Friday, September 23, 2011

Lighting up lives


Harish Hande is one of the recipients of this years' Magsasay Award. His organization is working on providing sustainable energy solutions to the underprivileged sections of the society. "We started with a concept to destroy three myths: that the poor cannot afford technologies, the poor cannot maintain technologies and thirdly, that you can't start a commercial venture while trying to meet social objectives," says Hande. Excerpts:

First of all, congratulations to you. You have been providing low-cost energy solutions to the poor for the last 18 years. Could you please tell us about your work?
We have been providing sustainable energy solutions, basically solar power, to rural villages, individual households, street vendors, schools. Most of our work is in Karnataka but a few years ago, we started work in Gujarat too. Our primary focus is the individual household. We started with a concept to destroy three myths: that the poor cannot afford technologies, the poor cannot maintain technologies and thirdly, that you can't start a commercial venture while trying to meet social objectives.

That's very interesting. But how did this idea come into your mind?
After completing my degree in IIT, I went to the US for a Masters and PhD. I had a chance to visit the Dominican Republic in early 1991 where I met Richard Hansen and saw what he had done with very small systems for three or four very poor households. I thought the idea was applicable to India too. So I returned home, took my thesis and threw it into the river. I began to look at the socio-economics of alternative energy. I started my PhD thesis on rural electrification in India and whether solar energy made sense. I was hesitant to come to India, initially because I had the so-called IIT "chhaap". But if I ask a rickshawwallah about his issues, he needs to feel that I am another rickshaw driver otherwise I will never get the right answer from him. The same way, if I talk to villagers, they have to feel that I am another villager if I need to create any sort of organisation with them. I chose to go to Sri Lanka instead where I did not know the language. Once you don't know the language, people treat you at the same level--sign language breaks all education barriers in life. So I went to north Sri Lanka, Anuradhapura. Those were exciting times because the LTTE was close by--this was in 1992. I had a friend who was doing a project on lighting used to scare away elephants. We put up solar lights in the field so that the elephants didn't attack the sugarcane crops. Then I came back to India, to Karnataka. I got into the politics of the state, into the dynamics of the village. I was doing my PhD thesis.

You said you are providing sustainable energy solution to the poor. How about the response?
There was this one incident that really moved me when I was leaving a village: a 65-year old lady said to me, "Can you provide me light before I die?" We're talking of 1992--after more than 50 years of Independence, half of India's population was without electricity. Even today, 500 million people live without electricity and we're talking of 8 to 9 per cent growth. It doesn't make sense. The lady had not seen a light bulb in her life and she was willing to pay for it. We have assumed that the poor can't pay, that their affordability is different, so we need to make cheaper products. That's not true--it's a combination of technology, finance, market forces. Everything falls into place when you are delivering a right market product to the end user. With Rs 1,000 we started this organisation in 1993. Today we have around 170 employees and 120,000 households where we provide electricity to individuals--all of them pay for it without subsidies. We have clients who earn Rs 1,600 a month. They pay for solar because the average household pays Rs 200 for kerosene and candles a month. If you create finances to equal that amount, you can provide them a Rs 10,000 product-- provided they get financing. That Rs 200 they are spending on kerosene and candles in fact goes towards an instalment for our product. Rather than looking at subsiding that Rs 10,000 we need to look at how to push financial inclusiveness in our country. Second, everybody assumes that everybody has a monthly pay cheque. The best financial lesson I learnt was in 1998 when a pani-puri wala said, "Harish bhai, Rs 300 a month is expensive but Rs 10 a day is fine." How do you create mechanisms to collect Rs 10 on a daily basis? On an average, a pani puri vendor or a vegetable vendor in Delhi spends Rs 450 on kerosene a month. You and I don't pay Rs 450 a month for a kerosene light, we don't even pay that much for a bulb for four hours. Can you imagine having five lights in the house and paying Rs 2,000? No. The poorer you are in society, the energy costs actually go up. But they need two lights or four lights for two hours and another three lights for four hours. Today we are actually ruining the choices for the poor. We are not sitting with them and looking at what they need. We're pushing shampoos and sachets etc, without looking at what they need. We clearly defined ourselves to be in the space of need, not in the space of want. One man told he wanted a three-light system and we knew he couldn't afford a three-light system. Our technician went to his house, cut open a part of the roof and put in one light. He needed light in three rooms; he did not need three lights. Thus, one light lit up three rooms. Suddenly, it became affordable, one-third the price. Within six months, 100 houses near him bought solar. The financing was created through banks. We partner with nine banks, mostly the regional rural banks. We have 28 centres in Karnataka. Our mantra is based on how far a technician can travel on a motorbike in two hours--that's the locality of our service centre. We do not sell beyond that service centre: the first question people ask is, 'You say solar is maintenance free, but where is your service centre?'
What is the economic model that works for you and your customers?
The average cost per light is approximately Rs 4,000. So people buy either a one-light system, a 2-light, 3-light or 4-light system. Typically, they receive financing from a bank and that is for between 3-5 years. Interest rates are anywhere between 12-14 per cent. But the payment mechanisms would differ depending on the work: a schoolteacher, a postmaster, a rural doctor would pay in monthly installments. The paddy farmer would pay once a year, a peanut farmer twice a year, etc. Since the rural banking system is already mature, they have the financial products to match the cash-hold of these farmers. But there's also the daily income earner. We had to innovate--90 per cent of our work goes into financial innovation and then technology innovation.

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