1. www.SoluzUSA.com Energy for Development : Technical and Business Issues in Serving the Unserved with PV John Rogers, Vice President Soluz, Inc. MIT - D-Lab I September 2006

2. www.SoluzUSA.com Presentation Overview Technology Market –The rural energy challenge –Where PV fits in Soluz business model –Soluz Honduras experiences Moving forward, scaling up

3. www.SoluzUSA.com Soluz, Inc. Business and technology development company Distributed micro-power technology commercialization Core expertise: rural energy delivery in developing countries REDCO developer –Rural energy delivery companies

4. www.SoluzUSA.com Soluz, Inc. 1993 – Soluz, Inc. 1995 – Soluz Dominicana 1998 – Soluz Honduras 1996 – Global Transition Consulting –Worldwide advisory services

5. www.SoluzUSA.com Technology

6. www.SoluzUSA.com Technology Sunlight goes in. Electricity comes out.

7. www.SoluzUSA.com World population: –Unconnected: –Biomass users: Market – Rural Electrification

8. www.SoluzUSA.com World population: 6B –Unconnected: 1.6B (300M+ households) –Biomass users: 2.4B Market – Rural Electrification

9. www.SoluzUSA.com World population: 6B –Unconnected: 1.6B (300M+ households) –Biomass users: 2.4B Latin America: 400M –Unconnected: 60M (10M+ households) Market – Rural Electrification

10. www.SoluzUSA.com World population: 6B –Unconnected: 1.6B (300M+ households) –Biomass users: 2.4B Latin America: 400M –Unconnected: 60M (10M+ households) What can an enterprise do to reduce this energy divide and make a profit? Market – Rural Electrification

11. www.SoluzUSA.com Rural Energy Sources, Costs ($/kWh) What are people using? What does it cost?

12. www.SoluzUSA.com Rural Energy Sources, Costs ($/kWh)

13. www.SoluzUSA.com Monthly Energy Expenditures What are people spending?

14. www.SoluzUSA.com Monthly Energy Expenditures

15. www.SoluzUSA.com PV Where does it fit in?

16. www.SoluzUSA.com Rural Electrification – Grid vs. PV

17. www.SoluzUSA.com PV is viable for pre-electrification, for: Dispersed households and enterprises, With low energy needs, Seeking high value, more energy, lower cost (per unit) Rural Electrification – Market for PV

18. www.SoluzUSA.com PV is viable for rural public services for communities: Rapid, cost-effective –Schools – Lighting, A/V, computers –Clinics – Lighting, refrigeration –Potable-water pumping –Street and security/area lighting Rural Elec. – Communal Niche for PV

19. www.SoluzUSA.com Basic business challenges –Target/serve poor, dispersed populations –Provide reliable, remote, quality service –Service customers efficiently Potential solutions –Target able customers with right products, right payment plans –Establish local delivery structure –Attract/apply “smart subsidies” (?) Soluz Business Model

20. www.SoluzUSA.com Typical Soluz PV System

21. www.SoluzUSA.com Typical SELCO PV System

22. www.SoluzUSA.com Monthly Energy Expenditures

23. www.SoluzUSA.com Offerings – Possible Market Penetration

24. www.SoluzUSA.com Offerings – Rental $5-20/month Easiest for rapidly capturing new customers Rental company assumes technology and sector planning risks Particularly good for pre-electrification –If the grid arrives, the PV can be redeployed

25. www.SoluzUSA.com Rural Energy Sources, Costs ($/kWh)

26. www.SoluzUSA.com Honduras Population: 6+M Population without grid access: 2.5M Households off-grid: 500,000+

27. www.SoluzUSA.com Soluz Honduras – Infrastructure NATIONAL OFFICE Service Center

28. www.SoluzUSA.com Raised investment – $1.55M Built innovative business model Reached rural customers – 5,000+ –Unsubsidized offers –Cash –Micro-credit – 1,300+ systems sold –Micro-rental – 2,500+ customers served ~100,000 payments collected Total collections – $2.6M+ Soluz Honduras – Progress

29. www.SoluzUSA.com Soluz Honduras – Progress Rural applications

30. www.SoluzUSA.com Soluz Honduras – Progress

31. www.SoluzUSA.com Soluz Honduras – Progress

32. www.SoluzUSA.com Soluz Honduras – Progress

33. www.SoluzUSA.com Soluz Honduras – Progress Microenterprise

34. www.SoluzUSA.com Soluz Honduras – Progress Micro- enterprise

35. www.SoluzUSA.com Soluz Honduras – Progress Clinic

36. www.SoluzUSA.com Soluz Honduras – Progress Schools

37. www.SoluzUSA.com Soluz Dominicana – Progress Community water supply

38. www.SoluzUSA.com Soluz Honduras – Challenges Any guesses?

39. www.SoluzUSA.com Hard to starboard! Hard to port! Reverse full! Steer clear, steer clear!… abandon ship?

40. www.SoluzUSA.com Transactions – 8-10 deals Hurricane Mitch – Survived, but... Churn – Grid, customer instability Restructuring – “Venture fund” debt obligations –Forced focus on cash sales, “cream-skimming” for profitability –Reduced local rural service capacity (rural agents and employees) Module supply Soluz Honduras – Challenges

41. www.SoluzUSA.com Soluz Honduras – Cash Sales Channels NATIONAL OFFICE Service Center DEALER

42. www.SoluzUSA.com Soluz Honduras

43. www.SoluzUSA.com Honduras – Changes in Environment Increased government interest World Bank rural infrastructure project –Lengthy process, but coming soon –Goal: 5,000 households with PV over 4 years

44. www.SoluzUSA.com 100%0% Cost Recovery from User Systems Donated Customer Pays ? The Subsidy Factor

45. www.SoluzUSA.com Soluz Dominicana

46. www.SoluzUSA.com Soluz Dominicana and Soluz Honduras

47. www.SoluzUSA.com Key elements to increase energy access through enterprises: Enabling policy environment –rural electrification planning linkage –subsidies by government for the poor Consumer finance Innovation funding Enterprise finance –Debt and equity will flow if above three exist Interventions

48. www.SoluzUSA.com SELCO India

49. www.SoluzUSA.com SELCO India

50. www.SoluzUSA.com Scale-Up: Dimensions Source: Rogers, et al., Innovation in Rural Energy Delivery, 2006

51. www.SoluzUSA.com Scale-Up: Range of Needs, Technologies

52. www.SoluzUSA.com Conclusions PV isn’t a panacea for rural energy... But it has an important role to play. Learning from leading experiences is key. Accelerating energy access will require attention to the four key elements.

53. www.SoluzUSA.com Soluz, Inc. 55 Middlesex Street, No. 221 North Chelmsford, MA 01863-1561 USA Tel: +1 978-251-1525 Fax: +1 978-251-5291 E-mail: john@SoluzUSA.com www.SoluzUSA.com © Soluz, Inc. 2006

54. www.SoluzUSA.com Designing Your Energy System Loads Resources and production Storage

55. www.SoluzUSA.com Designing Your Energy System Loads –Power x time = Energy –Watts x hours = Watt-hours –If include inverter, need to consider efficiency

56. www.SoluzUSA.com Designing Your Energy System Resources –Solar Often expressed in sun-hours (kWh/m 2 /day) Typical = 4-6 –Other possibilities Wind - Can be strong, but highly variable; very site- dependent Pico-hydro - Need resource Biogas - Feedstock

57. www.SoluzUSA.com Designing Your PV System Production –Power x time = Energy –Watts x hours = Watt-hours –Definitely need efficiency factor –Amps x hours = Amp-hours

58. www.SoluzUSA.com Designing Your PV System Storage –Current x time = (Energy) –Amps x hours = Amp-hours –Consider days of autonomy desired –Include efficiency factor

59. www.SoluzUSA.com Designing Your PV System Example: Loads (12VDC) Light (10W) x 4 hours40Wh TV (15W) x 2 hours30Wh Radio (3W) x 10 hours30Wh DAILY LOAD100Wh Efficiency factor (for inverter)N/A

60. www.SoluzUSA.com Designing Your PV System Example: Resource and Production Daily load100Wh Insolation5 hours Efficiency factor0.7 Extra sizing factor0.9 MODULE SIZE32-35W

61. www.SoluzUSA.com Designing Your PV System Example: Storage Need (/day)100Wh Autonomy5 days Need (total)500Wh Max depth of discharge80% BATTERY CAPACITY50-55Ah

62. www.SoluzUSA.com Soluz Dominicana