Solar Home Systems: Costs, Financing, Business and Operation Models

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Specifications of costs, financial models and subsidies of Solar Home Systems can be found in the following parts.


This section provides an overview of costs of Solar Home Systems in different countries and projects. Prices for solar components are expected to come down fast within the next years.

Financing Models

Even if Solar home systems have been implemented both in donor supported programmes and projects as well as through market initiatives world-wide, in many cases a sustainable PV market has not developed. This is due to a number of factors including the high capital cost of PV and lack of financing resulting in a small market for any entrepreneur. Other factors include the lack of clear ownership of the technology, lack of maintenance and the ultimate failure of the PV system with consequent rejection of the technology. There are a number of innovative PV implementation models that have been developed and used in order to encourage the widespread affordability and acceptance of PV, which are presented in this article.

Grants and Subsidies

So far all SHS programmes have relied on subsidies of one sort or another. In doing so it is often argued that market imperfections (e.g. lack of private financial institutions in rural areas, lacking information on available SHS options) justify the subsidisation of SHS or related activities. The challenging task is then how to target and allocate those corrective subsidies. This difficult question is discussed within this article.


In 2000, about 1.3 million households in developing countries used solar home systems. This article names the largest markets and provides an analysis of the East African Market.

Further Information