MICROCAPITAL STORY: Grameen Shakti Managing Director, Dipal Barua, Wins $1.5m Energy Prize for Implementing 200 Thousand Solar Panels in Bangladesh with Microfinance Scheme

The first annual Abu Dhabi based Zayed Future Energy Prize, worth USD 1.5 million, was awarded to the Founding Manager Director of Grameen Shakti, Dipal C. Barua, for his work in financing and installing over 200 thousand solar panels that have electrified the homes of approximately 2 million people in rural Bangladesh. Grameen Shakti, or “Village Energy,” was founded as a non-profit in 1996 as a sister organization of the Nobel Peace Prize winning microfinance institution Grameen Bank. Grameen Shakti’s website says that their solar power program “really took off the ground when rural clients realized (solar panels) are more cost effective than other conventional sources of energy such as kerosene and provide more utilities.” Grameen Shakti hopes to implement 1 million solar panels by 2015. As reported by the Financial Times, with over 30 million families without access to the electrical grid in Bangladesh, the potential for future growth of Grameen Shakti’s solar power program is enormous.

The Zayed Future Energy Prize was introduced in January 2008 at the World Future Energy Summit in Abu Dhabi in honor of the city´s late ruler Shaikh Zayed Bin Sultan Al Nahyan. Each year the prize is to be awarded to up to three individuals, NGOs, companies, and other organizations that have made a significant response to the global energy crisis. This year, Mr. Dipal Barua was the only winner.

As key to its success, Grameen Shakti emphasizes the fact that it operates on no direct subsidies, and that it uses microcredit to make the solar panels more affordable for their customer and to reach an economy of scale. Most of these panels cost between USD 350 and USD 435. Grameen Shakti has three different payment options: (1) the customer pays a 15 percent of the total price down payment, and the remaining 85 percent is paid within 36 months with a 6 percent flat rate service charge; (2) the customer pays 25 percent down payment, and the remaining 75 percent is paid within 24 months with a 4 percent flat rate service charge; (3) the customer pays 10 percent down payment, and the remaining 90 percent is paid with 42 weekly cheques, with no service charge. No financial information on Grameen Shakti is publicly available.

In order to carry out its operations Grameen Shakti has trained over 2500 women technicians. The women market and install the solar panels, and provide free monthly checkups when they collect installment payments. Beyond the payment period, Grameen Shakti offers a post-warranty annual maintenance service. Furthermore, if the buyer´s home is added to the country´s electrical grid, Grameen Shakti will buy back the solar panel system.

MicroCapital reported on Grameen Shakti in November 2007, after the electrical grid of Bangladesh had been tripped by Cyclone Sidr and people were powering their cell phones with solar panels in order to remain in contact with the rest of the country. As a flat country on the delta of the Ganges River, Bangladesh is one of the countries most susceptible to sea level rise and increased cyclones caused by global warming. Climate modelers have predicted a meter in sea level rise this century (the top of the forecast range) could cause as many as 30 million climate regugees in Bangladesh. Furthermore, Grameen Shakti reports that rural Bangladesh’s dependence on crop residue and wood for fuel, has led to deforestation, and increased flooding and soil erosion.

Beyond Solar Panels, Grameen Shakti has two other programs in operation that promote cleaner, renewable, and more efficient energy use. It has installed around 6000 biogas plants, which convert cow and chicken dung into gas for cooking, lighting, and fertilizer. It plans to expand the program in a financially sustainable manner through a similar credit mechanism as that financing the solar panels. The biogas plants are often integrated with poultry farms, that receive the dual benefit of disposing their slurry and meeting their energy demands. Other animal farms are supplementing their income by selling their waste. Grameen Shakti believes that there is the potential to develop 4 million biogas plants in Bangladesh, and plans to construct 500 thousand more by 2012.

Grameen Shakti´s third program is to develop more efficient cooking stoves in rural Bangladesh to reduce the demand for fuel. It reports that in rural Bangladesh, the energy consumption involved in cooking surpasses that of all other uses of energy. Traditional stoves also create indoor pollution that leads to respiratory problems. Grameen Shakti has already constructed 20 thousand energy efficient stoves, and aims to construct 10 million by 2012.

Mr. Dipal Barua was a student of Muhammad Yunus at Chittagong University, and a researcher for the Grameen Bank when it began as a research project in 1976. Today, beyond his role with Grameen Shakti, he is also the Deputy Managing Director of the Grameen Bank, number two to Mr. Yunus. After winning the Zayed Future Energy Prize, he told Gulf News, “I want to use the prize money to train solar technicians, award scholarships and provide seed money to entrepreneurs to start solar businesses… My mission is to create more green jobs in my country.”

By Ryan Hogarth, Research Assistant

Additional References:

Financial Times: “Climate innovation examples,” by Martin Wright

Grameen Bank: Home

Grameen Shakti: Home

Gulf News: “Mohammad awards Zayed energy prize to Bangladeshi pioneer,” by Himendra Mohan Kumar

Microcapital: Bangladesh: Cell Phones and Solar Panels Distributed by Microfinance Institutions Facilitate Recovery from Cyclone Disaster

Zayed Future Energy Prize: Home