Solar Revolving Fund: A Financing Strategy for Solar Energy Technologies in Namibia

Overview

The Solar Revolving Fund (SRF) is a financing mechanism for solar energy technologies administered by the Ministry of Mining and Energy (MME), Republic of Namibia. SRF is part of the large government program, Off-grid Energisation Master Plan (OGEMP). The scheme started in 1996 under the Home Power Project with an aim to address barriers to rural electrification through helping rural communities to have access to credit finance to make off-grid energy solutions affordable. Though currently the management of SRF is under the Ministry of Mining and Energy, it was previously administered since its inception by private companies (on behalf of the MME) until 2010. Initially the fund considered electrification by using solar home systems and motivated by the fact that the most crucial barriers to the wide spread of solar photovoltaic technologies as a solution to rural electrification include: high upfront costs for solar products, dispersed population and large distances limiting grid electrification. The fund is now expanded to include other solar technologies: Photo-voltaic Pumps (PVP) and Solar Water Heaters (SWH). The funds provided under SRF are in form of loans for the three renewable energy technologies i.e. solar home systems (SHS), Solar water heaters (SWH) and Solar water pumping (PVP). The funding limits for the technologies are summarised as follows:

Technology	Loanlimit, N$*	Comment
Solar Home System (SHS)	N$6,000 – N$35,000	The main focus technology for SRF
PhotovoltaicPumping (PVP)	upto N$50,000	limited no. of systems/year
Solar waterheaters (SWH)	upto N$30,000	limited no. of systems/year

• EURO 1.00 = N$ 12

Funds are provided to both individuals (end users) and sellers or energy shops (to stock up solar energy technologies). The scheme is operated on the ownership model whereby the end user purchases any renewable energy technology (among those funded) by making use of the fund and thus becomes the owner of the system. The owner has full responsibility for the system ownership and its maintenance. The loan secured from the SRF is characterised by: an initial minimum deposit of 5%, annual interest rate of 5%, expected payback period of 5 year, and eligibility for the loan is only for Namibians in the age bracket of 22 years and 55 years. The systems are insured whereby the insurance covers only natural disasters.

The application process for the loan takes up to 4 weeks. The administration process for individual loan scheme includes:

• Loan applicant fills the application form which is accompanied by a quotation from registered supplier/installer

• The application is screened at the Secretariat (located at the MME headquarters) and then verified for further submission to the Approval Committee.

• The Approval Committee has experts whose main responsibility is to scrutinise the technical, financial and eligibility aspects

• The approved application is sent back to the Secretariat for administrative work

• The applicant is communicated on the status of his/her application and for the approved application the applicant is advised to deposit 5%

• Purchase order prepared and then finally installation

To ensure the reliability and quality of services the selected installer is required to prepare and submit the after Sales Services program for his systems. The record keeping is emphasised to all stakeholders these include system owners, installers and Secretariat.

Challenges

• Low loan recovery rate and willingness to repay the loan.

• Limited budget for the program.

• Still high investment costs for Renewable Energy Technologies

• Maintenance of installed solar systems in off-grid areas

• Lack of test facilities for the verification and registration of new products market

• Lack of competent experts (installers and maintenance) for certain regions in the country

Further information

Contact the author ***** for more information.