khambai sums up, and she appears content about her success so far. But, for the future, she would like to buy a refrigerator. At the moment she is cooling the drinks in a cooling box with the disadvantage that she has to refill ice all the time, and the beer and soft drinks are not really cool during the whole evening. For the utilization of a fridge she would need a bigger SHS, and she does not know yet if her shop will run well enough to earn the money for a higher rent. By now, it is not affordable for her, but Mrs. Khambai hopes that her business will soon generate enough income to cover a higher rent.
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Since the decentralized energy supply, generated by photovoltaic systems, it became also possible to run a mobile station for mobile phones. With the opportunity to charge the battery at home, most of the villagers now own a mobile. This provides not only the opportunity to call relatives and friends, but also the option to gain more accurate rice prices: Instead of bargaining on the spot, the farmers are able to negotiate the rice prices beforehand by phone, which makes them more independent from the traders. Due to their better position of negotiation, their chances increase to fetch a fair price.
Not only private households have been connected to photovoltaic systems. Public institutions, i.e. the elementary school and the health post, also benefit from solar energy, renting solar community systems (SCS). The primary and secondary schools in Ban Sorg, consisting of 5 classrooms, were equipped with electrical light bulbs and ceiling fans, which noticeably improved the learning conditions for the 175 pupils. Especially in the hot season, the cooling of the classrooms by the use of the newly installed fans increases their ability to concentrate during the lessons. Combined with the opportunity to study in the evening, thanks to the supply with electrical lighting, and the new changes for the parents to increase family income, more children might have the possibility to go on to pursues secondary education.
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The health station with its five beds and two treatment rooms got a new solar driven refrigerator for the storage of medicines and vaccines, which now enables the doctor and his staff not only to treat small injuries, but also to prevent life-threatening illnesses. Moreover, due to the supply with electric light patients can be medicated in the evening as well.
Rental system for solar lamps
The households with the least income cannot afford to rent a SHS. Encouraged by the success of our rental system so far, and to meet the energy needs of the poorest parts of rural population, we added a new solar charger system, the rechargeable solar lamps, which enable Sunlabob to sell light per hour. (Read more: concept papers) |
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Solar water pump and purification system
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With the installation of a solar water pump and a purification system, a further step towards the improvement of the villager’s living conditions in Ban Sorg was undertaken. In cooperation with the local authorities, SUNLABOB installed a solar driven water pump and a 16.000 liter tank, which were both officially inaugurated in July 2005.
The solar panel is connected to a tracker, which follows the angle of the sun and thereby maximizes the outcome of energy. A pipe connects the pump system with the river deep in the valley. With a peak capacity of 14.000 liters per day, the pump covers the complete demand of water for domestic use of the whole village. The tank stores water for cloudy days, when the solar panel is not able to supply enough energy for the pump.
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Using the water from the river especially for cooking, cleaning and doing the laundry, before the pump was installed the villagers had to carry their whole requirement up the hill, a steep and difficult way, which they had to pass several times a day. Hence, the solar driven water pump saves the inhabitants of Ban Sorg a lot of energy and time, which they now can use more efficiently. These advantages outweigh the monthly fee of about one US-Dollar that everyone in the village has to pay for its use.
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The solar driven water purification system helps the villagers to facilitate their life as well: Arrayed with a separate water pump, the system is also connected to the river. The facility pumps a maximum of 1000 liters per day up the hill and filters it, thereby generating drinking water. The access to clean drinking water is one of the main development goals of the Lao government, because it helps to prevent diseases and to improve hygienic conditions. Particularly important is clean water for the medical supply, therefore the health post in Ban Sorg runs its own water filter. As the Doctor of the village states, the amount of diagnosed diseases caused by contaminated water, such as Hepatitis A, Typhus or Cholera, has noticeably decreased since the villagers began to consume the filtered water. The instances of disease have become more than five times less.
Sustainability
The project favors people living in remote areas, not connected to the public grid, and provides an opportunity to overcome the discrimination of rural population concerning their access to clean drinking water and energy, which increases their opportunities to create income.
The success of renting out solar home systems in Ban Sorg has shown that rental systems seem to be more attractive to Lao people than systems on direct purchase basis. Thanks to the rental system high quality photovoltaic systems became affordable even for poorer people, meanwhile maintenance and servicing are guaranteed by a private energy provider.
By using electrical light for work, which otherwise had to be done in daytime, the possibilities to increase income improved. Moreover the lighting can be used for studying in the evening and therewith influences the school performance of the children, which creates new abilities for future development and opens chances to reduce inequities between urban and rural population.
Furthermore, access to information via TV, radio and telecommunications is also an issue of equity. Telecommunications have been shown to have a direct impact on incomes of villagers through access to better market information.
Sustainability is guaranteed, as long as the rents are based on full-cost budgeting, which includes technical servicing, operating the rental system and appropriate margins for the involved actors. The rates of return reflect the high acceptance of the rental system in the villages: No villages have defaulted with rental payments being delayed for more than two months. The cancellation rate is less than 6%, mostly due to lack of financial sources.
Furthermore the build-up of a decentralized network of franchisees and village committees, contribute not only to a reliable energy supply, competences for “good local governance” are trained and boosted as well.
With an enlargement of the renewable energy share concerning the energy consumption of Lao PDR, ecological sustainability is also promoted, by reducing CO2 emissions.
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Programmes 
