When sustainable energy companies sell their products, such as solar home systems, a lack of awareness among consumers can create complications. If households are unfamiliar with the features and quality of a new technology, they may hesitate to spend money to purchase it. For example, a rural household may wonder how long the battery of a solar home system lasts or how well the system works during the cloudy monsoon season.

In an article forthcoming in Energy Policy, Semee Yoon and I tested whether solar product demonstrations might solve the problem. Collaborating with the Indian social enterprise Boond in Unnao district of Uttar Pradesh, India, we randomized the conduct of solar product demonstrations in a sample of 75 villages. We then measured the sales of solar home systems over a period of 12 months.

demo

A Boond solar product demonstrations in Unnao district, Uttar Pradesh.

We found that solar product demonstrations were ineffective. The treatment group – villages with demonstrations – did not see higher sales than the control group – villages without demonstrations. People’s awareness and perceptions of solar products also did not change.

The most likely explanation for this result is lacking access to finance. We saw high sales in villages that had active rural bank managers who helped households gain access to credit for their purchases. Because rural households usually have few savings, the ability to pay for solar products in installments over time appears critical to sales.

These results lend support to the hypothesis that liquidity constraints, instead of lacking awareness, are impeding the growth of rural markets for sustainable energy technologies in Uttar Pradesh. Policymakers should thus use India’s extensive network of rural banks to help households pay for their solar products gradually over time.

 

 

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