I came, I installed… I left11 / 2010, Markets & Trends | By: Shamsiah Ali-Oettinger
Shell Solar: Thousands of solar power systems were installed by the former Shell Solar in a bid to provide the average South Asian with uninterrupted electricity for their daily needs. The joy of green energy quickly turned to anger. What these people did not count on was Shell Solar bailing out and leaving them in the lurch.
The entire talk about corporate social responsibility and green energy has spurred many companies to take a serious look at alternative forms of energy for the world, especially the developing world, which needs a regular, uninterrupted energy supply. And who can rejoice more than the people of the lands who cherish the sun for their harvest? Imagine their joy when someone tells them that power can be generated via these rectangular wonders. That a solar panel will bring them power for their lights, radios and fans when the day gets stifling hot. They will succumb to purchasing the solar system in the hope of a brighter future, quite literally. After all, electricity is a scarce thing in many rural areas of India and Sri Lanka.
So, Shell stepped in. It is a global energy group and sits comfortably as the leader in the Fortune Top 500 list for 2009. Normally, Shell is seen as the oil and gas giant. But the company did try its hand at solar as well. The story happened three years ago. So why open an old can of worms? Because the problem still exists. Those affected are still lamenting and the number of affected people are not just a couple of hundred, but tens of thousands. Plus, they are not people with fat bank accounts either.
Shelling the truth
Shell dabbled in solar in the 1970s and 80s as a start and in the late 2000s, focusing on the developing world. Shell Solar offered to bring solar energy to the citizens of India, Sri Lanka, the Philippines and Indonesia namely. Googling the name Shell Solar draws nothing but a few disconnected threads to some modules here and some commentary there, but nothing solid. What does pop up is that Shell Solar and the World Bank became embroiled in a major dispute this year after the former refused to honor its warranties on solar power systems sold to the developing world. Quite cliché if you ask an environmentalist. There is probably something fishy when multi-million-dollar-oil-drilling-mega-ventures start turning their attention to renewables. Yes, there are some companies that are quite sincere about their desire to develop oil and solar power at the same time, ironic as it may sound. But in this case, the clichés mentioned became quite glaringly true.
For Shell, mum is of course the word. There were no replies from the oil giant when probed about their elusive exit from the solar sector. It was former Shell Solar Director of Rural Operations, Damian Miller, who took the time to enlighten pv magazine on how it all went down in South Asia. “Shell basically sold and got out in 2007. Businesses were sold out in India and Sri Lanka. Shell did not make provisions for the new company as to how they will handle the aftermath of the situation.” Quite a helter-skelter move for a multi-national corporation to employ such a cut and run strategy.
All cynicism aside just for a moment, Shell actually did decide to invest their interests in solar power. That was one step in the right direction. They embarked on producing modules and selling the Shell home systems under the rural electrification business scheme to developing countries, as mentioned before. When we look at the systems in India and Sri Lanka, we are talking about more than just a handful of clients who bought these systems.
Miller elaborates on the numbers: “Customer-base in Sri Lanka must be more than 50,000 and in India, 30,000. These are a lot of homes that are affected.” Those are not small figures by any means and certainly not numbers that can be easily ignored. Shell Solar sold and installed more than 80,000 solar systems in these two countries. And are all these systems at least still running? Not really.
After the pull-out
Shell Solar sold their manufacturing assets in Germany and in the U.S. to the German photovoltaic producer SolarWorld. Environ Energy Global bought over Shell’s operations in India and Sri Lanka, hence taking over the Shell Solar staff, operations and contracts in these countries. Environ is a relatively small company to have taken over Shell Solar India. Miller says. “There was no oversight on the maintenance after they left. Shell sold off their Indian and Sri Lankan assets to a small company that had no presence in the two countries.” As he points out, both the manufacturing plants and the Indian and Sri South Asian businesses were under one company, Shell Solar, so there may not have been that much of a need for papers. “Once they became two separate companies, with SolarWorld running manufacturing and Environ running the downstream sales and services, it became complex. The Environ people were unable to produce the papers that SolarWorld probably needs in order to honor any warranties,” elaborates Miller.
What started to irk the customers was that they had to go without any service. According to another solar manufacturing and installations company who did not wish to be named, PV system operators should know that a competent professional installer should regularly service their system. It was also highlighted that, in particular, modules must regularly be cleaned of dirt and other debris as part of recommended ongoing maintenance, as otherwise the system’s performance can be impaired. That means the 80,000 installations and their owners can expect Environ, who took the responsibility over from Shell Solar for the India and Sri Lankan home systems to service their systems. This is, however, ladies and gentlemen, not happening!
Environ, we have a problem
Let’s examine an example of a warranty issue situation (pvi 10/2010). First Solar got feedback on modules malfunctioning in 2008. The problem sites were identified and the system partners, whom according to First Solar Managing Director, Stephan Hansen, are the people with the best knowledge of the site, alerted the manufacturer. First Solar made site-specific plans and thereafter replaced the faulty modules and paid for the labor and logistics. This was a case of module failure. But in the end, all was settled and no one left in limbo.
Customers spoken to got close to nothing in terms of maintenance services. Some things went wrong with their installations and they tried calling Environ (who now fit the profile of a system partner for the ex-Shell Solar). Environ’s job would have then been to investigate this feedback and come up with a solution.
However, neither Environ nor Shell Solar were reachable. At least the latter does not exist anymore - but where is Environ? Environ was not available to provide any comments despite repeated attempts to reach them per email and telephone. pv magazine went to their Singapore office (at the address stated on the company website) in order to hear their take on accusations against them for failing to provide service for the systems they took over from Shell Solar. The Environ office did not exist and the address was occupied by an insurance agency. Another fruitless attempt at contact.
Director of mNXT Consulting and Services, Pradeep Srinivas, is an example of a customer who saw red. His house has a 1.5 kilowatt installation. It cost Srinivas more than 350,000 Indian Rupees or approximately 5,700 euros to set up. This is quite a substantial amount in India, but a worthy investment for someone who believes in solar energy. Solar is the primary source of power for his home in Bangalore. He depends on solar power 24/7 as he has no utility power supply. He consulted Shell Solar and they came by to install the system on his house rooftop. After three to four months, the system had problems, typically the parts and not the panels. Shell Solar did come by to service the system. Thereafter, a year went by and Srinivas’s home solar system suddenly came to a halt as all the electronics failed. He spoke to Shell Solar and this was when he started to quickly realize that he was about to face a bigger problem for having depended on them.
“I was told in no uncertain terms that they would not be in a position to support me, with or without a warranty. It was almost like telling me I can perhaps consult God but not Shell Solar anymore,” elaborates a frustrated Srinivas to pv magazine. This was the point he realized that he had to do something as he had no home electricity and Shell Solar was already packing its coffers to leave India. He had no choice but to go for another system. He thus became one of the first few people to install an Orb Energy system.
Orb Energy was founded and developed by Miller after he left Shell Solar just before it became defunct. Miller was soon to discover that Srinivas was not going to be the only ex-Shell Solar client who hit a dead-end when the system failed. More and more ex-Shell Solar customers started turning up, needing some sort of service after the company completely wiped its presence off the sub-continent. Some of them turned to Orb Energy. “People get service where they can and they can be quite genius about it. Not that local technicians cannot handle it but maybe they do not have the detailed know-how. They can learn but they won’t really know when a charge controller breaks down or when a module laminate problem pops up. There is only so much a technician can do,” stated Miller.
Which is true. After all, customers should not have to go on a wild goose chase for PV technicians after having installed a system. They did not buy their panels second hand at a street corner but through proper channels, with correct paperwork and via a global brand. Orb Energy started to provide services to hopeless customers who were left in the lurch with systems that did not work. As Miller adds, “There are module failures, as well as BOS (balance of system) failures due to lack of maintenance.” Add that to anything and everything able go wrong with a system due to lack of maintenance and soon you have an entire list of issues facing these ex-Shell Solar customers. “Sometimes, the customers pay, sometimes, we do it for free,” Miller continues. Once again, numbers run up to 80,000 in India and Sri Lanka to remind the reader of the magnitude. Shell Solar, in response to this accusation, released one statement to the UK newspaper, The Guardian, denying all charges. According to the report by The Guardian, the Shell spokesperson in Hague stated, “In October 2007, Shell sold Shell Solar…. to Environ Global., specifically in order to protect the customer interests, the terms of liabilities, including warranty issues.” Thus blame was shoved over to Environ.
Chased by banks
Banks in India finance customers who want to go solar. Orb Energy uses a branch network, with 88 branches, to sell solar systems. Miller aims to make it hassle-free for the customers. His company teams up with banks, in order to provide the support for customers from rural areas. There is a fair amount of solar finance available for solar projects in India right now. But most customers are from rural backgrounds and require guidance in attaining a loan for the system. Orb Energy holds the customers’ hands in the entire process. This hand holding and support did not come from Shell Solar though, at least not after the home systems were installed, as got their payments and left.
Banks in India have not been very happy about the Shell Solar exit. “In India, I sit in meetings with banks and the banks are ranting about customers who are not getting services,” laments Miller. Minutes of a meeting document with Cauvery Kalpatharu Grameena Bank reveals what the bank’s Chief Manager K. Gurumurthy had to say about the loan situation with the ex-Shell Solar customers. He says that poor after-sales service by Environ Energy Corporation India resulted in large over-dues. The customers are not paying their installments for the home solar systems they took loans to purchase from Shell Solar. After all, what motivation do people have to return their loans if their investments are just gathering cobwebs?
The bank also contacted Environ and the regional manager of Environ Karnataka apparently told the Cauvery Kalpatharu Grameena Bank that the problem lies only in old solar loans financed by the bank and that they will provide a toll-free service telephone number for further service pertaining to the solar units. Toll!, wonderful, as the Germans say. A toll-free service line! Where has the service been all along? And how is a toll-free line going to help the system owners lamenting for aeons now about the promised uninterrupted electricity supply?
Sri Lanka’s DFCC Bank acts as the administrative unit of the Renewable Energy for Rural Economic Development (RERED) Project. The bank’s Assistant Vice President of Project Management, Nalin Karunatileka told pv magazine, “The RERED Project, together with the previous ESD Project has funded over 128,000 Solar Home Systems in Sri Lanka, and Shell Solar installed a considerable number of these systems which were provided with at least a 10 year warranty on the solar panels. Currently Environ Energy is not replacing defective panels and many customers are affected. We are not in a position to help customers who complain to us.” He adds, “All we want is for one or both of them to alleviate the plight of the many innocent rural customers who bought the systems believing the promises and commitments made at the time of sale.” According to a statement by the World Bank, about 700 systems appear to have failed already. There are a number of solar systems gathering dust and the wrath of the customers who bought them with their average salaries.
Miller states, “The poor are affected the most. They spent approximately 30 percent of their annual income to purchase these systems and if the modules fail within the period where they stand under guarantee and Shell Solar is no longer around to help them, then it is also the reputation of the solar industry that gets damaged. That was the reason why I made all that noise at the time of the pull out because I felt that it would damage the solar market. Sri Lanka used to be such a great solar market and I think this is one big reason why the Sri Lankan solar sector in the country is now at such a standstill.”
We can second that. pv magazine spoke with Jasmeenah Hussain, a programmer who was toying with the idea for solar panels for her house in Colombo, Sri Lanka. “I initially thought it would be a good source of clean energy for my house. However, due to my work commitments overseas in the last years, I had postponed the idea. It has been a blessing in disguise as Shell Solar has now left Colombo and the company that took over is not very active. I have heard from some people that their systems are not working and that they are disappointed with the lack of service. In fact, one even told me that the kerosene lamp, as polluting as it is, is probably more reliable than solar power for him at the moment.” Expectable frustrations from the affected. And bad publicity for solar energy.
Anil Cabraal, former Senior Energy Specialist at the World Bank, had previously written a report to Shell demanding action, stating, “I would like Shell to honor these commitments. We are not talking about millions of dollars here, but hundreds of thousands.” Hundreds of thousands a Fortuna Top 500 company can surely help fork out. Cabraal told pv magazine he was unable to offer further comments on this issue as he was no longer working for the World Bank.
On its feet again
There is barely any news of solar coming out of Sri Lanka these days. In India, other companies like Orb Energy have started to push the solar sector. The government’s Solar Mission Plan has also boosted the public support. What Orb Energy has been providing is a service that can uplift the disappointed morale of those at their wit’s end with their failing systems. However, there is a large amount of responsibility lying with the initiator, the installer, the system operator that must be upheld, especially when it comes to firstly green energy and secondly developing nations.
People have had to dig deep into their pockets, get loans and act in hope. Breaking these trusts and hopes is something not only bad for the companies involved, but that also reflects badly on the industry. It will only be a matter of time before the issue is forgotten again as there is only so much noise the average person can make before switching to another service provider or giving up on solar altogether. Particularly when the company no longer exists and the ones who took over, have a phantom office and toll-free line.