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Are Micro-benefits Negligible? The Implications of the Rapid Expansion of Solar Home Systems (SHS) in Rural Bangladesh f

Fourth Asian Energy Conference “Electricity Sector & Renewable Energy cum Hong Kong Energy Policy” Hong Kong Baptist University. Are Micro-benefits Negligible? The Implications of the Rapid Expansion of Solar Home Systems (SHS) in Rural Bangladesh for Sustainable Development. December 3, 2010

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Are Micro-benefits Negligible? The Implications of the Rapid Expansion of Solar Home Systems (SHS) in Rural Bangladesh f

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  1. Fourth Asian Energy Conference “Electricity Sector & Renewable Energy cum Hong Kong Energy Policy” Hong Kong Baptist University Are Micro-benefits Negligible? The Implications of the Rapid Expansion of Solar Home Systems (SHS) in Rural Bangladesh for Sustainable Development December 3, 2010 Satoru Komatsu*, Shinji Kaneko, Partha Pratim Ghosh *Graduate School for International Cooperation and Development, Hiroshima University E-mail: skomatsu@hiroshima-u.ac.jp

  2. Backgrounds of Rural Electrification and Solar Energy Diffusion in Bangladesh Grid electrification: • Rural electrification rate 28% (IEA, 2009) • Vision statement and policy statement on power sector reforms in 2000 declared 100% until 2020. • Load shading (deficiency of supply) • Serious impediments on the sustainable development New dynamics in the market, especially: • Rapid increase in SHS (Solar Home System) installation • Rapid increase in mobile phone users • SHS has limited impacts on income generation • Needs to enlarge the capacity with affordable price Current Package, 30Wp-130Wp, major type; 40-85Wp • Needs cost break through (Price; 50Wp system…400-500USD)

  3. Details of the Solar Home System (SHS) Solar Power Generation Panel • It’s the package; contains solar generation panel, batteries, home appliance, and other accessories. • Solar power generation panel • Battery (storing electricity) • Charge controller (preventing excess charging, excess discharging of the batteries) • Lights (suitable for solar power system) • TV, mobile charger (optional) Lights Charge Controller TV Batteries • Suitable home appliance • Lights, radio, B/W TV, cassette player, mobile charging which are suitable for solar energy. -Price：Depending on the generation capacity and home appliances. -Payments: Monthly Payments with Loan (2 or 3 years; 4-6% service charges)

  4. Rapid installation of SHS • Diffusion speed of SHS is quite high; only Grameen Shakti (NGO), a family of Grameen Bank Group, installed 317,591 units until 2009. (Grameen Shakti 2009) • In the overall Bangladesh, a total of 645,033 units have already been installed (up to August 2010). (IDCOL website) Yearwise installation of SHS

  5. Research Objective • Examines the multiple benefits of the adoption of Solar Home Systems (SHS) and discusses the dissemination potential for sustainable rural livelihoods in developing countries. • Identify the impact on the reduction in energy costs and compare purchasing costs. • Examine household lifestyle changes following the adoption of SHS. • Examine the potential demand for SHS with price reduction scenarios and to evaluate its future dissemination potential. • Significance of the Study • If households with SHS can gain substantial benefits, -->The micro-benefits will have a considerable impact on rural society through the increasing use of SHS. • Many case studies exist with the use of SHS, but the extensive analysis on the benefits of SHS (monetary benefits, lifestyle changes) including the potential benefits are limited.

  6. Survey Location • Survey time: August 2009 (pilot survey in March 2009) • Grameen Shakti is working to install SHS at the household level. • Sample size: • Households with SHS (SHS households):305 • Households without SHS (non-SHS households): 308 Socio-demographic information on the three surveyed districts Source: Bangladesh Bureau of Statistics (2006a, 2006b, 2007).

  7. 1. Benefits of reducing energy costs through installing SHS1.1. Reduction of kerosene consumption • Kerosene: Common fuel for rural households. Used for lighting and for the cooking stove in the kitchen. • Households with a heavy consumption of kerosene were successful in decreasing their dependence on kerosene after installing SHS. Change in kerosene consumption

  8. 1. Benefits of reducing energy costs through installing SHS1.2. Abolishment of rechargeable batteries • Rechargeable batteries: Popular electrical devises for watching (black and white) TV, recharging mobile phones, and operating other low-load electrical devices. • Usually very heavy to carry, incur transportation costs along with the costs of recharging. • Almost none of the households use rechargeable batteries now, they are free from these burdens. Change in the use of rechargeable batteries.

  9. 1. Benefits of reducing energy costs through installing SHS1.3. Impact of energy cost savings • To assess the monetary benefits of energy cost savings, compared the monthly expenditure on SHS and fuel cost reduction. -->The households with SHS need to pay the cost of SHS with monthly repayments; at the same time, they alleviate their expenditure because their energy costs will decrease.

  10. Comparison of the monthly payments on SHS and the saved amounts of energy • Monthly expenditure appears to be high, but after accounting for the fuel cost reduction, households can alleviate their burden of energy-related expenditures (20-30%).

  11. 2. Non-monetary lifestyle benefits2.1. Benefits of using electric lights • The benefits of the extension of study time for children, and working until late at night. • Children’s study time: until 8–9 pm--> until 10–11 pm better environment, without odour and harmful pollutants emitted by kerosene lamps. • Working time: until 8–10 pm--> until 10–12 pm Benefits of electric lighting for households (multiple responses)

  12. 2. Non-monetary lifestyle benefits2.2. Enabling the watching of TV • The number of SHS households that obtained a TV increased, with more than 75% of SHS households now having a TV. • Several benefits of adopting TV • More than 95% of households mention the benefits of access to entertainment programs • 57% of households refer to updated news. Benefits of TV for households (from current users, multiple responses). Change in TV Use

  13. 2. Non-monetary lifestyle benefits2.3. Enabling the recharging of mobile phones at home • Without SHS or rechargeable batteries  Mobile users are forced to recharge their mobile phones either at the market or at a neighbour’s or friend’s house that has access to electricity. • Mobile phones have rapidly diffused into rural households in rural Bangladesh. Number of mobile phones (per household)

  14. 2. Non-monetary lifestyle benefits2.3. Enabling the recharging of mobile phones at home • Having SHS allows households to recharge mobile phones at home, and therefore brings greater comfort for household members. • The number of households who charged at the marketplace in the category of SHS-households occupy the majority -->SHS creates additional opportunities for charging mobiles. Distance and the frequency of visits to a recharging place for mobile phones. (Values of distance and duration indicate one-way)

  15. 3. Future demands on SHS • Providing SHS at an affordable price is the key objective for expanding the benefits of SHS. • As the rural electrification ratio in Bangladesh is still only about 28% (IEA, 2009), there is a huge potential demand if SHS becomes more affordable. • Although there is large disparities in terms of household income (Non-SHS households; 1,456 USD/year, SHS households; 2,812 USD) -->The affordability of SHS is limited to the more affluent segments of the rural population. Distribution of annual household income among SHS and non-SHS households. The bar indicatesthe half of standard deviation. 1 USD is equivalent to 68.60 taka, as of 2007-08 (Bangladesh Bureau of Statistics, 2009). Source: Komatsu et al. (under review)

  16. The potential demands with the price reduction scenario • For analysing the potential demand in accordance with price reductions for SHS, the price-reduction scenario for non-SHS households are provided (10% discount, 30% discount) The list of offered prices for SHS

  17. Potential demand for SHS with the price difference scenario. • A fall in price encourages the potential demand for non-electrified households and the further diffusion of SHS for rural electrification. Potential demand for SHS with the price difference scenario. • Around 61% of the non-SHS households show their desire to purchase SHS if the prices decrease by 10%. • The price decrease of 30% encourages not only the decision on purchasing SHS but also a demand shift to larger packages.

  18. Summary and Conclusions • Effects of Energy Saving • Most households could be free from kerosene and rechargeable batteries -->contributed to reductions in fossil fuel consumption • Reduced costs of those energy sources accounted for 20–30 % of the monthly payments on SHS. • Effects of Lifestyle Change • Electric lamps provide a better quality of lighting, which not only improves the indoor air quality but also creates a better environment for studying and working at home. • Watching TV provides opportunities for enjoying entertainment programs and understanding updated news. • SHS makes mobile phone recharging possible at home for those who previously went outside the home for recharging. • Even though the SHS system is micro-utility, the benefits generated from SHS are enormous.

  19. Summary and Conclusions • Potential benefits of further dissemination of SHS • The dissemination of the benefits of SHS could be further accelerated through price reductions in installation • A 10% price reduction encouraged 61% of non-SHS households to consider adopting SHS. • Price reduction of 30% encouraged not only a decision on purchasing SHS but also a demand shift toward larger packages. • As one type of photovoltaic systems for households, potential demands of SHS will generate massive benefits for the non-users of SHS through the cost breakthrough. • One of effective solutions for electrifying rural households with renewable energy.

  20. References • Bangladesh Bureau of Statistics, 2006a. Population Census – 2001, Community Series, Zila: Manikganj. Bangladesh Bureau of Statistics, Dhaka. • Bangladesh Bureau of Statistics, 2006b. Population Census – 2001, Community Series, Zila: Comilla. Bangladesh Bureau of Statistics, Dhaka. • Bangladesh Bureau of Statistics, 2007. Population Census – 2001, Community Series, Zila: Kishoreganj. Bangladesh Bureau of Statistics, Dhaka. • Grameen Shakti. 2009b.Yearwise Installation of SHS. http://www.gshakti.org/ (August 6, 2010) • IDCOL. 2010. Renewable Energy Projects. http://www.idcol.org/ (October 28, 2010) • IEA, 2009. WEO-2009 new Electricity Access Database. http://www.worldenergyoutlook.org/database_electricity/electricity_access_database.htm (April 1, 2010).

  21. Acknowledgement • We express our gratitude to Grameen Shakti for their cooperation with our survey activities. • This research is supported by the Japan Securities Scholarship Foundation, Ministry of Education, Culture, Sports, Science and Technology Grant-in-Aid for Scientific Research (B), (Number: 22310030), Grant-in-Aid for Research Activity Start-up (Number: 21810019), and the Global Environment Research Fund “Establishing of Methodology to Evaluate Middle to Long Term Environmental Policy Options toward Asian Low-Carbon Society (S-6)” from the Ministry of Environment, Japan

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