The bright future of small loans
Every few weeks, the women of Huoi Pung-a small village in the mountains of northern Vietnam-bundle and haul spent car batteries four hours down the mountain to the nearest town. There they line up and wait for a diesel generator, charge the batteries, and turn to start the slow climb back home. The process takes a whole day, and the juice costs a couple more days’ earnings.This practice is far from unique. All around the world, in rural villages and towns not reached by the grid, bringing even a little bit of electricity into the home is a struggle, if it’s possible at all. From Vietnam to Benin to Honduras, poor ruralites take what power they can get, or-as oil prices rise-as much as they can afford.Any discussion of energy’s role in sustainable development dances around something of a Catch-22. How can we provide electricity to the those who don’t have it without accelerating and amplifying climate change, which-unfair but true-poses a much greater and more immediate threat to the world’s poor than it does to all of us who already take reading lamps and refrigerators and charged cell phones for granted?Considering that there are about two billion people worldwide who live without access to electricity, we’re looking at a heavy lift. We’re nearly a decade into the 21st Century and almost a third of humanity is still studying, cooking, and working by the dim flicker of kerosene lamps, or improvising micro-energy systems like battery brigades of Huoi Pung.We’ve got to figure out how to get these two billion people more reliable energy, and-for everyone’s sake-it better be from clean, carbon-free sources.R.K. Pachauri thinks a lot about climate change and energizing the world’s poor. He’s the Director General of the Energy and Resources Institute in New Delhi and Chairman of the UN’s Intergovernmental Panel on Climate Change (IPCC). Last year, along with Al Gore, the IPCC was awarded the Nobel Peace Prize for researching, exposing, and educating the public of the severity of the climate crisis. In an interview this March Pachauri offered: “The poor are unable to adapt to the impacts of climate change because often they do not have the technical or financial capacity to be able to take essential measures… It is critical that the world realizes the importance of help for such vulnerable sections of society in adapting to climate change. Given that technology is a crucial part of solutions to the problem of global climate change, access to improved technologies must be an important part of the agreement.”One such technology that’s chock-full of promise is photovoltaic (PV) solar. Rooftop solar (distributed, modular, scalable, stand-alone systems) makes almost too much sense for these typically rural communities that aren’t connected to any grid, don’t demand too many Watts, and more often than not get plenty of sunshine.Access then, as Pachauri notes, is the challenge, particularly as the upfront costs of PV solar are formidable. A 50-Watt system–enough to power three or four lights, a radio and a couple of appliances in the home-runs about $400, which might not sound like a lot, but for a family living off of $1-2-a-day, it’s prohibitive.Coincidentally enough, we don’t have to look much further than the project that secured Alfred Nobel’s prize the year before the IPCC and Gore to find a wonderfully synergistic solution to this cost/access problem. In 2006, microfinance took the world’s stage when the Grameen Bank and founder Muhammad Yunus were recognized for spreading small loans to the world’s poor. These same small loans could put a 50-Watt PV system on a roof in Huoi Pung.
“Energy is a human right.” It’s a mantra that Bob Freling, founder of the Solar Electric Light Fund (SELF) repeats daily. His organization was an early pioneer in pairing solar power and microfinance. Through a series of pilot projects, SELF proved that poor, rural families are willing and-most importantly-able to pay for home solar…if they have access to credit. Freling explains in his blog that their financing mechanisms “enable families to purchase solar home systems over time, typically three to four years, paying only slightly more than what they previously spent on kerosene, candles, and dry-cell batteries.”Reliable energy at a set cost is-any lender will tell you-a pretty safe investment. SELCO-India, a World Bank funded microfinance-solar pilot project in rural South India, has achieved a 100% cost recovery rate. SELF’s projects, scattered about in the (once) darker corners of countries like Sri Lanka and Nigeria, Brazil and Indonesia, rarely have loan default rates of over 1-2%. (Ask Bank of America or Citi what they’d do for that sort of return.)A few hundred miles south of Huoi Pung in the Mekong Delta, SELF has brought light to the homes of over 1,500 people and, as Freling explains “indirectly benefitted hundreds more through solar systems in village community centers and village markets.” SELF generally works with local organizations to navigate any cultural divides. Here in the Mekong, it’s the Vietnam Women’s Union who help to recruit and train 25 technicians-to ensure constant maintenance-and 20 other liaisons to educate the villagers on microcredit, “sell” the systems using small loans, and collect the payments to the revolving credit fund. The VWU is well-established throughout the country. If Freling’s vision is fully recognized, nobody will be lugging old car batteries to charge off fossil fuels anymore.OTHER ORGANIZATIONS WORTH CHECKING OUT:Chi Em, a microfinance org serving Huoi Pung and other ethnic minority villages in Northern Vietnam.SunPower Afrique is bringing sustainable energy to microfinance organizations in Togo.Grameen Shakti is a solar power pioneer in Bangladesh, affiliated with Grameen Bank.WATCH:A short documentary on SELF’s work in Nigeria.Images from www.bobfreling.com
