Tuesday, 8 December 2009

Solar Lamps Face Subsidy Shadow in Rural India

CHIKANPADA, India -- Sunset used to be bedtime for 10-year-old Ankash Govind. This village, three hours from the bright lights of Mumbai, has not had electricity for the last eight years.

A villager scans for snakes and scorpions with the help of his Sun King solar lantern in Chikanpada, India.
Now, he spends his nights reading to his siblings by the light of a solar-powered lantern called the "Sun King." They were sold last year to about 400 subsistence farmers in the village, converting them from smoky, expensive kerosene lighting to a cleaner and cheaper alternative.
Some 400 million people in India do not have access to electricity, according to the World Bank. Prime Minister Manmohan Singh has pledged "power for all" by 2012. Supporters of solar technology say products such as the Sun King can play a crucial role in achieving that goal.
But, they contend, it is being hampered by government rules on what products qualify for government subsidies, which will be needed en masse to produce power-generating devices that even India's poorest can afford.
The solar lamps in Chikanpada were provided by Greenlight Planet, a for-profit enterprise, based in the U.S. It was started by one Indian and two American college students from the University of Illinois at Urbana-Champaign last year with a specific agenda: profitable philanthropy. The start-up now distributes lanterns in the western state of Maharashtra, the southern state of Karnataka, and the eastern states of Bihar and Orissa.
Solar Lamps Bring Light to Rural India
Some 400 million people in India do not have access to electricity. But new and cheap solar lamps are replacing smoky, expensive kerosene lighting in rural India. WSJ's Linda Blake reports.
Its co-founder Mayank Sekhsaria, says the company sold the Sun King, a light-emitting diode, to villagers at a discounted price of $4 compared to $15 that they regularly sell for. The company made up the difference with monetary support from Rotary Club Bombay Queens. The lamp provides 16 hours of light from a single charge.
Mr. Sekhsaria says that for such solar lamps to take off on a large scale requires them to be sold to villagers at such a low cost. But so far the government, which provides huge subsidies for power nationwide, hasn't accepted the Sun King as a product that meets its qualifications for receiving subsidies. The reason: its thin beam of light emits an average of only 6 lux (a measure of light penetration), short of the 16 lux average required for government backing.
Bharat Bhargava, director of India's Ministry of New and Renewable Energy, says the quality standards are there for good reason. "If a product does not meet the performance level set by the ministry, they are not eligible for a subsidy support," he said.
The government does sponsor a solar-lantern program but those lanterns, which are bulkier than the Sun King, cost consumers between $25 and $40; without the subsidy they cost an average of $60.
Mr. Sekhsaria argues that what villagers require is a cheaper product that is just bright enough to provide adequate light but at an affordable cost. Being able to expand the number of Sun Kings in the market also will help his company make money.
"When distribution finally expands, we will have higher efficiencies of scale and preferential treatment from our suppliers in China. This means profit growth," he says.
Even without subsidies, though, he says the lights make economic sense. He says villagers who purchase Sun Kings at the retail price of $15 and quit using kerosene for lamps can recover the cost of the lamp in 15 months.
Here's how: The Indian government sells subsidized kerosene to rural Indians at around 20 U.S. cents a liter, said India's petroleum minister, Murli Deora, at a recent conference. Rural families in Chikanpada say they use up to five liters of kerosene per lamp each month, which means they spend around $1 a month on lighting.
Mr. Sekhsaria also argues that the government would save money for every unsold liter of kerosene by not having to provide a subsidy on that liter.
An estimated one million families use kerosene for lighting in India. The United Nations Environment Program says that kerosene fumes are responsible for around 64% of deaths for children under the age of five in developing countries.
In Chikanpada, an elderly woman points to her blackened wall then dangles the culprit – a rusty kerosene lamp – at arm's length, as if she is holding a rat by its tail. "This made me cough all the time," she said. "But now we got these solar lamps."