Milan, September 7, 2007 — IFC,
a member of the World Bank Group, today presents its lessons learned from
investing in solar energy in emerging markets for more than a decade, at
the 22nd European Solar PV Energy Conference. The study, entitled
“Selling Solar,” finds that, to be successful, investments in solar photovoltaic
technologies must acknowledge different market segments and adapt products
and financing accordingly. It also finds that most solar PV programs require
subsidies to be viable. The study explains how IFC is moving toward supporting
programs that deploy a mix of technologies, rather than solar PV alone.
IFC is committed to finding market-based
solutions for rural electrification in emerging markets. In the mid-1990s,
IFC initiated several solar PV activities, in partnership with other investors
and donors including the Global Environment Facility. These efforts did
not overcome all the complexities of the market. They provided valuable
lessons of experience and case studies, which IFC has compiled in the publication.
Rachel Kyte, IFC Director for Environment
and Social Development, said, “We hope these lessons will be useful to
other investors looking to explore the nascent PV market in the developing
world. We think that solar PV can make a significant contribution to addressing
rural electrification issues, and that we can develop sustainable business
models. The World Bank Group is the largest financier of solar PV businesses
in the developing world. Supporting solar PV and renewable energy applications
is an important component of our work to combat climate change and ensure
sustainable energy access for the poor.”
The study encourages PV companies to
acknowledge the different segments in the market. For example, low-income
consumers are often looking for a system that supports a single light source.
Higher-income consumers, however, are probably connected to the power grid
and looking for larger systems to ensure an uninterrupted power supply
The study recognizes that without some
level of subsidy, solar PV in developing countries is often too expensive
for the average rural consumer. While prices were forecasted to decrease
between 2004 and 2006, they actually increased. Alternatives to solar,
such as grid extension, often benefit from subsidization and political
The study notes that private equity
is not the most appropriate mechanism for financing solar PV activities
in the developing world. Returns on such investments are nonexistent, so
flexibility in investment offerings is necessary.
While solar PV is a viable technical
solution, it is not the only or preferred one, the study concludes. IFC
is moving toward a broad approach to market-based solutions to rural electrification
that supports a variety of technologies, including low-power lighting devices
and distributed power generation. IFC is working on a number of market
acceleration initiatives, including “Lighting Africa,” which is looking
at affordable off-grid lighting to replace fuel-based lamps.
“Selling Solar” is available on IFC’s
Web site at: http://www.ifc.org/enviropublications.
IFC, a member of the World Bank Group,
fosters sustainable economic growth in developing countries by financing
private sector investment, mobilizing private capital in local and international
financial markets, and providing advisory and risk mitigation services
to businesses and governments. IFC’s vision is that poor people have the
opportunity to escape poverty and improve their lives. In FY07, IFC committed
$8.2 billion and mobilized an additional $3.9 billion through loan participations
and structured finance for 299 investments in 69 developing countries.
IFC also provided advisory services in 97 countries. For more information,