Solar crusader - Harish Hande

I have some bad news and some good news for you. The bad news is you are totally dead and the good news is you are still young—This is what Denis Hayes, leading environmental activist and founder of the Earth Day, told Harish Hande about the short-term future of his business early 2007.

Hande, a 40-year-old energy engineer, sells solar power and his company Selco Solar Light has a solar product line for customers at the bottom of the pyramid.

Sample this. The flower pickers near Ahmedabad would usually get up in the middle of the night, get hold of a kerosene lamp in one hand, and hurry to the fields to pick flowers between 2 a.m. and 4 a.m.

Their target: to bring the flowers to market by 6 a.m., in time for the dawn crowds and before the flowers start wilting. Or take the case of silk farmers of Karnataka, who would typically use candles or kerosene lamp for lighting at the time of feeding worms in the dark (harsh light hampers the growth of silk worms). But a drop of spilled kerosene would destroy the entire basket of worms.

These are not the perfect customers for someone starting out his business. Hande thought otherwise in his initial days of creating the need for solar energy. He designed lamps keeping in mind the needs of these clients.

The result: flower pickers got headlamps.

A bolt from the blue

Ask Harish Hande how the balance-sheet looks and prompt comes the reply: Pathetic. Hande says that the root of this dismal scenario is a big subsidy programme in Germany that was started a few years back. One part of this programme was a tax rebate for the general household—If you have solar panels and you are not using the entire power that gets generated, you can send the units back to the grid. The programme turned out to be a huge opportunity for the solar module makers in India, who started manufacturing large modules for Germany. The production of small modules, which is the raw material for Selco, was cut down. With the shortage of small modules, price for these rose 47 per cent in 2006. In the last two years, Selco has had no supply for eight months. Prices have now come down again thanks to a lull in the German market but they are still 22 per cent higher than pre-2006 levels. But there’s more bad news for Hande. With demand in the European markets shooting up, the shortage is likely to continue at least till 2011. Hande’s remedy: Variation in product line like using LED (light-emitting diode) that has helped negate the cost of the panel.

They now have both their hands free to pluck flowers, their productivity has increased, and there’s no likelihood of their hands or saris getting burnt. The silk farmers have solar lamps in their farms.

Worms are safe and so is their livelihood. And if you thought money was an issue, Hande roped in local banks to help the flower pickers and the silk farmers get loans to buy these lamps.

Seems like a cinch? Not quite. Much before the headlamps came the idea of going solar that invited scepticism to say the very least. Hande recalls: “When I started thinking of solar in 1991, people said job nahin milega (you won’t get a job). I used to say nahin milega to nahin milega (I don’t care).” Early ’90s after all were not yet the times when people were thinking climate change.

“I get a lot of invitations for funerals because I had friends in their sixties (in 1991)—hardcore environmentalists who grew their own vegetables and baked their own bread. These were the same guys who went to Vietnam and protested against America. Solar power at that time (1991) was something that hippies in California would do,” says Hande.

It was his advisor and mentor at the University of Massachusetts, Prof Jose Martin, who instilled in him that “socio-economic needs are more important than technology”. Armed with this wisdom and academic qualifications, Hande started Selco Solar Light in 1995 along with Neville Williams (who now heads a local solar company in the US).

Hande’s first move was to push towards non-profit, but he wasn’t too sure of its sustainability in the long run. So he started a business that was decentralised, had its profit centre and seemed sustainable in the long run with an initial capital of a meagre Rs 1,000.

His big game plan: to destroy three myths that the poor cannot afford technology; the poor cannot maintain technology; and the third myth that you cannot run a commercial venture while running a social venture.

It’s been a roller coaster ride since then for Hande and his team. Selco incurred a loss of Rs 75 lakh in the year to March 2007. But the winner of the ‘green energy Oscars’ Ashden Award in 2005 and the Social Entrepreneur of the Year Award in 2007, Hande is undeterred by the losses, which he says are not mounting any more.

Future plans Top on the agenda is roping in leading institutions like NABARD and RBI. If they are convinced of the viability of the model, it can change the way banks look at financing Selco is raising money ($7.5 to 8 million) in March 2008 either in the form of equity or debt. This money will be utilised for setting up an incubation centre in Bangalore Selco is in the process of diversifying by expanding its product line to become an energy services company. Solar power apart, the focus will be on bio-gas and cooking energy. Target is to reach 200,000 households in four years Hande is working towards creating Selco-type organisations and also using Selco as a training base. He wants to train entrepreneurs in the Selco model

Losses for the year to March 2008 are expected to be about Rs 25 lakh. And he sure has a strategy ready in the shape of diversification.

Hande, who never wears western suits, aims to broaden his horizon and become an energy services company focussing on bio-gas and cooking energy. “We are seriously sitting in March to see whether we can create Selco-type organisations.”

Each of these set-ups would need two years of rigorous work and a lot of financing. The present setup in Karnataka could be a training base. Hande, who speaks Oriya, Bangla and Kannada, besides English and Hindi, has a proposal from South Africa to train entrepreneurs in the Selco model. “I would like to do a similar model in India,” he says.

Hande has already started building entrepreneurs though. A mid-wife in Ahmedabad bought solar light kits from Selco in bulk and now rents them out to a dozen other midwives on a daily rental basis.

There are scores of such examples. Selco with its 25 centres in Karnataka and Gujarat has 85,000 clients in all.

Is time ripe then for a national footprint? Hande is uncomfortable with the suggestion. “We did try a franchisee model last year in Karnataka but failed miserably as the model became product-based and not need-based. We got very jittery when the basic mission of Selco got compromised,” he recounts.

That would have been one of the few occasions Hande got edgy. By and large, he is calm, deliberate, and unpretentious if you believe his peers and employees. “He is unassuming to such an extent that I did not realise for a long time that he was heading Selco,” recalls Jayshree Vyas, MD, SEWA Bank.

The bank works with Selco to find out how solar energy fits in the daily life of poor working women.

The business

Rural electrification Selco Solar Light is a for-profit company. It sells photovoltaic solar electric systems mostly to the people at the bottom rung. Harish Hande has tweaked the business processes to make his systems affordable to the poor after a street vendor told him “300 rupees a month is way too much money, but 10 rupees a day is affordable”. He established microfinance plans with the rural development banks that have made his systems affordable for the poor. The business model has changed little by little, but has not deviated from the primary module which is: People should get the service at the doorstep and be financed at the doorstep. About 80 per cent of his clients are villagers and local school teachers and the rest 20 per cent are institutions. The cost of a solar unit is between Rs 5,000 (for one-light system) and Rs 18,500 (for a four-light system). Maintenance comes to around Rs 150-200 a year. Selco’s revenues were at Rs 13.25 crore for the year ended March 2007, with losses at Rs 75 lakh. The ubiquitous talent pool shortage and the resultant high salaries have also hit this human resource-driven project badly.

Hande is also forthright. Ask him about the government’s role in solar energy, and he is firm that the government’s job is to create the policy and equitable distribution.

They are not there to sell. “The Ministry of New and Renewable Energy did a fantastic job by making people aware of the technology. But it also came to the business of doing business. The government failed because of a lack of services.” It has stuck to the subsidy route but “why not create policy for encouraging sustainable chains?” asks Hande.

The didactic gentleman has many an issue weighing on him.

He has recently got a loan approved at a lower rate from Lemelson Foundation but is facing problems in getting the money into the country. “Reserve Bank has restricted the working capital loan. Nobody is giving me a working capital loan for 2 per cent but here I am getting a loan at 2 per cent but do not qualify because I work in a competitive market,” he says.

Probe him on the challenges and Hande has a bone to pick with non-profits because “they do not catch the essence of sustainability and financial transparency. You do not keep subsidising all parts of the chain.” The conundrum of high salaries, too, baffles him. “The salary levels of IT and financial services have destroyed my ability to grow.”

Hande, however, has an interesting mix of talent in his 145-strong workforce. Thomas Pullenkav, 40, Vice President, Selco, has been a witness to Hande’s journey.

He has had stints with the Institute of Rural Management, Anand, National Dairy Development Board and Tata BP Solar. Sarah Alexander, Assistant Manager, Innovations, has done her Masters in conservation biology from the US.

The 26-year-old specialises in animal behaviour and has worked in Lincoln Park Zoo in Chicago. She stumbled upon Selco, courtesy Google. “When I read about Harish’s work, I was determined to work with him.” And compensation? While Thomas cannot give up the excitement of “reinventing the wheel”, Sarah says, “I don’t think I came with high expectations.”

Amit Kumar, Director, Renewable Energy technology Applications, TERI, finds Hande’s feats incredible. “Disparate efforts are going on in solar energy. But the kind of approach Harish has taken is remarkable.

He is one of the trail-blazers and is inspiring others.” Speak to his professors at IIT Kharagpur, his colleagues, his partners or clients; every body seems to have been swept away by his “dedication and commitment”.

Talking of Hande, Don Mohanlal, President and CEO of The Nand and Jeet Khemka Foundation, quotes Spanish philosopher Antonio Machado, who has said: “Traveller, there’s no path. Paths are made by walking.” It’s not that Hande invented the concept— but knowing what he needs to pull it off has indeed proved vital.