Authors:	Shanker, A; Bertarelli, L.; Collins, G.
Organization:	IED for Ademe (FRA), CIDA (CAN)
Reference:	IEA  PVPS T9-06:2003
Date of issue:	September 2003
Details:	30 pages: figures, graphs, tables; with references and appendices
Type:	Report IEA  PVPS Task 9
Download:	Open or download report as PDF document (1145 kB)
Abstract:	Institutional Framework & Financial Instruments Photovoltaic (PV) systems represent an interesting option for supplying electricity to dispersed rural communities. However, the emergence of PV as a technology has, in itself, not been enough to ensure its widespread diffusion amongst those who desire electricity. Whilst market forces and government programmes together have played their part in promoting its uptake to date, widespread opinion across a broad range of actors recognize a clear need to strengthen the institutional framework in support of the long term sustainable market development and deployment of PV services. This report aims to define the key components and mechanisms of just such a framework. The focus of this effort should be to develop the necessary market rules and incentives to ensure that the market develops in a self-sustaining fashion. This requires the adoption of a lifecycle approach and an emphasis on the provision of a sustainable (and quality) service. Attention, during the project initiation stage, on establishing a framework that ensures a continuous and reliable service provision over time is as an important a consideration as the initial installation of a rural electrification PV facility itself.
	Past PV projects where such equal emphasis has been lacking has invariably resulted in early system failure with inadequate provision for rectification. In such incidences, consumer disillusionment and negative press have been the natural consequence, to the detriment of the wider uptake of PV. Furthermore, the current trend is toward provision of energy services for rural development, particularly in the health, education and communication sectors. PV must clearly be viewed as one of the technical options for meeting the energy needs for development of these sectors in the rural milieu. This report therefore proposes a framework to ensure a healthier development of the PV market in rural communities by seeking to address at the institutional level: The role of regulation and the Public Authority. The positive role of the Regulator is significant yet requires further development in practice. How to create an enabling environment for the key roles of users or end end-user groups, the service provider, and the facilitating agents to act as mutually supportive agents. The issue of quality of PV service over time. Affordability of the service, financial sustainability and packaging of funding. and at the financial level : Financial services – in the case of a direct sales approach. Where PV is the most economically viable of all the options it often requires significantly less investment on a lifecycle basis but for the individual end-user the initial investment is still high in relation to income and income earning opportunities. Credit (end-user or dealer) and loan schemes remain a necessity. Investment subsidies for infrastructure development in rural areas. Throughout the world, rural electrification has been substantially subsidized, at least regarding investment costs. A share of the financial responsibility has to be born by the Governments themselves and the modalities through which the required funds will be raised, level of subsidies calculated and subsequently disbursed need to be specifically worked out. Support to private investment and development of private entrepreneurs. Risk analysis and perception is clearly a key component in private investment decision making whether for the local entrepreneurs, the banks having to lend to these emerging companies or for multinationals. Unless the risk spectrum is properly analyzed and mitigated, there is little chance that thriving private initiatives will emerge.

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