Enlightened Development

The Grameen Bank for Microfinance is known worldwide after the Peace Nobel Prize for Mohamed Yunus. What is the background for its sister ‘Grameen Shakti’ to engage in energy?

We founded Grameen Shakti – and ‘Shakti’ is the Bengali word for ‘energy’ – in 1996 to provide an integrated aud sustainable model for bringing light, income, health and affordable climate friendly energy to the rural people. To work successfully against poverty you need many approaches. And one of it is to supply energy to the people. Bangladesh can be called an energy starved country. The high population density places tremendous pressure on its land, air and water ressources. Trees are cut down, farm land depleted, forests disappear, soil fertility decreases as more and more people depend on wood and simelar sources of energy. Environmental degridation and energy scacity both push rural people into poverty and keep them there, reinforcing inequalities, both social and economical. Villagers in Bangladesh like in many other developing countries are forced to live in primitive conditions, where no development can take place because there is no energy. They cannot upgrade or scale up their economic activities because they lack the requisite power. This is what we try to change with providing renewable energies, mainly solar.

Usually we think that solar energy is something like a follow-up of non-renewable energies – like oil or atomic energy. You seem to have proven a very different approach in Bangladesh

Yes, we have a very different approach.  In Bangladesh there are living 150 million people and only 30 % of them have electricity. In average 70 % of our people live without electricity. In the countryside almost 80 % of the people have no electricity. They are forced to depend on cow dung, poultry wastes, crop residues, or kerosine which not only provide very low energy, but also pose environmental and health threats. But because we have plenty of sunshine,  there are other opportunities available. One because of the sunshine is solar energy. We also have wind and biomass-energy production. But solar energy is much more suitable for us.  In Bangladesh in 365 days we have 345 to 350 days sunshine, even if it is raining we don’t have long raining but sunshine in between. So we developed decentralized solar home-systems at an affordable prize. We are convinced that this solar home-system is the best for rural Bangladesh.

How successful was your approach so far?

Well, by May 2008, Grameen Shakti has installed more then 150.000 solar home systems, with a capacity of 7.5 Megawatt peak, covering more than 30.000 vilages. Each system includes a photo-voltaic module, battery, charge controller, fluorescent lights, wiring and outlet fictures for installation. The installation rate is growing exponentially, with plans to reach one million installations in 2015. Currently, more than 4000 solar home systems are being installed per month. In the previous month of April , we installed more than 8000 SHS.  In addition four wind energy plants, 1000 biogas plants and three solar thermal projects have been installed and nine solar powered computer training centres have been created. We are now serving one million people in Bangaldesh. Because one system is used by five to six people in a home. They actually are getting four light, one television-point, one mobile phone charger and radio out of one solar system. Because Bangladesh is very compact, population is high, density is high, in cases where one is buying a system, they are giving light often to 3 houses. The public use might be even higher: In a marketplace lot of people are visiting the small shops which are lightened by solar systems. So one system with 50 Watt is very popular. It costs around 200 Euro. So people are using it, it is cost-effective and they are enjoying this energy

How are you able to offer these systems for this relativly low prize?

Because we  are procuding at a very cost effective prize all what we can in Bangladesh itself, including the bulbs, the batteries, the ballast, the lamp-shade. Only the panel we are importing  at a good price. So we can trade this technology in a cost-effective price. And we have our own technicians and maintainance engineers. So we are reducing the cost  in producing and maintainance. Every day we are reducing cost. Solar energy might be expensive in other countries. In our case, in relation to the average income it is still expensive, but we have found strategies to make it cost effective for our people in Bangladesh.

Here in the industialized world we still have this cliché that  solar energy is much more expensive then fossil fuel energy sources. It seems surprising, that in a country like Bangladesh, which is one of the poorest countries in the world, you go forward with renewable enegies in a fast pace while we stand almost  still …?

I like this question  because I am asking that myself very often. I think the idea, that  solar energy is expensive and can not be viable in an economy like Bangladesh, is old conventional thinking. We simply have to overcome it. Especially here in Bangladesh. We are in a very different situation, because with the solar energy we do not overcome the oil, nuclear or gas option. What we do in Bangladesh is mainly that we are replacing kerosine. And the solar option is what people need nowadays, because they often can not afford to have kerosene lamps anymore. Kerosene costs have risen by 60 % in the past year and are continuing to increase due to rising world oil prices. The price further went up after the government was withdrawing the subsidy from the kerosine. In the urban area the price for kerosene is now 50 BDT per litre. But in the rural area with all the transportation costs prizes are even higher. 70 Taka is one Dollar. But in a country where the avarage income is less then one Dollar, three quarters of a daily income is much more then people can afford to pay. This is one of the reasons we replace kerosene with the solar home system.

But how can people who can hardly buy a litre of kerosine can afford a solar system?

At least 50 % of the costs for such a system they can save from not spending their little income on kerosene. We from Grameen Shakti offer them a financial package, which is much more sustainable. Everybody can understand that. A litre of kersoine is burned in a short amount of time, but a solar home system can work for 25 years. People have to get out of the poverty-trap and have to realize their potentials. They have to be couragious enough to change their living conditions. And they realize that through an independent energy supply a lot of things can change. So in our situation in many cases through a solar home system they can get extra income from extension of working hours in the rural market places. And with that extra income they can pay the installments. I can give you the example of Mr. Roni who has a pharmacy in Durgapur. He has purchased a Solar Home System on credit. With this system he now has extended his business hours into the evening after sunset. His avarage sale went up from 1000 BLT to 1600 BLT. Before he had to spend 500 Taka monthly for kerosine, now he only pays 320 Taka as monthy installments. So you can see:  He has better light, earns more and has less costs. And its even more then that: if you are using kerosene you have a fume, you have a pollution indoor, you have a health problem. But if you save money from not using kerosine you can buy a solar home system and live more healthy. So its win-win on all levels.

How do you reach the rural population which usually will not know a lot about sustainable economy and solar energy?

We were created as a non-profit company to promote rural development. Therefore Grameen Shakti employes 2100 field staff , most of them engineers  and has trained 2000 local technicians in renewable energy technology. They either work for Grameen Shakti or have started their own energy business. We also have built 390 villiage unit offices in all of Bangladeshs 64 districts, reaching out to the rural areas where 70 % of the countries 135 million inhabitants live. These are mostly areas where there is no electricity grid. Through the village unit offices, Grameen Shakti promotes renewable energy technologies, which typically consist of a small 10-20 to 100 Watt photovoltaic panel connected to a battery for storage. We have always sought to involve the local community in the planning, implemantation and maintainance of solar home systems and have therefore started a network of technology centers. These centres are managed mainly by women engeneers, who train women as solar technicians. The women are equipped with tools to service and repair the systems in their areas and to manufacture solar home assessories. Seven of such technology centres are already in operation and there are plans to expand to 30 technology centres and to train 2000 women technicians. So we are supporting the local development in many ways.

Why did this energy initiative  originally came from the Grameen Bank?

Grameen Shakti strives to create a synergy between renewable energy technology and micro-credit in order to give rural people a chance to improve their quality of life and also take part in income generating activities. The Grameen Bank is our parent organisation, Professor Yunnus is the founder of the bank and myself is right now the deputy director of the bank. In my own village the Grameen bank was born in 1976. With the Grameen Bank we are now operating in whole Bangaldesh. We have 7.5 million borrowers, almost one person in each family, 97 % of them are women. In 2006 Grameen Bank and Prof. Yunnus got the Nobel Peace Prize. And this micro-credit is now operating all over the world, more then 100 countries are replicating it. What we did since 1996 was exploring the potentials for using this foundation for a different energy strategy – solar energy, bio-gas, wind energy – and we found that solar energy is much more suitable. We now have a long experience in micro-credit and micro finanance systems with Grameen-Bank. So we are able to blend the knowledge we have about micro-finanance with that about solar-energy. Through that combination we are able to offer a financial package for people who usually would not be able to buy such a solar energy system.

Could you explain in how far you work with the micro-credit ideas to support the distruíbution of solar energy?

Grammen Shakti has developed four different credit schemes to make the solar home systems affordable. Customers pay differerent proportions of down-payment and monthly installment according to their circumstances. In the micro-utility financial model for example a client can get a solar home system with only 10 % down-payment. They can rent the system with other households or shops for a fee and can become outright owners of the system following payment of 42 monthly installments without any additional service charge. Presently, around 10.000 clients have availed the micro-utility system. That strategy is  supported by low interset loans that Grameen Shakti receives from the World Bank and KFW through the Bangladesh  Ministry of Finance. In other credit schemes the user pays 15% or 25% of the total prize as down payment. The remaining 75% or 85 % are paid within 24 or 36 months with four or six percent service charge. Don’t forget: We are one of the poorest countries of the world. So we always have to look for complimentary approaches. We have to find ways how we enhance the ammount of energy, of income, of schooling, of meeting the basic needs. If you add micro-finance and energy it has the full potential for supporting a functioning entrepeneurship or a business.

How do you work with micro-credits to finance sustainable and renewable energy use?

Grameen Bank and Grameen Shakti work a little different. Grameen Bank always organizes small group to give a loan in form of a micro-credit. Often it is five women or five men, but in avarage it is 97 % women. Grameen Bank is only open for the poor people. Grammen Shakti is open to all. So we are also giving loan to individual. And we are collecting the installments monthly whereas custumors of Grameen Bank are paying weekly with a smaller installment. But in our case we know that users of a solar home system save money from not using kerosene in one month. The monthly payment is also a good rhythm for our  engineers to check the system and maintain it and collect the money. Meanwhile more and more people are coming and asking for a solar home system in the rural area. They have realized that they can afford it and that it can heighten their life quality.

It seems that providing solar energy gives much more support to local development, then just giving light. Could you give an overview of the different advantages?

Solar energy can be used for lighting, for television, for radio, for mobile phone charger, even for the extension of working hours – all that comes from the solar energy. Solar home systems are replacing the kerosene lamps, avoiding the fumes and fire-risk of such lamps. Each solar system also saves about 375 kg CO2 per year.  And as already mentioned, it can help to generate more income and help the poor to get out of the poverty trap by providing chances for own entrepeneurship. But also many clinics use our systems to provide save lighting during check-ups or operations.

Could you  say something about the social benefits of this project?

There are a lot of social benefits. Women are the main victim of poverty  and victim of energy-poverty also. Once you have a solar light women can work under light, also caring for the family through cooking becomes easier. Women feel more secure after dusk and can be more mobile. Many used the increased working time provided by the solar home system to start small-scale business such as poultry and handicrafts. We also support the self esteem of rural women by gradually training them to become a technician, because  they can maintain the system on a household level. Women becoming technicians and they are producing parts of the  solar systems. So they are having income. In future they will be entrepeneurs. They can sell the system, they  can install the system, they can  maintain  the system, they can have an income. We are transforming them from passive victims to active agents of social change for their communities.
Schools also use the solar home systems for lighting. By that solar energy leds to an enhancement in childrens education, because they can study at home in the evening. The availability of power for mobile phone chargers has made it possible for more people  to use mobile phones and maintain contact with family members throughout Bangladesh and abroad. New business opportunities are also made possible, such as renting mobile phone time. Solar home systems can also be used to power computers and bring internet to the villagers. As people get access to radio and television programms they are much better informed and can take part in democratic processes. So there is a lot of political, economic and social benefit.

And this seems to be of special importance for the remote areas, which where cut off from any devlopment so far ….

That is true. Recently we have had a Cylone in the southern part of the country, 3000 people died and 7000 people were missing. In 1991 we had another cyclone where 130.000 people were killed. Now in this last catastrophy we were able to see that the independent decentralized solar energy play a very important role in such a crisis when all electricity connection is gone and normal telephone communication is not working. With solar energy and batteries there is light available, even when there is storm and strong wind. This even helped the fisherman in the storm when they lost orientation during the storm. They could see the light and went to the shore which saved their live. This was one reason that the solar energy became very popular in that part of our country, because it is an individual but independent system.

Do you also see your solar systems as a contrbution in the fight against global warming?

Bangladesh is more a victim of global warming climate change. The annual 375 kg saving of CO2 per solar home system will not stop global warming. But without question we created a sustainable business model which shows other developing countries that they don’t have to follow the western centralized energy system. Now we envisage a future where rural households of Bangladesh would have access to environment friendly and pollution free energy. With less environmental degredation we will reduce poverty and get the people out of the vicious cycle. We need an energy source that serves the needs of the rural people, help them develop economically without further damage to the environment. Renewable energy technologies can help Bangladesh to dream big, to transform thousends of its villages into places of health, cleanliness, connected to the whole world with better income generating opportunities.

What is your  impulse what we can learn from your experience with solar energy?

I think the solar energy is a very important renewable source. It is economically viable and also environmentalwise good and helps on a social level. So it brings only win-win-situations. If we can demonstrate this in Bangladesh, other developing country can be interested to dublicate this idea. They can see: In Bangladesh they are operating a million systems and people are enjoying it, because it is economically viable and they have social benefits from that. Its right Bangladesh is not really contributing to the global warming, but even a developing country can contribute in the fight against it. We can not leave it only to the high technology countries. That is a time everybody has to give his or her attention for the climate change. Everybody is feeling it. So we like to build up a strong program in Bangladesh, then people can get inspiration, people can get confidence: Yes, we can build projects of hope, it is feasable.