Solar electricity:Beating the need for deep pockets


3 kW residential rooftop solar installation

By Chandre Dharmawardana,
Ottawa, Canada.

Everyone howled in protest when the previous government raised the electricity tariff steeply (except for consumption below 180 units a month) in May 2013. However, I felt that it was (an unwitting but) truly salutatory step. It makes the competition between solar energy and fossil-fuel energy more favourable to solar energy (see the Island article:

The Sunday Island, 25 May 2015 carries a very informative article by Prof. David. This gives an excellent analysis of how even a three-KW installation on a roof top can be profitable to a Sri Lankan house owner and also to the country. He estimates that this may cost a house owner 1.3 million rupees, and considers that sum to be a major stumbling block to the rapid deployment of solar electricity by Sri Lankans. Prof. David's discussion of viable business models to overcome the stumbling block needs to be pursued further because there are easy solutions which are almost always neglected by the existing business, social and banking structures prevalent in many developing countries.

The main business model mentioned by Dr. David is the zero-$ down-payment option used by some vendors in the USA who require the house-holder to enter into a 20-year agreement. The cost of the installation gets paid for by the excess electricity generated by the roof-top solar installation. He laments that no local business offers this option, available in many parts of the world.

However, we may ask the question, shouldn't the Ceylon Electricity Board (CEB) step forward to do this? CEB need not get into the business of importing and installing solar panels. That can be left to the private sector. The CBE can be the middleman who "rents" the roof of the subscriber at no cost to the subscriber (zero-Rupee option), while paying the vendor up-front for the solar installation on the rented roof space. The CEB can force an excellent price because the CEB will be ordering large-volume deals to cover whole streets of houses. That is, the Rs. 1.3 million outlay per house may be enough to provide even a 4 to 5 KW installation, giving more excess power for the same buck.

Some of the major banks and lending institutions can offer mortgages or mortgage extensions on the houses to cover the cost of installation of the new solar panels. A twenty-year mortgage using the house as collateral is already a well understood financial instrument and banks can move into it right away. The government can give the lead by installing solar panels on its many buildings like schools, offices, hospitals and airports.

Prof. David had mentioned examples from California. Municipalities in Texas and Arizona have acted as the middleman financing the deal, and they have sweetened the deal by removing city taxes for a period based on the amount needed to amortize the loans. In addition, citizens cooperatives have sprung up in some neighborhoods where the citizens themselves have pooled their money and resources to make it happen.

The 1.3 million capital investment per house mentioned by Prof. Kumar is surely a small amount given the price of a house in Greater Colombo. If architects were to automatically incorporate solar electricity into the house designs, the cost gets incorporated into the price of the home and into its normal mortgage. It is not only the lights, cooking and the fridge mentioned by Prof. David that become a normal part of a house with cheap electricity. Air conditioning and climate control are an even more important advantage, keeping out mosquitoes, humidity, insects and pests. The consequent improvement in health and well-being is of great importance in raising productivity and diminishing medical costs.

The process of installing solar power and maintaining the installations will create many jobs for many decades to come.

So, all that is needed is for the financial people to get involved as middlemen working between the house-owner and the vendors of solar installations.

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