Founding SELCO

Hande returned to the subcontinent in 1994 to research the viability of decentralized solar electricity in India. He traveled throughout rural areas in his home state of Karnataka, spending considerable time living among villagers with limited or no access to electricity.He not only researched the energy needs of poor households and communities, but also observed the dynamics of their lives and income generating activities.

“I came in with a product-focused mind, asking ‘What do people need?’ But the fieldwork helped me realize that product was the least important thing. … The political dynamics, the social dynamics, the relationship between neighbors was as important as looking at what the product was,” he said.

During the later stages of his research, Hande met fellow solar energy pioneer Neville Williams in the United States. Williams was the founder of SELF (Solar Electric Light Fund), a U.S.-based nonprofit organization facilitating rural electrification worldwide, and his interests were directly aligned with Hande’s work in his home state of Karnataka. In 1995, the two partnered to found SELCO as an energy services company focused on meeting the needs of people lacking adequate access to energy. Initially, SELF took a majority stake in the new company, with Williams as Chairman, while Hande retained a minority shareholding position and the role of Managing Director.

When Hande established SELCO-India in Bangalore, he was looking to dispel three myths: 

1. Poor people cannot afford sustainable technologies;
2. Poor people cannot maintain sustainable technologies;
3. Social ventures cannot be run as commercial entities.

Having spent considerable time in the field with rural customers, Hande concluded that the best way to dispel the myths was to provide PV installations in combination with service and financing. Hande believed that a distributed solar lighting product of the type SELCO would provide was marketable only if the financing needed to acquire the technology was included in the overall product package. By developing affordable “lease-to-own” schemes with rural banking institutions, SELCO would make capital-intensive PV systems affordable to the rural poor.

The first few years of operating in India, however, greatly challenged the fledgling company. SELCO-India could not take advantage of a $40,000 infusion by SELF due to foreign capital investment restrictions in India at that time. Hande was forced to buy his systems on credit, with the SELF money in the United States as a guarantee. Gradually, other sources of funding materialized, beginning in 1996 with a conditional grant of $150,000 from Winrock International, under the USAID Renewable Energy Commercialization project.

The turning point came in 1997, when ownership of SELCO was transferred from SELF to newly created SELCO-USA, which Williams had founded to own and fund subsidiaries in India, Sri Lanka and Vietnam. In that same year, SELCO-USA raised $2.5 million in private equity financing from European investors, and the company made equity investments of $850,000 in its Indian subsidiary. In 2003, SELCO-USA also secured a $1 million loan from the International Finance Corporation (IFC), the private lending arm of the World Bank.

By 2005, SELCO had reached more than half a million people by electrifying more than 80,000 households, micro-enterprises and community facilities, making it one of the largest PV providers in the world. In 2001, SELCO broke even for the first time and earned modest profits for a number of years, peaking at a profit of $88,380 in fiscal 2005.