Adoption of solar home lighting systems in India: What might we learn from Karnataka?

Karnataka has been among the most successful markets for solar lighting systems (SLS) among Indian states. In order to understand the dynamics of systems adoption and operation, that have fostered market based adoption of solar lighting, we interviewed rural households from six districts that had purchased solar lighting systems using loans at market rates, the rural banks that provided loans and the solar firms that marketed the technology. We found that a large proportion of households in our sample were connected to the grid but chose to install solar lighting because they considered the power supply from the grid to be unreliable. Households in our sample reported savings on electricity costs and reduced kerosene usage for lighting. In addition to providing credit, banks also play a key role in ensuring good service and maintenance; the viability of the SLS market is thus critically dependent on the role that the banks play as intermediaries between consumers and solar firms in rural areas. Government programs should be carefully designed to match the incentives of firms, banks and consumers if the successes of the 'Karnataka model' are to be repeated and amplified. -- Highlights: •Solar lighting system (SLS) adoption in Karnataka largely through commercial sales. •Most surveyed households adopted SLS due to grid supply unreliability. •Rural banks critical in introducing consumers to firms and financing systems. •Banks also play support role in ensuring after-sales maintenance. •Institutional structure may limit choice of firms and products