Best Practices for Pv Solar Home System Projects Ieee Paper

8/12/2019 Best Practices for Pv Solar Home System Projects Ieee Paper

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BEST PR CTICES FOR PV SOL R HOME SYSTEM PROJECTS

Ma c Cosgrove-Da vies and Ani1 Cabraal

Wo rld Bank Asia Alternative Energy Unit

ABSTRACT

PV solar home systems (SHS) are increasingly

employed as an energy supply option for rural

populations. The past 20 years' experience with small-

scale SHS programs in developing countries has

had

mixed results. Howe ver, efforts in recent years have

been more successful. In support of World Bank lending

operations, the Bank's Asia Alternative Energy Unit

(ASTAE) has undertaken a series of case studies of

currently operating SHS programs in Indonesia, Sri

Lanka, the Philippines, and the Dominican Republic.

These programs have varying degrees of government,

NGO, and private sector involvement. This paper

summarizes ASTAE's draft Solar Photovoltaics:

Best

Practices or Household Electrification report which

identifies the institutional, financial, and technical factors

fundamental

to

the success of a PV solar home system

project The final version of the ASTAE report will

incorporate comm ents from an international group of peer

reviewers.

INTRODUCTION

Rura l electrification is given a high priority in the

developing world in order to fulfill economic, social,

politic,al, and regional developme nt goals. How ever,

despite nearly two decades of aggressive public

investiment in the power sector, few developing countries

are able to extend grid-based electricity to more than 20%

of their rural populations'.

extensive transmission and distribution systems, pow ered

by central generation stations.

Isolated diesel powered

grids ii lso are used

to

serve more remote towns and

villages. The distribution sys tem cost of these grid-

based schemes is about 900 per connection* on

average, but costs rise steeply as the population

to

be

served becomes more scattered. Photovoltaic systems

can be a cost-effective alternative in areas with dispersed

populations and modest electricity needs.

The Asia Alternative Energy Unit (ASTAE) of the

Wo rld Bank has com missioned a series of case studies in

support of i ts mission to incorporate alternative energy

Rural electrification most com monly means

components into Bank projects. These case studies, in

Indonesia, Sri Lanka, the Dominican Republic, and the

Philippines have yielded the insights into the key

elements of successful solar home system initiatives

which are summarized here.

This report provides a brief overview of the key

barriers to widespread expansion of PV systems into rural

markets. Institutional mo dels which have been used in

PV programs are then described. Finally, the financial,

institutional, and technical bes t practices identified by

ASTAE for design and implementation of solar home

system projects are presented.

BARRIERS TO

PV

MARKET DEVELOPMENT

Wh ile some of the mill ions of rural people living

without electricity would be more economically served

through grid extension or with isolated grid networks,

there remains a vast number who will not receive grid

service in the next ten years, if ever. For areas with

dispersed populations and modest loads, photovoltaic

solar home systems can be the least cost mea ns of

serving household loads -- at a cost lower than grid

service or kerosene lighting and automotive batteries for

TV o r rad io ~pe ra t i o n . ~espite this fact, there are

barriers to the expansion of photovoltaic systems into the

rural marketplace, both from the supplier's perspective,

and the consumer's viewpoint. These are:

the early stages of market developmen t, it is difficult to

justify the large investment needed in retail and service

networks to reach the economies of scale required for

a

sustainable market.

Administrative and Management

o

Dispersed Rural PV Program -

Rural PV programs

serve dispersed populations, frequently in remote areas.

Efficient manage ment of the sales, service, training,

collection and other functions required under such

conditions is a challenge which m ust not be

underestimated.

tariffs on PV systems or components, increasing the cost

to the consumer, and thereby reducing PV's market size.

High

Cost

of

Retail and Service Network

- In

Import Duties - Several countries im pose high

' M. M,ason, Rural Electrification:

A

Review of World

Bank and USAlD Financed Projects, draft Background

Paper, April 1990, p 1.

M. Miason, p

26-27.

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IEEE

In these cases, productive loads which are too large for

PV or other renewables are served by dedicated diesel

gensets.

irst WCPEC Dec 5-9, 1994;Hawaii


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Initial Cost - At costs ranging from

100

to

1400 (depending on the product, and the country) the

cost of a P V system represents a significant outlay

relative to the annual income of a rural household. This

high initial cost is the greatest single barrier to increased

PV ownership by rural populations. Affordable financing,

which can ease the first cost burden, therefore becomes a

crucial element in PV marke t expansion.

Subsidies on Other Rural Energy Options - A

study of 37 rural electrification programs revealed that

only one levied tariffs sufficient to cover the economic

costs4. W hile subsidies of grid electricity and kerosene

might b e justified on social or development grounds, their

side effects include reducing the cost of service to

consumers to a level well below PV, even when PV m ight

be the option with the lowest economic cost.

INSTITUTIONAL AND FINANCIAL MODELS

Wh ile the subsidy and tariff issues described

above m ust be addressed on a national level, the

organization and operation of a PV household

electrification program are crucial to market development

and sustainability. There is no single

institutional/financial m odel which can be applied

successfully in all situations. Each program will require

its own unique design. However, PV programs can be

broadly grouped into the categories of energy se rvice

compa nies, leasing, consum er financing, or cash sales

selling or leasing the PV hardware, an energy service

compa ny (ES CO) sells the energy service while

retaining ownership of the hardware which provides the

service. An electric utility uses an ESCO structure. An

ESCO arrangem ent allows the PV system costs to be

spread over a longer period, reducing the consum er's

monthly payment. With lower payments, a larger market

segment can be reached, offering the potential for

creation of the critical mass required for project

sustainability. Aggregating this demand can permit cost

reductions through bu lk procurement as well as the abil ity

to obtain m ore favorable credit terms than could an

individual consum er. However, an ESCO must guard

against becom ing organizationally complex, bureaucratic,

and inefficient. This would result in high administrative

costs an d jeopardize project sustainability.

intermediary retains ownership of some or all of the PV

system, a nd provides it to the customer under specified

terms and conditions. In this case, it is the system itself,

and not the energy service. which is being leased. In

most leasing p rograms to date, cooperatives or NGOs

have been the implemen ting organizations. Donor grants

have seeded the projects, which have established

revolving funds. Consum er paymen ts return

to

the

revolving fund, allowing others to obtain P V systems.

When the loan is repaid, tit le of the PV system transfers

to the customer. The scarcity of donor funds limits the

Energy Services Company Rather than

Leasing -

Under a leasing arrangement, the

M.Mason

number of systems which can be installed under such a

program. The sustainability of this approach is

questionable if customer repayments are subsidized and

do not at least recover recurring costs. How ever,

comm ercial leasing program s using in novat ve

approaches such as offering daily usage fees for PV

lanterns, appear

t o

have good prospects for long-term

growth.

Consumer Financing

-Whe re ESCOs o r

leasing programs are unavailable, custome rs mus t

purchase systems directly fro m private sector vendors.

Financing of these purchases is sometimes available

from either comm ercial banks, or from th e dealer.

Comm ercial banks rarely finance consum er durables in

rural areas of developing countries. Whe re bank

financing is available, interest rates are high, and security

requirements are significant. Although dealer financing

typically has higher rates and shorter periods than do

banks, the dealers' familiarity with their cus tomers allows

them

to

offer credit without the stringent security

guarantees required by banks. The primary advantages

of comme rcial financing are that

I

t

is

rooted in the

private sector, and therefore has the potential

to offer

competitive, and e fficient services, and 2) it is based on

existing institutions (banks and private vendors), reducing

start up requirements. This model, however, is subject to

the chicken and egg problem associated with all new

markets: costs will not decline until the m arket reaches a

sufficient size, but demand will not increase until costs

decline.

vehicle, and

it

shares the advantages and problem s of

commercial financing described above. In addition, the

market for cash sales is l imited by inadequate disposable

income of the majority of rural households. The high

sales m argin required to cover dealer expenses, due to

the small number of annual sales, further l imits

affordability and exacerbates the chicken and egg

problem.

Cash Sales This is the simplest financial

BEST PRACTICES FOR RURAL PV PROGRAMS

Regardless of which rnstitutronaVfinancial model

is used for a rural PV prog ram, there are a number of

basic elements which must b e attended to, in the area of

financing, institutional design, and technology selection

and deployment The following best practices describe

ASTAE's current understanding of the key elements of a

successful PV household electrif ication prog ram

FINANCING PLA N

BEST

PRACTICES

As described above, financing m ay b e the single

most important means of expanding the market bas e for

PV beyond those able to make cash purchases.

Financing can be offered through any of the institutional

models, and can be implemented by public sector

agencies, banks, private dealers, NGOs, or cooperatives.

There are several factors to consider in the financing

plan:

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Price systems fo r full cost recovery.

Numerous P V programs h ave undermined their own

sustainabi l ity as wel l as the chances for a compet i t ive

commercial market by of fer ing he avy subsidies. Wh i le

the ini t ial cost is an important barr ier to a homeow ner 's

purchase of a PV system , this does not mean that large

subsidies are required. Affordab le f inancing, with

at tainiable down payments and reasonable monthly

paymlents can provid e for ful l cost recovery without

sabotaging long-term sustainabi l i ty.

cost of replacing a battery every three years can be a

heavy burden for a rural household. f inancing

arrangement which includes periodic battery replacement

could mit igate this problem for a smal l addi t ion to the

monthly paymen t. Once the f inancing per iod is over,

another mech anism, such as an escrow account, m ay be

required for this purpose.

Provide convenient access to fi nancing. It is

not comm on for Bank branches to be located in rural

areas. If multiple visits are required for loan application

or repayment, this can be a deterrent to customer

acceptance of PV. Bank outreach programs, or dealer

credit can help overcom e this problem.

forms sho uld be simple to complete, an d the number of

visi ts required to approve the loans kept to a min imum . I f

possible, arrangements should be made for the supplier

to assist the homeowner in preparing and applying for the

loan.

Rural households wi thout salar ied workers may not have

the col lateral to secure a loan. In Sr i Lanka and

elsewhere, customers are reluctant to reveal the income

informat ion required by the loan appl icat ion. These

conditi ions become deterrents to expansion of the PV

market. Whi le there is no simple solut ion to this problem,

potential solut ions include using the PV module as

security, establishing a loan guarantee program similar to

mortgage insurance or power uti l i ty loan guarantees for

house wiring, or leasing arrangements.

Provide flexible repayment schedules which

compllement borrower s income streams. Such

arrangements wi l l al low a farmer

to

pay after the crops

are sold, and salar ied workers to pay on a mo nthly basis.

If a com mercia l ban k is involved in the financing

of PV :systems, addit ional factors include:

Ensure eligibility of PV for bank financing.

Banks frequently offer loans for incom e producing

investm ents, especially to small businesses. If PV

is

considered by the b ank to be a consu mer i tem, i t might

not qualify for lending.

Increase bank staff familiarity with

PV. An

awareness program targeted at loan off icers

is

necessary, if ban ks are expec ted to loan for P V, even for

banks with a PV-friendly policy.

Finance battery replacements. The $40 to $50

Streamline application procedures. Loan

Overcome collateral and security barriers.

INSTITUTIONAL B EST PRACTICES

Institutions such as public or private sector

groups,

NGOs

or cooperat ives w hich implem ent a PV

program wi l l face some issues which are unique to their

own ci rcumstances as wel l as issues comm on to PV

progra ms worldwide. The following discussion describes

issues which must be addressed regardless of the type of

implement ing inst i tut ion.

Use existing organizations. To

avoid the

problems of creating and staff ing new institutions, it

generally is preferable to strengthen existing

organizat ions which have som e of the character ist ics

needed for successful project implementat ion. These

include local level representation, good management and

business skil ls, experience with collection a nd cost

recovery on rura l projects, and an incentive for

part icipat ing in a PV project. Some technical assistance

wil l generally be required to f i l l out the ca pabil i t ies of the

selected institution(s).

satisfaction with the PV system

is

closely l inked to cost

recovery. Loca l representatives, who are properly trained

and adequately equipped

to

handle service requests

prompt ly, are important elements in a sustainable PV

program.

policies.

Cost recovery diminishes rapidly if i t is not

emphasized, as has been the case in num erous

subsidized PV p rograms.

A

clear, consistently enforced

disconnect policy for customers in arrears has been

shown to be a strong tool in maintaining cost recovery.

Monitor and supervise implementing

organizations.

Regular supervision, and periodic audits

of

NGOs

f inancial intermediaries, or other implementing

organizations should cover both f inancial and technical

aspects of the project. These shou ld include project

management, due dil igence reports, record keeping, and

spot chec ks on the quality o f installed systems.

Establish and enforce standards.

Balance of

system components, such as batteries, controllers, and

lighting ba llasts frequently a re the weak l ink in

a

PV

system. International standards for PV mod ules, such

as

the European Community's JRC 503, are available, and

should suffice for mos t PV program s. Syste m standards,

however, are less well developed, but no less importa nt.

Systems standards are under preparat ion, in India as wel l

as Europe. The applicab il i ty of any given standard to a

particular situation m ust be carefully reviewed.

Provide ongoing technician training. Wel l

trained, adequately equipped service technicians are

crit ical for a sustainable PV prog ram. Init ial techn ician

training should be supplemented wi th an o ngoing t raining

program which can both train new recrui ts and enhance

the skil ls of experienced technicians.

Educate users.

Rea listic expectations

regarding PV sys tem performance as wel l as

maintenance requirements is an important ingredient for

consumer sat isfact ion. The educat ion program should

include routine maintena nce, battery watering

procedures, interpretation of control panel information,

Offer quick response service.

Consumer

Adopt effective cost recovery and disconnect

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load man ag em en t, solar access, replacement of fuses

and bulbs, and safety.

substantial investment for most rural households in the

developing world. warranty can add confidence to a

consum er 's purchase decision. A ten year warranty

should be avai lable on the PV module.

A

one to three

year warranty on balance of system components should

be offered

Offer an attractive warranty.

A

PV system is a

TECHNICAL BEST PRACTICES

Solar hom e systems should be designed for

usabi li ty and rel iabil i ty as wel l as minim al user

maintena nce requirements. Wh i le the PV module

is

the

featured component in the system, batteries, controllers,

and la mp bal lasts ha ve caused the major i ty of technical

problems. Th e following component level discussion

provides an o verview of the ke y features of technically

successful systems:

Modules

36

cell design, with heavy duty

terminals, lock washers, and a single junction box.

Module support structure

-

Corrosion

resistant; electrolytically c omp atible with m odu le frame

and fasteners: design which allows for proper t i l t and

orientation as well as system expansion: solid reliable

moun t ing design

weather proof, or located indoors

voltage disconnect: short circuit, reverse polarity, and

surge protection; weather and insect resistance:

temperature compensation; state of charge indicator;

system expansion; and emergency disconnect.

technically preferable option, howe ver, l imited availabil i ty

frequently results in replacement with autom otive type

batteries. The n ew battery's l i fe wil l be signif icantly

reduced if the controller

is

not reset for the new battery

type.

systems because of their higher luminous eff iciency

comp ared to incandescent l ights. The bal lasts required

for operation of f luorescent l ights have been problematic

in some PV program s. Bal lasts mu st be matched to the

l ight , and thorough ly tested pr ior to widespread

deployment. There must also be a focus on maintenance

of product quality. Ballasts should be chosen for

eff iciency, durabil i ty, and compatibil i ty with other system

components -- especially the locally available tube l ights.

They should avoid radio frequencies which could interfere

with radio or television use.

Lamps and fixtures - Consu mers ma y prefer to

have several l ights at lower wattages, rather than a

single, higher wattage l ight. Provision for two wattages of

f luorescent f ixtures should be considered, to offer both

task (i.e. reading) an d area (i.e. courtesy) l igh ting.

Attractively designed fixtures can enhance the consumer

appeal of the system.

Battery mounting

Child-proof enclosure e ither

Charge controller

- Provisions for: low and high

Battery - deep discharge batteries are the

Ballasts - Fluorescent l ights are used in PV

Wiring, switches, and outlets - Use

2.5

m m 2

or greater wire. Switches an d outlets should be rated for

DC

operat ion. Provisions should be made for

maintenance of polarity, such as color coding, or non-

reversible connectors. Comp atibil ity of house wiring with

grid service wil l ease the transit ion to grid pow er if and

when it arrives.

Inverters Solar home systems, which are

typically less than 100 Wp, n general wil l not require

inverters. If inverters are required, a dedicated unit for

the specif ic load should be considered over a centralized

inverter for all loads.

CONCLUSION

There is an important econom ic nich e for solar

home systems within the context of rural electrif ication.

Fuel independence and modular ity mak e solar home

systems an attractive pre-grid energy alternative, as well

as

a valued comp lement to gr id based power that cannot

be extended economically to sparsely settled andlor

remote areas. Solar home systems also are safer, and

more convenient than kerosene l ight ing and autom ot ive

batteries for powering small appliances.

Despite these appealing features, acceptance of

PV in rural markets is ser iously constrained by their high

purchase pr ice, which puts them out of reach of al l but

upper incom e households. Witho ut adequate f inancing

arrangements that capture customer wil l ingness and

abil i ty to pay, solar home systems cannot claim their

potential ly signif icant role in rural electrif ication. Man y of

the early PV e lectrif ication efforts failed due to on e or

mo re of the following factors: unreliable technical

performance, poor system design, lack of qualif ied

technical support, implementing agency shortcomings,

poor attention to cost recovery and cost control, and

unrealized user expectations leading to dissatisfaction.

More recent prog rams have incorporated the

lessons learned from these experiences and have

benef ited f rom technological improvem ents. s a result,

solar home systems show robust potent ial for long term

sustainabil i ty in the rural household market.

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Best Practices for Pv Solar Home System Projects Ieee Paper