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The first pilot project in the slum in Manipal began in September 2008 with installation of solar systems in 4 households. As of June 2012, sixty four systems have been installed in the same slum. Based on the encouraging response and regular repayment of loans, the model was replicated in a slum in Bangalore city with 65 households. These households today use solar systems for lighting and mobile phone charging. Systems are being financed by a nationalised public-sector Bank and a co-operative society with previous loans as precedents. In this way, systems are being added in a phased manner.
Assessment by external volunteers and internal sources has revealed that with the installation of solar systems, each household saves an average of 6 litres of kerosene per month. This not only reduces monthly household expenditure, but also contributes towards reduced carbon emissions of over 101 tonnes (i.e. savings of 72 liters of kerosene per household per year) over the lifetime of the systems (20 years) in the Manipal slum (Calculations are based on IPCC, 1996-each litre of kerosene burnt emits 2.41 kg of greenhouse gases).
Through the replication in Bangalore, a similar quantity of carbon emissions is being offset over the life of the solar system. The emission reductions are currently being verified through a carbon verification process as applicable to other SELCO solar home lighting and water heating systems (SELCO engages in Verified Emission Reduction schemes on a case by case basis). The reporting occurs through an Independent Verification agency with the support of SELCO’s internal resources. Savings from reduced kerosene expenditure has enabled users to repay loans taken on the solar systems.
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The project objective was based on three basic principles of social, financial and environmental sustainability. As described earlier, the project has been implemented in Pragati Nagar slum in Manipal and Ashraya nagar slum in Bangalore. While Pragati Nagar has 64 households using solar systems today, Ashraya Nagar has 65 household end users. These households are migrants from other parts of the state of Karnataka and workg in the city as labourers in unorganised sectors like construction, garment factories, etc.
This project has provided the affected communities with cleaner affordable solar systems which save money spent on both lighting/kerosene and mobile phone charging (most households pay Rs.5 per charging session at the nearest shop with electricity). The savings from both these applications are sufficient to pay the loan while they have better light for the education of their children, smoke-free home leading to a better quality of life. Through the intervention, women have benefited from improved conditions of living, better lighting while cooking and completing household chores. Prior to the intervention, women were forced to save money at home with high risk and had little say in the expenditure. The access to banking has given them the options of saving their money and earning interest.
Environmental benefits are very clear as every family is avoiding the usage of about 72 litres Kerosene per year over the life of the system. Each litre of kerosene burnt emits 2.41 Kg of greenhouse gases (according to IPCC, 1996). The large savings on kerosene through this project has helped reduce indoor air pollution and greenhouse gas emissions. Consequently, the savings of GHG over a 20 year period of time (life of the solar system with one battery replacement is assumed to be approximately 20 years) is huge, making it a positive contributor for the environment. The additional benefit that the project provides to households is financial inclusion. For all of the households the solar loan is the first ever institutional financing. This also provides them a savings bank account which facilitates savings, future credits and most importantly provides them with a residential status and address proof. The financial inclusion has created a social security net for these people as well.
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The project has already been replicated in a slum in Bangalore city. While the original project started in September 2008 in Manipal, the replication occurred in January 2011. The model has already shown signs of changing the way bankers think about slum populations. Slum clean-up projects in India have either slowed down or failed due to the lack of realistic, implementable alternatives.
In the pilot phase, the banking partner (Hamsachaitanya Co-operative) was unwilling to finance the systems unless SELCO took on the complete risk of the project cost. The Cooperative only agreed to sanction loans when SELCO offered a 100% risk guarantee deposit. Once convinced about the potential of this slum, the same partner did not insist on the guarantee for loans provided to other households. Since then, the Cooperative has opened Savings bank accounts for more than 250 households and provided loans for various activities including solar energy systems. This example was brought to the notice of other scheduled banks in the area that had earlier refused to finance the same slum. Today, many of them have also come forward to provide loans to the people. The Syndicate bank, a Public Sector Undertaking, financed the replication project in Ashrayanagar slum, Bangalore, based on the example set by the Manipal project. The change in institutional financing patterns is, perhaps, one of the most significant contributions of the project.
The willingness of banks to finance renewable energy systems for this community of so-called â€illegal’ settlements proves that institutional change is vital in the larger sphere of energy access provision.
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