Solar photovoltaics in Developing countries : expanding the private market through multi- and bi-lateral programs

Abstract

International funder organizations are expressing a renewed interest in designing electrification projects for developing countries that utilize renewable energy technologies. These new projects are designed to overcome obstacles that inhibited success of the international sponsored aid programs of the 1980's and 1990's. The most notable alteration is to focus on developing the private sector by providing loans to retailers, credit to consumers, and training to retailers and banks in order to encourage their participation. This paper assesses the effectiveness of the current generation of renewable energy programs, developed by the World Bank Group, the US Agency for International Development, and the US Department of Energy, in developing a private market for solar photovoltaics in developing countries. It identifies eight barriers to market development that discourage retailers, consumers, and financial institutions from participating in the market. The new programs will collectively contribute hundreds of millions of dollars to the market. This will help to overcome several of the barriers, however there are challenges that will persist into the future. These include the degree to which the national government will influence market development, the extent to which financial institutions can assess the viability of the market and choose to participate by issuing loans, and the ability for retailers to overcome obstacles that inhibit sound business practice. One way to measure the success of these programs is by how much they impact the size of the market, as well as the extent to which they can lower the cost of solar photovoltaic systems.