Grameen Shakti: A Vanguard Model for Rural Clean Energy

Nancy Wimmer
Tuesday, March 19, 2013
Grameen Shakti has helped Kohinur become an energy entrepreneur
Grameen Shakti has helped Kohinur become an energy entrepreneur
Photo by Nancy Wimmer

In one of the poorest countries on the planet a renewable energy service company is installing one thousand solar home systems a day. Not in its capital or busy urban centers, but where 80 percent of the population lives - in rural Bangladesh. The name of the company, Grameen Shakti, literally translates as rural energy. In November 2012 it installed a total of one million solar systems and now has expansion plans to install a second million systems by 2016. Shakti is succeeding in a tough rural market where business as usual has failed. It's a success story we should understand and replicate.

As in other developing countries, serving a rural clientele means doing business with customers with low and unsteady incomes.They often lack bank accounts, telephones and insurance against illness, floods and storms. Bangladesh lies in the delta of three giant rivers: the Brahmaputra, the Ganges and the Meghna.  The delta is one of the largest in the world because almost all water running off the highest mountain range on earth has to pass through it. Without the Himalayas, Bangladesh wouldn’t exist.  As a result, its villages are not houses clustered around a center like a market, but often scattered homesteads on elevated plots of land that become islands in the rainy season, when half the country is flooded. Although solar prices are coming down and kerosene prices are going up, income is low and variable in these areas. In 1996 a solar system could cost the price of 3-6 months food for a family." How then does Shakti market expensive solar systems to a rural clientele?

Shakti solved part of the problem by tailoring a solar system to exactly what people like Mr. Majid, a traveling food vendor, needed: a 25W solar system to light his grocery cart and power his cassette player. They then coupled tailored solutions with microfinance to provide him with a loan he could afford to repay, because he doubled his monthly income by working after dusk and attracting more customers with popular Bangla music.

But the problems don’t stop here when working on the delta.

Mr. Majid's solar system has made his food cart more lucrative.
Mr. Majid's solar system has made his food cart more lucrative.
Photo by Nancy Wimmer

Rural customers are hard to reach. In areas called Hoar, where the land lies lower than the plains, broad swaths of land can turn into huge lakes in the wet season, forcing villagers to travel by boat seven months of the year. Serving village customers on the delta means traveling bumpy mud paths and crossing rivers – on foot, by bike, boat and rickshaw. It can take hours during the rainy season to reach a few customers.

Shakti meets this challenge by creating rural supply chains and after-sales service. Its engineers and technicians live, work and are trained on the job in the villages. They become part of the community, keep in close contact with their customers, and make sure the solar systems are in good repair and running. If there is a problem, Shakti is on site to solve it – even in times of disaster.

In the aftermath of Cyclone Sidr in 2007, staff members from the local Shakti branch were out doing repairs within hours in areas where it took days and weeks for emergency teams to reach. For Shakti, all business is rural. Its field managers run 1,500 branch offices in every district in Bangladesh. They guarantee full service – from installation, maintenance, repair and financing to customer care and training.

This focus on rural service began when Grameen Shakti was founded in 1996. It sent young, motivated engineers into the hinterland to set up its first branches. They won the trust of the villagers, trained village technicians, managed all financing, solar installations and maintenance. This laid the groundwork for Shakti's quality service and steady growth, but it took years to develop.

In 2005 Shakti set up its first village technology centers to produce and repair solar accessories. In this way production moved from the capital to the villages and solved problems of cost, logistics and rapid growth in a highly decentralized company. By 2012, Shakti had installed 45 village centers, all managed by women engineers who – like their male colleagues – live, work and train in rural communities. Importantly, these technology centers function as incubators for a further innovation: the village energy entrepreneur.

Kohinur, for example, was trained at a village technology center to become a solar entrepreneur. The self-employed 19-year-old earns an income producing and repairing solar accessories, and receives ongoing support from Shakti for her business. Neighbors now bring Kohinur solar lamps for minor repairs instead of contacting the Shakti branch. The technology center engineers supervise Kohinur's work and do quality control.

Kohinur had no vocational training and no source of income, but is now able to contribute on average Taka 5,000 per month to her family's income. This is as much as her father earns delivering fresh fish to the shipping port in Khulna and a substantial increase in monthly income for the family.  

Managing growth
Today, eight million villagers benefit from Shakti’s products and rural services – not only solar home systems, but also biogas plants and six hundred thousand clean energy-efficient cooking stoves.  Shakti continues to pursue growth in a labor-intensive business, which is a challenge for a full-service company.  For example, if one technician can maintain 100 solar systems, 10,000 technicians are needed to service a million systems. Should Shakti reach its goal of two million installed systems by 2016 and aim for millions more in future, where will all the technicians come from to install and maintain them?

Grameen Shakti installation of solar home systems
Grameen Shakti installation of solar home systems

Kohinur is still one of just a few hundred village energy entrepreneurs, but soon she will be one of thousands. This well-trained village workforce is needed to achieve Shakti’s ambitious plans for growth as demand for light and electricity increases. On the other hand, Kohinur and her many colleagues can rely on Shakti as a strong partner for education and training, for supplies and technical expertise, for funding and quality control. They benefit from Shakti’s trusted brand name. A signboard in front of Kohinur’s house tells the village that she is a Solar Technician Certified by Grameen Shakti.

There are no silver bullets for solving the many problems facing traditional rural societies, but entrepreneurial companies like Shakti are proving we can do far better than business as usual. Shakti succeeds in such a tough business because it has found a way to provide affordable services and financing to a million village customers with microcredit. It is a 100 percent rural company, which means all 11,500 Shakti engineers and technicians learn the business from scratch by providing service to villages they call home.

Shakti’s engineers work in widely distributed branches and need to be self-reliant. The company started small, learned from its mistakes, adapted and steadily improved. As a result, Shakti was able to break-even in only four years, launch a production center, expand its business and reach scale.

Shakti’s business model was made in Bangladesh and reflects rural reality. It's more about people and the will to innovate change than technology. It has stood the test of time, proving that business model innovation geared to a rural economy can succeed. Above all, it highlights the possibilities in the untapped market of a billion rural customers in developing countries who are deprived of electricity.

More information: 
  • Nancy Wimmer is the Director of microSOLAR and author of "Green Energy for a Billion Poor: How Grameen Shakti Created a Winning Model for Social Business" (2012). The book describes in detail how Shakti’s model works.