SELCO Solar Pvt. Ltd : Bringing Light to the Poor
The story of SELCO is one which imbues us with courage to pursue visions which we rarely believe could be practical reality. SELCO has busted many myths by bringing sustainable technology in the hands of poor who seemingly could not afford it. The organization is transforming the lives of the poor by uplifting them economically and socially by bringing more earning opportunities and even aiding many children in their learning and education. SELCO is truly bringing light in hundreds of thousands if not millions of homes.
After B.Tech in Energy engineering from IIT Kharagpur, Harish was doing PhD from University of Massachusetts in USA. During a field trip in Dominican Republic, he was surprised to see the poor using solar lights. If it was possible for the poor of Dominican Republic to use sustainable technology, he should be able to bring the solar lights in the hands of poor in India too.
The thought inspired Harish and he decided to choose solar lights as a means for rural electrification for PhD. To get real exposure to the practical issues and problems faced while using solar lights by rural and those who have little or no access to electricity, he traveled to village Galgamu near Anuradhapura in North Sri Lanka with scholarship money. He took a few solar panels and solar powered laptop with him and lived there for six months until armed forced rebels forced him to leave.
Coming back to Massachusetts, he met Mr. Nevilla Williams, a green peace activist, and got the opportunity to install solar lights in 100 rural homes in Western Ghats. This gave Harish a chance to validate his thesis and his strengthen his vision.
Harish did not want to depend on grants for the work and he also believed that the poor will be willing to pay if they found the technology useful. In 1994, he founded SELCO Photovoltaic Electric Private Limited as a commercial enterprise that would sell solar lights in rural India.
Harish Hande, founder of SELCO
Challenges and initial days of SELCO
The vision of Harish and SELCO was not easy to achieve. In fact it was met with challenges from the start.
Every year Government installed solar lights in the rural areas to utilize the funds for sustainable energy. No dedicated organization looked after these lights for servicing and maintenance. Every year the solar panels would overcharge in the summers, the distilled water in batteries would dry up and when rainy season would come, most of the lights would be dysfunctional. Solar Lights was considered a failed product by the households of India. So the first challenge to SELCO was to change the mindset of people about Solar Lights.
Harish took the responsibility for repair and maintenance of solar lights in rural Karnataka. For that he took help of people involved in television and cycle repair. These trained locals made the pool of technicians who would help SELCO install and maintain Solar Lights in future.
Financial status and growth
Harish did not want to depend on grants so SELCO had no access to funds. At that time Tata BP Solar was setting up its rural infrastructure division to develop rural markets for its products. Harish was able to convince them to grant solar lights on credit, one or two systems at a time.
Later Thomas Pullenkav, a graduate degree in Physics and an alumnus of Institute of Rural Management (IRMA), Anand who worked as a young manager in TATA BP Solar joined SELCO and Harish in his efforts.
1996: SELCO started working as an organization. It could not afford any office space and could employ the services of an accountant only on a part time basis.
1996 – Received a conditional loan of INR 5 million from USAID through its partner the US-based nonprofit organization Winrock International. This enabled SELCO to hire employees and promote the organization. Around this time Indian market faced a television market slowdown and many tv repair technicians joined SELCO permanently. SELCO setup its first three rural service centres, which were essential for creating a sustainable rural delivery model.
1997 – Registered in USA as commercial entity so that they could raise money from investors there. Apart from India, Neville setup various SELCO subsidiaries in other developing countries such as Vietnam, China and Sri Lanka.
1999-2001 – Received USD 750,000 from equity investors in USA
2001 – Reached breakeven for the first time.
2003 – Received loan of $1 million from International Finance Corporation
2005 – Made a profit of US$88,380
Inspired by the growth, SELCO decided to expand to Andhra Pradesh and Maharastra and to address the needs of Karnataka through business associates. SELCO also decided to diversify supplier base to get access to cheaper alternatives.
Products and services
When poor put up their hard earned money on something, they want the product to be really useful to them and meet their living conditions and usage demands. If these are not met, then the product is a failure for them losing their hard earned money and faith in the product as well. Also poor cannot afford to travel long distances do get the product serviced and repaired, so the after sales services have to be truly accessible and reliable. Harish from his experiences had realized these facts and he wanted to provide the rural households with the product that could prove to be worthy and suit their different needs.
“We could have gone in for some one-size-fits all system, but we didn’t,” says Harish. “When it comes to the poor, everyone wants to standardize solutions to save cost, but not us. Thus, we have a significant amount of pre-sales activity, all of which is done by the technicians because they are in the best position to understand the context as well as the solution that can meet the requirement. We do not have any marketing budget. We put all our efforts into pre sales and post sales services, which is marketing for us. All our customer service agents don the mantle of marketers when they are dealing with the customers. We encourage them to interact with the neighbors, the local community so that they have a deep understanding of the problems that the people face.”
During the sale of any product to its customers, a SELCO technician would discuss with them about the payment options that they can afford. He would also discuss with them the opportunities that they could have by purchasing the solar lights. In many cases the income earned from the extra work hours provided by light would be more than sufficient to pay for the lights in easy monthly installments.
Lights not being directly related to income, SELCO had hard time finding financers for the poor. Using family connections and persistent efforts, Harish manages to provide its customers with financing options from the rural banks. SELCO however chose to stay away from providing financing the customers themselves in order to keep focus on their work and avoid any conflict of interest.
For selling the solar lights, technicians would carefully consider the design of the household or working area where the light is supposed to be installed and used. They would consider all the various needs and demands of the customer and plan the number of lights and placement of each accordingly. Once that is done, the wiring is done and lights installed.
SELCO charges INR 250 as annual maintenance contract for a four light system, which entitles the customer to two maintenance services and one emergency service on call. SELCO technicians check every solar installation twice a year to ensure that they are in proper working condition.
Entrepreneurship and employment opportunities generated
SELCO lights have also promoted local entrepreneurs to start their businesses. Some have bought lights from SELCO which they rent out to the vendors. Vendors are able to sell their products for a longer period of time and also save Rs 2-3 per day when compared with kerosene.
Many people with the help of lights are able to spend more time on stitching, making bags and other employment activities.
The need of different types of people has led SELCO to continuously change designs of their lights to match local demands. This has been truly a success for SELCO in terms of innovation and service.
German Renewable Energy Act came into force in the year 2000. This resulted in increasing demand for solar panels of higher wattage in Germany and all major manufacturers started to cater to the German market. Consequently, there was a shortage of solar panels in the rest of the world markets leading to a steep price rise of nearly 47%.
SELCO was caught completely unaware. It did not have enough inventories. Because of diversifying supplier base, its relationship with Tata BP was sour. Also because of higher profits, the new supplier started serving the German market. As a result, new offices in Andhra Pradesh and Maharashtra were deprived of supplies and the associate business model in Karnataka began to break. SELCO started making losses and in the next two years, ended up wiping almost the entire net worth of the company. All other subsidiaries of SELCO also failed and investors began to withdraw. However IFC strongly supported SELCO and helped Harish raise fresh funds from a new set of socially oriented investors such as E+Co, Lemelson and Good Energies Foundation.
Meanwhile, SELCO repaired its relationships with Tata BP, the prices of solar cells started to reduce, he expansion plans in other states was postpones and SELCO also realized that associate business model was commercial in nature and unsuitable for the purpose of serving the poor. Slowly SELCO recovered and posted operating profits in 2008.
“Howsoever in need you might be, one needs to be careful about the kind of person from whom you take money. You should always have control of the company for the sake of the mission. Never take money from someone whose mission is not aligned with yours,” is his advice to other social entrepreneurs.
SEWA Bank initiated Project Urja for its 300,000 members to have access to reliable and affordable sources of energy. In 2006, SELCO was approached by SEWA Bank to be their technology partners for the project. In the next two years, SELCO designed several solar products in consultation with SEWA to serve midwives, flower pickers, labourers etc.
Such experience in working with the diverse energy needs of the poor inspired Harish to set up an innovation department and an incubation laboratory as an experimental arm of SELCO.
From the experiences Harish and Thomas have had, they have realized that one SELCO model is not truly scalable as it has to serve the local needs and demands which vary greatly and some are particular to the area.
“It is better if we focus on developing other SELCO’s suited to the context where they would operate, rather than trying to grow this SELCO,” says Harish.
Thomas agrees, “Ideally we should create an organization that can become investment partner for entrepreneurial entities – the SELCOs’ of the future. We can provide the seed capital and pass on to them our knowledge, things that we learnt the hard way. However, the new entities will have complete independence in the way they would develop their business, because their specific model needs to be suited to their context. We would like to do this in other parts of India first and thereafter, maybe, across the globe.”
For his efforts Harsh Hande has been honoured with Asia’s prestigious Ramon Magsaysay Award for 2011.
We salute SELCO and Harish for his efforts and truly respect his vision.
Contact SELCO at :
SELCO Solar Light (P) Ltd.
#742, 15th Cross, 6th Phase, J P Nagar
Bangalore – 560078, India.
Tel: +91-080-6590 2906
Cell:+91 99800 55566
References and further reading
1. SELCO: Solar Lightening for Poor
4. Harish Hande of SELCO India: Shedding Light on India’s Underserved Markets
5. Delhi mafia dominates solar energy policy