Solar Home System (SHS) Costs

Compariosn of Costs and Subsidies of SHS in different programmes and projects

Country Example	Model	Market Costs in € per SHS	Costumer Price in €	Share of direkt Subsidies1
EnDev Nicaragua	Cash Sales	600 (75-85 Wp)	220-280	54-63%
EnDev Honduras	Two hand	576 (54 Wp)	231-301	60%
EnDev Bangladesh	One hand	341 (50 Wp)	290	15%
EnDev Bangladesh II	One hand	142-149 (21 Wp)	98-115	19-34%
EnDev Uganda	Cash Sales	420 (50 Wp)	420	0%2
EnDev Senegal	Concession	498 (50 Wp)	30 connection, 6 per month	70%
GTZ Tansania	Cash Sales	200 (14 Wp)	200	0%
Roshan Pakistan	Concession	?? (40 Wp)	4,10 connection, 1,76 per month	100%
Solarstiftung Äthiopien	Service NGO	200 (10 Wp)	connection free, 0,17 per month	100%
Sunlabob Laos	Service RESCO	?? (20 Wp)	?? connection, 2,5 per month	0%3
Sri Lanka RERED	Two hand	372-437 (?30? Wp)	310-375	14-17%

1: of direct costs for the system and for installation, without O&M.
2: for private costumers, social infrastracture is subsidised with up to  85% of costs.
3: but refinancing loans at discounted rates

For an evaluation of these economic data, information on the quallity and sustainability of the SHS, as well as on O&M and services has to be collected. In addition, it has to be checked to what extent the target group of the poorer rural population could be reached within the different projects.

Source: Translated from the study on subsidies conducted by SiNERGi for EnDev (in German).

The Solar Energy Foundation, Ethiopia 

The Solar Energy Foundation (Stiftung Solarenergie) has developed a small solar-home-system (SHS) with a 10 W_p PV module for rural electrification in Ethiopia.

The basic ‘SunTransfer 10’ system developed by the Solar Energy Foundation uses a 10 W_p SunTransfer PV module, and an 18 Ah maintenance-free gel type lead-acid battery. This combination is designed to provide light for a minimum of four hours per day, with the possibility of connecting a radio or music system for short periods as well. The battery is expected to last for five years if used carefully. The PV module and charge controller are expected to last more than 10 years.

The current system has up to four light-emitting-diode (LED) lamps, although some earlier units used compact fluorescent lamps. A much brighter LED (80 lumens rather than 25) has recently become available, and this will be used in future systems.

The innovative charge controller was designed to allow the systems to be disabled remotely by a local technician, as a last resort if the user does not pay the rental costs. The battery and charge controller are housed in a sealed box, which needs a special tool to open it.

Each SHS costs 3000 ETB (about 167 €, September 2009), including manufacturing and installation, divided approximately:

10 Wp PV module	15%	450 ETB	25 €
18 Ah gel-type lead-acid battery	20%	600 ETB	33 €
Charge controller with payment function and data logger	25%	750 ETB	42 €
Lamps	15%	450 ETB	25 €
Cable, box, plugs, user book, fixings, manufacturing, installation	25%	750 ETB	42 €

The capital cost of the systems installed in Rema and its neighbouring village of Rema ena Dire were financed by donor funds. However, households must pay a monthly fee of between 10 and 14 ETB (0,66 € and 0,78 €, September, 2009) depending on the number of lamps in their system. The charge is divided into two parts: a basic fee which is used to pay the local technicians for regular maintenance work, and a further fee to pay for replacement parts such as the battery and LEDs.

In future villages, owners will also pay for the capital cost of the system, either directly or through a loan over one to three years. A revolving capital fund is being set up to cover the purchase of further SHS units and allow the programme to become self supporting. Loan repayments will be set at about 80 to 150 ETB (4,45 to 8,34 €, September 2009) per month. This charge is similar to the energy costs which are avoided by having an SHS. Surveys by the Foundation suggest that families in rural areas of Ethiopia spend about 60 to 90 ETB (3,33 to 5,01 €, September, 2009) on kerosene, and 20 to 80 ETB (1,11 to 4,45 €, September, 2009) on dry cell batteries, each month.

Source: 2009 Ashden Awards case study: The Solar Energy Foundation.

Cost analysis

Assuming that the solar panel lasts 10 years, the battery five years and all the lamps are changed after five years as well, the total system costs about 34 ETB (1,89 €) per month over a period of ten years. Regular maintenance costs and possible change of cables and fitting are not considered in this example, but compared to monthly expenses on kerosene and dry cell batteries, the price is quite low. Even if the battery was changed three times within ten years, the monthly cost would only be 39 ETB (2,17 €, September, 2009), still less than the amount usually spent on kerosene.

This is of course no detailed analysis. In reality, other influencing factors have to be considered: market prices change, the LED lights might be changed more often or even not be change at all, etc. Regular maintenance costs and possible change of cables and fitting have to be considered as well.

Even so it can be seen that SHS have the potential to be a competitive alternative to kerosene and dry cell batteries. However, it has to be kept in mind that SHS owners still spend money on kerosene and dry cell batteries, so that monthly energy expenditures might even rise.

Down payment for the SHS installation and monthly loan repayment might be an obstacle for poorer households, that could prefer to buy batteries or kerosene on an irregular basis, whenever their financial situation allows it.

SHS in Rural Bangladesh

In his diploma thesis "Electricity and Sustainable Development: Impacts of Solar Home Systems in Rural Bangladesh" Michael Blunck shows that the expenditures on a SHS for lighting purposes exceed those on kerosene even over a period of twenty years.

The initial installments costs and accumumaltive monthly loan repayments are usually far higher than expenses on kerosene for lamps. The household survey conducted in 2006 revealed that in most cases overall expenses on the SHS would not amortise over a period of twenty years. Households without a SHS would have average accumulative lighting expenditures of 29,040 BDT whereas households with a SHS would have expenditures of 50,670 BDT.

See: Blunck, Michael (2007): Electricity and Sustainable Development: Impacts of Solar Home Systems in Rural Bangladesh, Diploma Thesis, Mainz, pp. 89-91.

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