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Monday, July 05, 2010

Solar Energy for the BoP: Katherine Lucey of Solar Sister

By Nilima Achwal

"Renewable energy HAS to be the solution for energy in development. If development happens using fossil fuels, the environmental impact will be devastating. The environment simply won't be able to stand it." -Katherine Lucey, founder of Solar Sister

As part of our segment on clean energy for the BoP, I had the unique opportunity to chat with Katherine Lucey, the founder of Solar Sister, a Uganda-based, up-and-coming social enterprise that is currently in its pilot phase.

Solar Sister focuses on employing and empowering local women to act as Avon-type, commissioned saleswomen for solar lanterns in their own villages. With the assistance of partner Mother's Union, a faith-based Ugandan NGO, Solar Sister identifies a woman or a group of women in each village to sell the solar lanterns under a micro-consignment model and trains them on lantern use. The enterprise uses lanterns by D.Light, Sun Night Solar, Pisat Solar, Barefoot Power, and other brands, priced $15-$30, usually equivalent to a 2 month kerosene supply for their households.

NextBillion: Why solar lanterns?

Lucey: I used to work as an investment banker, raising billions of dollars to build power plants-I realized that large-scale power could not reach the poor, since the investment and infrastructure costs would be too great. I wanted a simpler solution to the energy problem.

95% of people have no access to electricity in rural Uganda. Currently, the women in these villages spend about 30-40% of their income on kerosene for their lamps-it is a priority purchase in the household.  These lamps emit smoke, cause burns, are fire hazards, and need to be re-filled constantly.

Solar electrical installations transform the life of a village. They are safe and efficient. Children can study at night and villagers can gather together. It frees up the portion of a household's income that would have been used on kerosene to use on other things, like nutrition and studies.

NextBillion: Why women?

Lucey: When you bring a new technology to a village, all of the men gather around, and the women stand on the margins. They are left outside the circle. But ironically, lighting is part of domestic responsibilities-it is the women who gather the wood, buy and fill the kerosene, and light the kerosene lamps. Similarly, women are the main beneficiaries of solar lanterns-they no longer have to deal with indoor pollution and burns and can help their children with their homework after sunset. So we decided to design a program that would be deliberate about reaching the women. If women are not intentionally included in technology, then they are unintentionally excluded. We decided that an Avon woman-to-woman model would be not only empowering, but practical for seamlessly incorporating this technology into homes.

NextBillion: How can villagers afford the lanterns?

Lucey: The majority of the consumers are subsistence farmers with an erratic income that amounts to about $1.50/day. The lantern cost is about equivalent to 2 months' kerosene purchase, but all at once. Culturally, they buy everything daily, including cell phone minutes. However, there is no love for kerosene lanterns, so people go to lengths in order to afford the solar lanterns. There are two different methods we can use so villagers can afford the lanterns:

a. There already exist community savings programs in which women pool money. All the women will contribute a small amount every week. The first week, only one woman will buy a lantern with the pooled money. The next week, another woman will buy one. The first buyers are in a way buying on credit, while the last buyers have paid installments over the course of a few weeks. By the end, everyone owns a lantern.

b. We are looking at a rent-to-own plan in which a consumer would pay 5,000 shillings ($2.20) per week to rent a lantern. After 8 weeks, it would be hers. In this way, we would align ourselves with their consumption habits, though it would take a great deal of trust between the Solar Sister (village entrepreneur) and the end consumer.

NextBillion: Why did you choose a micro-consignment model?

Lucey: In a micro-consignment scheme, as opposed to micro-franchise scheme, the entrepreneur (or group) pays for the inventory after she sells it, as opposed to before. Instead of putting our entrepreneurs at more risk by forcing them to take out micro-loans to finance their inventory costs, this scheme provides our entrepreneurs with some breathing room to get their business on its feet. However, this would not work without our vital partnership with the Mother's Union, who has identified trustworthy entrepreneurs and self-help groups.

NextBillion: What are some challenges you've faced?

Lucey: Creating systems and processes that will allow us to scale while still maintaining our sensitivity to working with the women in the way that they want. For example, some villages have very community-based cultures that do not want to single out a woman to be the Solar Sister. In those cases, we have to rely on selling lanterns to groups of women who receive the commission as a discount on their own lanterns.

NextBillion: What's your vision for the future?

Lucey: I see a tremendous potential for this enterprise to scale, and our goal is to be 100% self-funding, with any profits going back into Solar Sister in the form of community-benefiting solar installations or business trainings for the top-selling entrepreneurs. Also, eventually we could implement an SMS-based platform for data sharing, where an entrepreneur can text her inventory and get paid through text message, as mobile banking fees decrease in Africa. This would be ideal, since the women don't do a lot of record-keeping but are very comfortable sending text messages.

NextBillion: Thanks for your insights on solar lantern distribution in Uganda and good luck!

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