Grid electricity extends to about 55% of Sri Lanka's population, but to only 40% in rural areas, although the infrastructure is now being extended. The average rural family in Sri Lanka spends 19% of their income on energy, and so many could afford off-grid electricity with a suitable credit system.
Sarvodaya Economic Enterprise Development Services (SEEDS) therefore financed the installation of solar home systems and other ways of accessing electricity, in rural areas of Sri Lanka.
SEEDS worked through accredited solar installers to identify potential loan customers. These loans enabled poor households in rural areas to purchase the systems, and receive the benefits of improved light, communications and entertainment. The monthly repayments were set at a rate which the household could afford to pay, and the loans were paid back over a period of one to four years. Local field officers employed by SEEDS collected monthly repayments, and also carried out checks and minor repairs to the systems.
Between 1998 and 20010, SEEDS financed the installation of around 80,000 solar home systems. It also installed 13 micro-hydro schemes in rural areas, and provided loans to a further 1,800 poor rural families to enable them to connect to the mains grid. Now that the grid is being extended into rural areas, SEEDS is focussing on lending for other needs.