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For development-policy aspects, care must be taken to ensure that dissemination strategies are based on the following principles:
- The utilization of SHS should only be promoted if they can be shown to offer both micro- and macro-economic benefits and social advantages. The introduction of the small photovoltaic systems must also be an integral part of a coherent overall energy supply strategy.- The dissemination process should be organized as a commercially viable undertaking.
- Priority must be given to non-governmental entities for dissemination activities.
- Government institutions should not be burdened with tasks that have nothing to do with their actual mission.
- The role of governmental institutions must be to lead the way by introducing the small PV power supply systems at public institutions in rural areas, which will not only serve to demonstrate the viability of the technology but also help to reduce the disparity between rural and urban areas in terms of basic infrastructure development.
- Governments must not be burdened with long-term follow-up costs.
- The dynamic potential of private entrepreneurs acting in their own self-interest must be harnessed to promote the dissemination of the technology, but their activities must also be monitored in order to ensure that the interests of the target group are protected.
- Local production of SHS components should only be promoted in a given country if it can be assumed that the domestic market will be large enough to make it worthwhile, if system costs are significantly reduced in relation to imported systems, and if quality control is ensured.
- In the final analysis, the long-term social- and structural-policy goals which SHS dissemination programs are designed to achieve can only be met if distribution is handled by the private sector. In many cases, though, private firms will be either unwilling or unable to develop the market for this technology and it will be necessary for the government to become involved in the initial stages of the project to "get the ball rolling", i. e. create an environment in which private enterprises will have an incentive to identify and supply the demand for the small PV systems.
The key actors in dissemination processes in developing countries are:
- The target group, i. e. those segments of the population that are interested in utilizing PV systems.- Manufacturers and distributors who are able to supply the target group's demand for the technology with high-quality products sold at reasonable prices.
- Political institutions and bodies that regard the use of PV systems as a sensible way to supply rural regions with electricity and are willing to create the overall conditions required for the utilization of these systems on a larger scale.
- Technical Cooperation (TC) institutions which can coordinate communication among the other actors, provide advisory assistance and facilitate the transfer of technology and know-how.
During the early stages of the dissemination process for PV technologies, there is a real risk that the interests of the participating firms and institutions will be promoted at the expense of the interests of the users; program planners may pay too little attention to their needs and they may even be used as "Guinea pigs" to test systems that have not yet been perfected even though they are billed as technically optimized, reliable products. It is here that government agencies - possibly with the support of a TC institution - should intervene to help minimize the risks for consumers. It is particularly important to ensure that the introduction of this new technology does not make the lives of low-income target groups even more difficult by exposing them to additional economic risks.
A solar home system can be broken down into four elements: the solar panel, the electronic components, the battery, and "other parts" (lamps, lamp fixtures, cables, etc.), and in view Of the number and diversity of the components that are involved, an institution that wishes to promote SHS dissemination will not find a single, "natural" partner in a developing country's manufacturing sector. Indeed, an SHS is not "produced" in the usual sense of the word. Rather, its various parts are assembled to form a system, and it is completely irrelevant whether the company or institution that is in charge of organizing this process also manufactures one or more of the components. It must, however, be capable of carrying out all of the different tasks that are involved in the marketing and distribution of SHS and of providing satisfactory after-sales service.
These tasks include:
1. Importing the panels and, if necessary, the electronic parts.2. Local procurement of components that can be obtained more cheaply in the developing country (e. 9. batteries, lamp fixtures, cables, miscellaneous fittings, and possibly also electronic parts).
3. Organizing the assembly of the individual parts to make the various main components of the SHS (e. g. installation of electronic ballasts in locally purchased lamp fixtures), including quality control.
4. Organizing distribution in various parts of the country, and establishment and operation of a spare parts depot.
5. Organizing the advertising activities.
6. Organizing the installation process; if necessary, establishment of a central repair service.
7. Organizing the financing arrangements.
8. If state subsidies are provided, possibly also management of government funds and monitoring of expenditures.
In order to perform these tasks properly, firms or institutions which distribute PV systems must have certain minimum qualifications:
- They must have experience in the importation of goods.- They must have excellent organizational abilities.
- They must have sufficient capital to be able to purchase the components in large enough quantities to benefit from economies of scale.
- They must be sufficiently credit-worthy to obtain the financing required not only to purchase the components but also to offer instalment payment schemes to their customers.
- Last but not least, they must already have a distribution infrastructure in place that is suitable for marketing PV systems, i. e. one through which products that are in some way similar to SHS (for example, agricultural implements or pumps) are already being marketed to groups within the rural population that are either identical or very similar to the solar home system's target groups.
Marketing will be more efficient and cost-effective if all of these tasks are carried out by a single entity. Of course, depending on the size of a country's market, two or three companies may also become involved in the distribution of SHS, and this would promote competition. In any case, though, if the market is being supplied by several firms, each of them should be capable of performing all of the different tasks involved. Companies that can handle all aspects of distribution and marketing would be a suitable "motor" to drive the dissemination process and ensure that it is self-sustaining, and, initially at least, the provision of assistance to such firms would be one of the focal points of Technical Cooperation activities.
Unfortunately, however, experience has shown that a "single-track" approach of this type Is extremely difficult to implement in practice. It has proved virtually impossible to find a single vendor capable of fulfilling all of the tasks outlined above. In particular, existing companies are typically unable to meet requirements 6 and 7. It therefore makes sense for different institutions or entities to be responsible for assembly, sales and financing. If a government-subsidized distribution program is carried out for disadvantaged segments of the population, a further subdivision of the tasks Is necessary, and consideration must be given to involving additional actors (e. 9. utility companies).
The dissemination measures that have been carried out to date by GTZ have varied considerably in terms of the distribution strategy employed. Nearly every project has utilized a "tailor-made" approach that was designed to fit the specific conditions found in the country in which it operated. In all cases, however, the focus was initially on utilizing private enterprises to achieve the project's aims.
The range of approaches that have been employed is illustrated by the following examples:
1. Distribution of SHS on a commercial basis by large trading firms which employ local artisans to assemble and repair the systems (e. 9. in Peru).2. Commercial distribution with the participation of local equipment manufacturers (e. 9. in Colombia, Senegal and the Philippines).
3. Encouragement of private-sector initiatives by promoting a government institution (e. 9. in Rwanda).
4. Promotion of self-help groups among the users of SHS, with support being provided by cooperatives (e. 9. in Senegal and the Philippines).
5. Government-organized programs to develop remote areas by providing basic infrastructure (Including SHS-based rural electrification measures), with consideration being given to the interests of all social groups and private enterprises being given responsibility for supplying and installing the equipment (e. g. in Tunisia).
The diversity of the approaches outlined in just this small number of examples illustrates the complexity of the conditions that must be met in order to disseminate just one technology in various countries. A different approach is called for in each situation. Especially during the early stages of a project, the overall climate for dissemination can be improved if government institutions or development cooperation organizations like GTZ furnish technical advice, implement measures to reduce the initial risks, and furnish back-up support for the private commercialization's process (e. g. by providing funding to get things started). Developing-country governments must take steps both to promote the participation of private enterprises in the dissemination program and, once they have become involved, to monitor the quality of their services and products (quality control). Indeed, unless product quality is monitored and compliance with standards is enforced by a neutral agency, and unless the government creates a favourable overall environment for commercialization, dissemination projects will face a situation in which the requisite market forces will either be unable to develop properly or will develop in a way that may work to the disadvantage of the target group.
The task of selecting appropriate financing schemes for the investments that must be made by the target group is quite complex. There is a wide range of different approaches ranging from simple credit extension by a selected bank through highly complex arrangements involving the participation of formal and informal banking institution's operating at the national and regional levels to instalment payment plans in which financing is provided by the manufacturers and/or distributors. In order to select the right option, project planners must know precisely how their dissemination activities are to be structured and who the target group will be and also be thoroughly familiar with the project environment.
The most important tasks of government agencies and/or development-assistance organizations are:
- Elimination of obstacles to competition in the PV equipment market.- Abolition or reduction of import duties on PV panels.
- Measures to ensure that banks extend credits to cooperatives to fund their lending to finance the purchase of SHS.
- Establishment of revolving funds administered by government agencies for start-up financing.
- Training of staff for installation and maintenance of equipment.
- Provision of support to small and medium-sized companies engaged in component production, including assistance in establishing contacts with companies in industrial companies.
- Quality control in testing laboratories (granting of "seals of approval', and establishment of production standards.
It is essential that the implementing agencies continue to receive advice and technical assistance on an on-going basis until the dissemination process for this "new technology" has gained sufficient momentum to be self-sustaTnTng, especially since the main activities involved in promoting its diffusion take place far from the centres of political power. Once dissemination has got under way in a given region, people in the local area are usually quick to recognize the technology's benefits, but it takes longer for policy-makers to become aware of them. Accordingly, efforts to bridge this "information gap" are just as important as the provision of training to the local personnel who will be responsible for installing and maintaining the systems.
It is also crucial to determine whether long-term subsidies are desirable tend if so, how they could be financed), or whether a commercial dissemination strategy would be more appropriate. If the implementing agency opts for subsidies, then it must still decide whether some sort of commercial distribution program might make sense - and be feasible - in addition to the subsidized scheme.
Greater government involvement, as in Tunisia, can Indeed prove worthwhile if the goal is to develop a promotion strategy for disadvantaged regions of the country while at the same time making the development of renewable energies like solar power an integral part of the overall development of the energy sector (e. g. by Introducing a small surcharge on the prices paid for electric power from conventional sources to help pay for PV based rural electrification).
When implementing government dissemination programs, however, care must be taken to avoid impeding private marketing activities. It is also important to remember that the responsible government agencies Will depend on private enterprises to do the installation and maintenance work. Thus, the provision of technical training to local personnel and research and development (e. 9. the design and testing of new PV systems meet the needs of specific segments of the target group) are further areas in which collaboration between government and the private sector is essential.
So far, we have focused our attention on the importance of creating the prerequisites for successful dissemination that are required in specific situations.
Before concluding our discussion, however, we would also like to point out a few essential aspects which are common to dissemination processes in all countries.
For instance, it is always vital to secure the participation of policy-makers at the highest level right from the beginning, i. e. starting with the project design phase. This has become standard practice in all of our more recent projects, and meeting this objective often calls for the assignment of a full-time staff member to handle this task alone (energy-policy adviser).
When it comes to the actual implementation process at the project level, the situation is more varied. As the examples cited above show, the spectrum of possible strategies ranges from exclusive reliance on private enterprise through approaches involving cooperatives, non-governmental organizations and self-help groups, to collaboration between the private sector and government institutions. In every case, though, project planners must attempt to identify the particular organizational set-up that will best serve the interests of the users.
Although this organizational arrangement will vary from country to country, certain roles can be assigned to each of the principal actors, thus yielding a generally applicable "division of labour" that can be used in all projects.
When decisions are taken in the area of development policy and economic policy to promote the use of photovoltaics, the government and its institutions must restrict themselves to the performance of certain functions:
- They must not perform commercial marketing functions.- They must not undermine commercial distribution by providing inappropriate subsidies.
- They must not promote local production if this would be detrimental to the interests of the users (toleration of inferior quality in order to maximize the "local content" of systems).
- They should:
- Eliminate or reduce duties on imported PV components, even if they are also produced domestically, so as to make the systems more affordable for the target group.
- Ensure that the prices charged for competing products (kerosene, lamp oil) reflect their true economic costs.- Provide for quality control by establishing and enforcing equipment standards (granting of technical "seals of approval").
- Monitor competition among SHS vendors.
- Enable vendors to provide financing to users by ensuring that they have access to appropriate credit facilities.
- Monitor the overall dissemination process and assess its effectiveness.
- Create a favourable climate for dissemination by leading the way in the utilization of the technology, e. 9. by supplying PV systems to institutions such as schools where they will be highly visible and help to create a public awareness of the technology and its benefits.
- Take steps to overcome social disparities, e. g. by supplying equipment to public health-care centres which serve disadvantaged segments of the population.
- Possibly extend credits to purchasers of SHS.
- Create Incentives for private investors in the PV sector.
- Integrate the development of renewable energy (RE) resources into the framework of national energy planning and policy-making.
- Facilitate the relevant activities of self-help groups, cooperatives, NGOs, etc.
Makers of photovoltaic equipment in industrialized countries also have an important role to play. If they wish to take advantage of the opportunities offered by the markets in developing countries, they must:
- Adapt their systems in accordance with operating conditions in those countries and the needs of local target groups.- Take the initiative and assume the entrepreneurial risks involved in marketing their systems.
- Transfer know-how to local manufacturers and distributors and work with them to provide reliable after-sales service.
- Develop suitable financing and product warranty schemes in cooperation With local institutions and companies so as to reduce the risks incurred by purchasers of SHS.
- Be willing to enter into joint ventures with local companies.
Finally, a TC organization like GTZ must perform the following tasks:
- Provision of advice to governments regarding the selection and evaluation of strategy options (e. g. commercial distribution vs. subsidization).- Provision of support for long-term dissemination, for example through a dialogue with user groups and decision-makers.
- Technical assistance in the area of financing to help distributors obtain the capital required to purchase PV systems.
- Provision of technical know-how, training of local technicians and artisans, and promotion of efforts to establish and enforce high product quality standards.
- Advisory assistance to distributors.
- Sharing of information with component manufacturers to help them improve the quality of their products.
GTZ must make its support contingent on the fulfilment of a number of preconditions that are essential for the success of dissemination measures:
- The developing country must demonstrate that it is in fact interested in the dissemination of PV technologies, e. g. by providing for the development of solar energy and other RE resources in a five-year plan.- The public-sector institution which serves as GTZ's counterpart organization must agree that government agencies will play only a secondary role in the dissemination process, i. e. that their contribution will be limited to creating a favourable overall environment for the diffusion of the technology.
- The developing country must pledge to make certain contributions of its own, e. 9. by equipping public facilities in rural areas with PV systems.
- The institutions collaborating with GTZ must ensure that there will be sufficient latitude for cooperation with private enterprises.
An institution at the policy-formulation level would be the most appropriate counterpart organization for GTZ. The most valuable contribution that GTZ can make to a dissemination process is to allow local institutions to benefit from its extensive experience with different project approaches around the world, which enables it to provide sound advice and meaningful support to both the users and the vendors of PV systems.
Thus, the range of services that could be included in a GTZ assistance package cover the following:
- Selection of appropriate counterparts.- Development of appropriate individualized implementation strategies, including schedules, definition of tasks and phases, realistic cost calculations, and integration of individual tasks into the general framework of energy supply planning.
- Assistance in creating a favourable overall climate for the initial phase of such a measure.
- Measures to ensure that the design of the systems offered for sale to the target groups and the installation procedures are appropriate to the needs of the users.
- Competent advice for producers and suppliers of PV systems.
- Specialized training for local counterparts.
- Realistic assessment of follow-up costs.
- Analysis of the ecological and socio-cultural impacts of project measures.
- Promotion of an exchange of information and experience among developing countries (South-South cooperation) in order to avoid a duplication of effort.
If the various actors are assigned the right roles in the dissemination process and their activities are coordinated properly, then the developing countries may be able to make the transition to an energy supply in which solar power plays a substantial role more quickly than the industrialized nations. If GTZ continues to receive the support of the German government In its efforts to promote solar energy utilization and it maintains its current working relationship with the German solar equipment industry, it will be able to help establish the environmentally friendly PV technology as a mayor, long-term energy supply option in the Third World, especially for the target group of smallholder households.
Those who are responsible for formulating energy policy and setting priorities for the future development of the energy sector in developing nations should endeavour to assess the potential contribution of solar power in their countries, and if they decide to exploit this energy resource through the large-scale dissemination of household PV systems, they can rely on GTZ to provide a broad range of technical-assistance and other support services.
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