Marketing and Financing of Solar Home Systems in Bangladesh: Assessment of Success Shakila Aziz 1* , Shahriar A. Chowdhury 2 , Hirak Al-Hammad 3 1 Faculty of Business Administration, American International University, Banani, Bangladesh 2 Department of Electrical and Electronic Engineering, United International University, Dhaka, Bangladesh 3 Infrastructure Development Company Limited (IDCOL), Dhaka, Bangladesh * Corresponding author, saziz@aiub.edu Abstract: The commercial success of solar home systems in Bangladesh depends on the extent to which it can fulfill the needs of the end users, which will motivate users to invest money in SHS systems. This paper has explored the factors that can make SHS commercially viable in Bangladesh, and how far the SHS industry in the country has come to being commercially viable. The customers in Bangladesh have found that the SHS have satisfactory technical performance, an adequate financing infrastructure and good after sales support. The commercial distributors of SHS units also show increasing annual sales across Bangladesh, despite declining subsidies and rising prices of SHS. Keywords: Solar Home System (SHS), technical performance, Micro financing, After sales service 1. Introduction Access to electricity is one of the major factors that affect the socio-economic development of a population. This is why electrification is one of the targets of any development or poverty alleviation drive. Availability of adequate electricity is also an indicator of the standard of living of a population [1]. Bangladesh, an example of a developing nation, enjoys an electricity distribution of 42% [2], but large segments of the rural populations live in remote and off- grid areas, where the purchasing power of the consumer population and the low density of habitation do not make it cost effective for the national grid to distribute grid electricity to such locations. The success of any new renewable energy technology among the target market depends on the extent to which the technology is able to fulfill the needs and demands of the target market, while being financially affordable, practically reliable and user friendly [3]. At present, a major portion (81.43%) of the power generation capacity of the country is gas based [2]. The reserves of gas in Bangladesh are decreasing with time, while demand for energy is increasing. The gas reserve is expected to last until 2019 and supply will start declining after 2011, if no new gas field is discovered [4][5]. As of now Bangladesh is experiencing a shortage of power generation than the demand, which causes load shedding, and this is more pronounced in rural areas. The economic condition of Bangladesh do not allow immediate solution of power crisis by imported fuels. These causes slow down the grid extension in rural areas. To fulfill the national plan set by the government “Make electricity available for all by 2020” [6] alternate off grid power solution should be sought. This paper will attempt to identify the factors necessary for the commercial success of SHS technology in a developing country, and how successfully the SHS industry of Bangladesh has been able to fulfill the necessary conditions towards full commercialization. The financial and distribution figures for SHS dissemination are taken from the database of Infrastructure Development Company Limited (IDCOL), a non bank financial institution established by the Government of Bangladesh. 2. The Consumer Decision Process in Adapting PV SHS Research shows that the factors that influence the target consumers to adapt and pay for renewable energy technology based solutions are a concern for the environment, knowledge about the efficiency and role of renewable energy in the environment and society, and a belief that the adoption of such technologies will have a positive outcome for the environment [7]. Moreover, the demographic segments that tend to adopt solar energy technologies tend to be younger, better educated, having higher income and occupational status, and earlier in the family life cycle. The product quality, efficiency and cost, the cost of alternatives, and the motivation of social responsibility are important factors that influence the decision making process for potential adopters [8]. 3. Traditional Barriers to the Dissemination of SHS in Developing Countries A study shows that rural grid extension for electricity on a small scale would cost in the range of 2 to 10 US$/kWh in some developing countries while stand alone PV electricity might be in the range of only 1 to 3 US$/kWh [9]. This makes PV electricity an ideal