Shining examples: solar financing is setting up shop, and for the 2 billion people who still have no electricity, help may be on the way.

• Author: Flavin, Christopher

Until May 1996, the Ramji family of Andhra Pradesh, India had a problem that is all too common in the developing world - they lacked reliable electricity to light their home. Each month they used about 10 liters of kerosene for lamps that shed only dim light and coated their walls with soot. When they tried to obtain power by illegally stringing a cable from a power line in the nearby town of Nizamabad, they discovered that the state electricity system was prone to frequent black-outs; the Ramjis' "unofficial" electricity was hardly better than no electricity at all.

In the summer of 1996, one of the Ramji daughters was to be married, and her father wanted to ensure that the wedding festivities would be lit. As Mr. Ramji asked around, he learned of a possible replacement for his sooty lamps - a small array of photovoltaic (PV) cells, the wafer-thin silicon chips that directly convert sunlight into electricity. A local solar-service company called SELCO was beginning to market such systems, but they were dauntingly expensive: about $540 for what the Ramjis needed, well beyond the reach of their modest income from selling the sugarcane, corn, and vegetables they raised on their six hectares of land.

In order to afford solar electricity, the Ramjis needed something that is readily available to middle class families in industrial countries who are considering major purchases such as homes or automobiles: a loan that would allow them to spread the cost over a period of months or years rather than having to pay the entire bill up front.

Fortunately, India's Syndicate Bank had begun offering credit for solar systems just a few months earlier. The Ramjis got a loan that let them put $54 down and pay $11 per month over a period of 48 months. They were skeptical about how the solar system would work, but as Mr. Ramji told Damian Miller, a Cambridge University PhD candidate studying the commercialization of solar systems in developing countries, if the system didn't work he could stop paying his monthly installments and dump the panel at the bank's branch office, a kilometer away. He decided to buy.

Within days, the Ramjis had become mavericks in their tiny tribal hamlet of Tamda. Local electricians mounted a shiny silicon panel on a pole outside their front door, pointed it toward the sun, then ran copper wires to a battery located just inside the home. Connected to the battery were compact fluorescent lightbulbs that would provide light for the daughter's wedding as well as ongoing illumination for their three rooms.

The down payment and monthly installments on the Ramjis' solar system were well above their earlier expenditures on kerosene, but the high quality light and independence were worth it. The wedding proved a success, and soon, neighbors were asking how they might acquire a similar system. A pleased Mr. Ramji told Miller, "With solar we need not depend on others. We have our own power." Soon, he was planning the next step: "Now I want a TV."

Around the world, an estimated 400,000 families have installed solar home systems over the last decade, allowing children to read in the evening and providing parents with additional opportunities for supplemental income, such as sewing or weaving. But another 2 billion people - one-third of the world's population - still lack access to any electricity at all. The great majority of these people, like the Ramjis, could not afford to pay cash for a solar home system. If they are to get electricity anytime soon, they will need the same service that builders of massive coal and hydro plants have counted on for decades: affordable financing.

People Power

Since Thomas Edison started the world's first power company in Manhattan in 1882, thousands of cities have been connected to electric lines. These power "grids" link consumers to increasingly distant and progressively larger power plants - often smoke-emitting, coal-fired generators, or gigantic hydropower stations that harness the energy of falling water. Rural areas are generally the last to get electricity.

In recent decades, developing countries have joined the electrification bandwagon, as governments have sought to provide power for communications and education, as well as to boost the productivity of industry and agriculture. For politicians, providing electricity for voters is often seen as the surest route to re-election. As a result, an estimated 1.3 billion people have received power in the last 25 years. About 75 percent of China and 80 percent of Argentina, Colombia, and Brazil, for example, are now fully electrified, supplied with power for such amenities as refrigerators and washing machines, as well as lights, television, and radio.

Although billions of dollars have been spent on these efforts, with the support of the World Bank and other development assistance agencies, rural electrification has run out of steam in many countries. In Africa, there were 100 million more people without electricity in 1990 than there were two decades earlier, and in South Asia 140 million more.

Electrification has been slow in coming to many people for a number of reasons. Rural areas are always more expensive to serve than cities are. In the United States, it was only after the government established the Rural Electrification Administration in 1935 to provide low-cost financing for rural electric cooperatives that most farmers received power.

Many developing countries now have similar programs, but as the frontier of electrification has moved to increasingly remote and mountainous areas, the cost of hooking up new customers has grown exponentially. The World Bank estimates that in places like Western China, the Amazon or the Himalayan foothills, where the population density is low, the cost of hooking up new rural customers can be 70 cents per kilowatt-hour - seven times the rate in cities.

To make a bad situation worse, state-owned power systems have been badly mismanaged in many countries. With little incentive to be efficient, they have poorly maintained their power plants and lines and have looked the other way as potential customers steal electricity by surreptitiously tapping into nearby power lines. Graft and corruption in the state-owned power companies in developing countries have in many instances worsened the situation, leaving the national electricity systems all but bankrupt, and making blackouts increasingly common.

Sunlight to the Rescue

In India, the public power system is now so prone to blackouts that many urban factories and other businesses have begun at great cost setting up their own private systems as the only practical way to obtain reliable power - usually based on diesel engines that run on natural gas, propane, or fuel oil. Rural families like the Ramjis do not have access to these fuels. What they do have - sunlight - doesn't have to be delivered, and is always free. In most tropical countries, the energy contained in the sunlight that falls on a rooftop exceeds the electricity needed by the occupants within. The problem is how to harness it.

Ironically, the solution to the energy problems of the rural poor may lie in what is arguably the most sophisticated energy technology yet developed. Solar photovoltaic cells are semiconductor devices made of silicon - similar to but far less expensive than the chips used in computers - that convert the energy from sunlight directly into electricity, avoiding any need for the costly and environmentally compromising mechanical turbines and generators that provide most of the world's electricity today.

The precursors of the modern...