Determinants of the success and sustainability of Bangladesh’s SHS program

Large numbers of households in rural areas in Bangladesh have no access to electricity. Providing these households with electricity by extending the country’s already overloaded grids is neither an economically nor a technically feasible option. Rural electrification strategies therefore, by necessity, need to rely on stand-alone generation systems. One of these is solar home systems (SHS) and the SHS program developed and implemented in Bangladesh has been highly successful, with very large numbers of rural households now participating in the program. What makes the program’s success most remarkable is the fact that it targets households with very low incomes using a purely market-based approach. Those participating in the program pay the full, unsubsidised cost of their SHS using a micro-credit loan facility and are charged high interest rates. Understanding the reasons behind the success of the Bangladeshi program therefore holds potentially valuable lessons for SHS programs being implemented in other developing countries. A comprehensive qualitative and quantitative survey was used to find those factors perceived by program stakeholders as being most critical to the program’s success to date and the factors considered most likely to impact on its future success. The two primary reasons for the program’s success were perceived to be its strong focus on meeting householders’ needs and on its ability to make the solar home systems as affordable as possible. The continued success of the program was considered likely to be determined by a variety of factors, including the ability of program implementers to control increases in the cost of SHS, to maintain the quality of SHS and components and to increase program loan recovery rates, the degree to which the program is integrated into national, energy policy, and the degree to which local banks become involved in the program.