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Prepared By: A.M. Al-Ashwal Project Advisor OFF GRID 1.

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Presentation on theme: "Prepared By: A.M. Al-Ashwal Project Advisor OFF GRID 1."— Presentation transcript:

1 Prepared By: A.M. Al-Ashwal Project Advisor OFF GRID 1

2 1. Cash Model a) Applicability: Easy to apply but very dependant on economical situation b) Main stakeholders: end-user / client, supplier and dealer c) Advantages and Disadvantages OFF GRID 2

3 1. Cash Model i) Advantages: Minimal number of stakeholders Infrastructures can be built as sales go in lowest demand for capital and the highest circulation rate No need for explicit government or support OFF GRID 3

4 1. Cash Model ii) Disadvantages: Limited market as a result of the high up-front investments Minimal end-user training Possible low quality of some components and system installation Little interaction between supplier and user Problem of Competition with cheap low quality products OFF GRID 4

5 1. Cash Model d) Success and failure factors Success: Good maintenance structure and after- sales for long term sustainability and Proper installation, good user manuals, good design of the system Failure: Market distortion by, grid-extension, etc. ; Mismatch between expected and real output of the system and Lack of supply/availability of spare parts. OFF GRID 5

6 2.1 Dealer Credit Model 2.2 Credit Institution Model OFF GRID 6

7 2.2 Credit Institution Model a) Applicability: existence of capable and interested credit institutions b) Main stakeholders: Credit institutions, Government as regulator, end-user, supplier and dealer c) Advantages and Disadvantages OFF GRID 7

8 2.2 Credit Institution Model i) Advantages: It removes the need for a high initial investment; No need to allocate a budget to run the credit scheme, The credit institutions are better equipped to manage a credit scheme and The rural network of the credit institution may also be used to promote sales OFF GRID 8

9 2.2 Credit Institution Model ii) Disadvantages: This model is geographically restricted; Often difficult to find suitable collateral for the credit; and Two separate structures are needed to handle the financial and the technical work, OFF GRID 9

10 2.2 Credit Institution Model d) Success and failure factors Success: Successful rural financial institution, Good maintenance structure and after-sales for long term sustainability and Proper installation, good user manuals, good design of the system Failure: Conflict of interest between company and credit institute, Credit organization is unsustainable due to rapid growth, low repayment rates and high running costs; and Unexpected high inflation OFF GRID 10

11 3. Hire-purchase (Lease) Model a) Applicability: PV-companies having financial resources and administrative and technical infrastructure b) Main stakeholders: PV-companies and dealer, End users, Government as a Regulator c) Advantages and Disadvantages OFF GRID 11

12 3. Hire-purchase (Lease) Model i) Advantages: It removes the need for a high initial investment; One single structure can handle both the fee collection and technical work Maintenance can be kept at high standards Good quality products are feasible OFF GRID 12

13 3. Hire-purchase (Lease) Model ii) Disadvantages: Leasing is not a well-known concept in Yemen End-users careless treatment of the systems; The lease construction absorbs a lot of working capital; PV-companies are usually not equipped and/or capable to run such program This model is geographically restricted OFF GRID 13

14 3. Hire-purchase (Lease) Model d) Success and failure factors Success: Clear design of the ownership structure, Effective fee collection system; and Reliable and effective O&M infrastructure Failure: Unexpected high inflation rates; Theft/replacement/mismanagement of systems; Inadequate financial administration; and High recovery costs OFF GRID 14

15 4. Fee-for-Service Model a) Applicability: SP and its partners should be able and willing to stay involved in the business for long time [long term investment] b) Main stakeholders: SP, End users, Government as a Regulator and Financial Institution c) Advantages and Disadvantages OFF GRID 15

16 4. Fee-for-Service Model c) Advantages and Disadvantages i) Advantages: Client does not have to invest Client does not have to bother about maintenance Due to long term investment feature, high quality systems will be used; Proper recollection and recycling of components (mainly batteries) is achieved. OFF GRID 16

17 ii) Disadvantages: Low Internal Rate of Return high financial risks; Possible careless treatment of SHS Expectations are often set too high, causing disappointment; The client is usually not allowed to skip a monthly payment Collection of the small fees is time consuming and expensive. Extensive infrastructure needed for recollection & OM OFF GRID Fee-for-Service Model

18 d) Success and failure factors Success: Government should issue a clear long- term license to SP, Relatively stable economy, Clear definition of system boundaries, Effective fee collection system and Participation of local community; Failure: End user unconcern of to make payments on time, Unexpected high inflation rates; Theft/replacement/mismanagement of systems; Inadequate financial administration; and High recovery costs OFF GRID 18

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20 20 THANK YOU FOR YOUR ATTENTION OFF GRID


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