Affordable small solar home systems represent an excellent opportunity to bring modern energy services to those presently lacking it, and the French Development Agency AFD has chosen SNV to coordinate the largest-ever solar power initiative in Cambodia.
The four-year Solar Microfinance Programme aims to broaden access to energy for 25,000 households in off-grid locations through the market-led installation of solar home systems.
Many households in Cambodia are not yet connected to the national electricity grid and instead use car batteries charged at diesel-powered charging stations to satisfy their energy needs. The costs can be three or four times more than what they would pay for grid electricity – up to $1 per Kwh! Such high expenditure is a major drain on limited family incomes.
As coordinator for the Solar Microfinance Programme, SNV will work with all programme stakeholders to ensure smooth collaboration, and will manage the accreditation and verification process for solar products and suppliers. To lower the initial investment barrier for rural households, the Solar Microfinance Programme collaborates with three leading Cambodian Microfinance Institutions (MFIs), which will develop Cambodia’s first dedicated solar microcredit offer for their customers.
Private solar supply businesses also stand to benefit. "Building a nationwide network of solar installers and technicians is neither easy nor cheap," said SNV Country Director Erik van Waveren. "And making sure that everyone in the remotest corners of the country knows about the availability of solar solutions takes an effort in awareness raising and education." To support solar suppliers in making this investment in their business, the programme offers a post-financing incentive for each system installed. The sales incentive can only be claimed after the sales of approved solar products have been verified.
Results-Based Financing like this is an innovative way to support sustainable market development. It allows the private sector flexibility in choosing the most appropriate business and distribution models; and the incentives can be re-invested to further grow the business.
By working closely with the Solar Energy Association of Cambodia (SEAC), SNV will ensure that a similar solar quality initiative can be continued in the future. SNV will be supported by its partners PicoSol Cambodia, Emerging Markets Consulting, and 17 Triggers who will provide a range of training, awareness-raising, and business development services to solar suppliers and participating MFIs alike.