While the biggest markets for solar power continue to be Germany, Japan, and the United States, some researchers said Wednesday evening that they soon hope to target developing countries.

“There have been past failures,” said Bernard McNelis, managing director and co-founder of renewable energy consultancy IT Power, at the European Photovoltaic Industry Association’s industry forum Wednesday. “But the programs going on now recognize the failures of the past and plan to tackle the problems in a long-term, sustainable way. I think the tide has turned.”

Developing countries have long been considered a potential breeding ground for new solar technology, as solar installation could be cheaper than building up infrastructure for conventional electricity, especially in areas where buildings are far apart.

But finding a way to pay for the initial infrastructure, even if it is cheaper than other forms of electricity, can be daunting. One possibility is pay-as-you-go systems.

Michael Müller, a research project manager and sales director at the solar electronics developer Steca, said the company—in conjunction with another researcher from Fraunhofer, and support from Exide Technologies, RWE Schott Solar, and Sharp—is field-testing prepaid solar home systems in South Africa.

Taking a world view, Mr. Müller said about 2 billion people live in rural areas with no electricity. Of these, about 40 percent are already spending $5 to $10 per month for lighting, but are too poor to afford to install electrical systems—making them an ideal target market for prepayment systems.

The Steca-Fraunhofer research group installed solar panels at homes in the village of Ndawana, along with prepayment card readers and boxes that included batteries to store the electricity, electricity regulators, and everything else needed to bring electricity into the homes. The researchers also provided free energy-saving lamps.

Families buy electricity-credit cards from a solar shop and slide the cards through the reader to turn on the electricity. The shop is outfitted with a laptop and a device to read and recharge the cards, as well as with software that analyzes user data to determine when the battery will need to be replaced, and to make sure the user hasn’t been bypassing the system to get free electricity.

While there were some problems with cabling—and with some boxes not being locked, allowing residents to bypass the system—the test has been successful so far, according to Mr. Müller.

“Users were very happy to have the systems, and were sociologically prepared to pay the fee,” he said.

Breakeven Point Years Away

In the future, prepayment systems could allow large-scale solar electricity systems to be profitably installed if there is good technical, social, and financial support, and if the cards provide information allowing companies to see if users are bypassing the system, said Mr. Müller.

But currently, the systems cost more than €150 ($191) each, even though they use standard parts, he said. At that rate, it would take eight to 10 years to break even, and there’s the risk that some people won’t participate, or will use little or no electricity some months, he said.

Of course, at higher volumes, the cost would go down, said Mr. Müller. Monthly fees, or a mix of monthly fees and fees for the amount of energy used, could make such a program less risky for companies, as well.

The main tipping point is government incentives, Mr. Müller said. The South African government is currently discussing a large-scale prepayment project. “Of course we’re in strong contact with them,” he said. China and Indonesia are also discussing projects with Steca.

“Whether these prepayment programs can be successful, it very much depends on financial participation from the local government,” said Mr. Müller. “If there’s no other financial source aside from the payback of users, it will be a long time. Large installations, such as Luz Para Todos in Brazil, lower the time dramatically.”

Mr. Müller estimates a return-on-investment target of four to five years would be needed to make money. That would mean that about 50 percent of the initial costs would have to be subsidized by the government.

“The potential is there,” he said. “The only problem is that the deciding point is not system technology, but organizational structure and infrastructure. It’s not a built-up market now, but if we see worldwide a point where people support solar home systems, then they could be a solution.”

Contact the writer: JKho@RedHerring.com

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