Kapok Value

Solar Lanterns
Concept Note & Brief Proposal

Introduction
According to the Ministry of Power, Government of India there are 161,982,648 Un-Electrified
Households in India. Providing grid power to these remote and thinly populated communities
all across the country is a very challenging and difficult task. The solar lantern was initially used
as a replacement for candles, kerosene lamps and hurricane lights, commonly used by the
villagers. In addition, villagers require portable lights for working in the fields at night, for
watering/irrigation, harvesting, fishing at night and many such related activities. A portable
Solar Lantern is an ideal companion for him in all his activities.

Market feedback from the users of Solar Lanterns has provided new ideas for product
development and marketing to the manufacturers. The problem of high costs and lower
incentives from the Government has made it difficult for the manufacturers to push the
product into the desired segment. The end users who are in real need of the product cannot
afford the costs which are above Rs 1500. The product has very good potential if deployed
innovatively and also if some creative financing schemes are worked out.

Objective

To develop innovative plans for manufacturing, marketing and financing Solar Lanterns for large
scale deployment across the country. The product’s application as replacement for Kerosene
Lamp, Candles and Hurricane Lamps in Rural Areas and as Emergency Light in Urban Areas is
well established.

Product Models and Costs

There are several models under development and manufacturing. These depend upon the
illumination, standby power and the type of Solar Panels used for charging (Built-In or stand
alone). Therefore the price of the product ranges from as low as Rs 1200 to Rs 2500. Similar
products cost upwards of Rs 3500 in open market. With increase in demand and sales the costs
of the products would further come down, the target price being below Rs 1000.

Here the success would lie in;

1. Numbers
a. Large scale manufacturing
b. Large scale & Rapid sale

Satish Shukla Page 1

 Kapok Value

c. Large groups as initial targets for pushing the numbers

2. Low cost
a. Of Product
b. Of Marketing
c. Of Distribution
d. Of Sustenance
3. Varied applications
a. Rural
b. Urban
c. Military
d. Others

Potential Application

The potential application as discussed above is very vast. With the improvement in system and
design technology it is expected to have more models coming out in very attractive designs and
application. This would further boost up the market. There however would remain an ever
increasing need for carrying out reverse integration with low cost technologies to ensure that
the overall costs are kept well within the limits to make these products attractive and within
the reach of the needy consumers.

Impact on Environment

Each Solar Lantern if operated for 4 hours a day for 300 days helps save about 1200 hrs of
Kerosene Lamp usage in a year. An average Kerosene Lamp uses about 0.025 Litres Kerosene oil
per hour. Accordingly each such lamp would help save about 30 Litres of Kerosene in a year,
thereby reducing 73.5 Kilograms of CO₂ annually (emission intensity of 2.4 Kilograms of CO₂ per
litre of Kerosene). This does not include the saving on CO2 emission from Candles and other
such improvised lamps using other types of oils.

Micro-Financing Proposal

As discussed above we need to develop highly innovative plans to finance the Solar Lanterns. It
is proposed to initially provide funds for 25,000 units of Lanterns @ Rs 1000/Unit. The
economics of the project would work as under:

Expenditure

1. Cost Per Unit- Rs 1,000

2. Total amount required-Rs 25,000,000

Revenue

Satish Shukla Page 2

 Kapok Value

1. Sale of Lantern- Rs 1,500

a. Down Payment- Rs 500
b. Equated Weekly Installments- @ Rs 20
c. In 50 Weeks- Rs 1,000
2. Total Revenue after 1 Year- 25000 x 1500= Rs 37,500,000

Conclusion

Solar Lanterns have the potential to provide us the right platform to enter into the vast market
comprising of people below poverty line. This market is huge and if tapped properly, with
patience would yield the results much beyond expectations. While the primary objective would
be to light up homes which have no lights, the secondary objective of introducing this large
base to Micro-Financing is no less attractive and holds greater potential for development.

A group of Micro-Finance practitioners have estimated the annualized credit usage of all poor
families (rural and urban) at over Rs. 45,000 Crores, of which some 80% is met by informal
sources.*

* This figure has been extrapolated using the numbers of rural and urban poor households and their average
annual credit usage (Rs 6000 and Rs 9000 pa respectively) assessed through various micro studies.

Satish Shukla Page 3