Barriers to the Uptake of Off-Grid Solar Lighting Products in Bihar

The federal government of India and the state government of Bihar, India’s least electrified state, have always focused on grid expansion to bring power to those living without grid access. However, grid expansion has been slow. In Bihar, 83% of people still live without electricity, relying on dangerous kerosene lamps to light their homes. In the 1980s, an alternative—a market for solar home systems and solar lanterns—started to develop in Bihar. Yet, this market has failed to thrive, despite three decades of intervention by the government and activity by private companies. Today, fewer than 4.2% of unelectrified Bihar households use a solar lighting product. Based on interviews with key stakeholders, this case study found that the biggest obstacle to market growth is the government kerosene subsidy, which halves the price of kerosene, and makes people less interested in solar lighting products. Lack of company financing, product quality issues, lack of customer awareness of the benefits of solar, and another counterproductive government subsidy for solar products are other challenges that hamper market growth. Interviewees also identified factors promoting the growth of the sector, including the large unmet electricity demand and unreliable electricity supply, and dropping solar prices. Overall, there is significant potential for market growth if strategies are developed by key stakeholders to help overcome the challenges identified in this case study, and build on the factors promoting the sector’s growth. Most importantly, the government needs to re-think their subsidy policies and adopt a stance to encourage market forces.