Un Futuro Mejor Solar Panels

Income inequality is entrenched in developing countries because poor households cannot access the education needed to obtain good jobs. Without jobs, peri-urban youth in Honduras are vulnerable to the lure of gangs.

We can provide jobs to undereducated youth by manufacturing, installing, and servicing solar panels. We are already conducting electrical vocational training in four communities, and these graduates will provide the labor for our solar panel construction. 

Electrification rates are low in rural Honduras, and demand for solar panels is high. Currently all solar panels are imported, and building panels locally would reduce costs by 25-30% based on prototype panels we have built. With a strong cost advantage, sales revenues should make us financially self-sufficient within 2-3 months. 

As revenues plus donations accrue, we plan to establish multiple manufacturing sites around San Pedro Sula and Tegucigalpa to maximize the number of jobs we create for the youth of Honduras. 

Income inequality in Honduras is among the highest in the world, with the middle class comprising just 11% of the population compared to 35% for the region as a whole (WorldBank 2019). Poor households cannot access the education needed to obtain good jobs. In Honduras, secondary education net enrollment rates are just 44% (UNESCO 2017) and Honduras has one of the lowest per capita GNPs in Latin America (World Bank 2018). Honduras has a youth NEET rate (Not in Education, Employment, or Training) of 27%, or approximately half a million youth (IndexMundi 2018). 

Extreme poverty makes peri-urban Honduran youth particularly susceptible to gangs, because gangs offer two meals a day to members. When you can’t afford an education and there are no job opportunities, hunger drives youth into crime. As a result, Honduras has one of the highest intentional homicide rates in the world (UNODC 2018). Jobs are desperately needed for marginally-educated poor to increase incomes and offer a survival option apart from gangs.

Such problems are not unique to Honduras. Over 70 million youth are unemployed worldwide, and the vast majority of these are in developing countries (ILO 2018). Our solution can apply just as well to other countries. 

Honduras has one of the lowest electrification rates in Latin America (WorldBank 2018), with two million people lacking access to electricity (CIA Factbook 2017). The only option for remote villages is solar panels, so demand for solar panels is high. Informal surveys of mountain villages indicated 10% of the households want to purchase solar systems for their homes, and, in time, more and more households will follow suit.

Currently, all panels are imported, yet solar panels use a simple technology. A bit of vocational training is all that’s required to create a workforce with the skills necessary to manufacture them locally. With local manufacturing, costs would be reduced by 25-30%, and this would give us a significant cost advantage, make solar more affordable for rural households. 

We currently have vocational training classes in 4 communities, so we have a ready workforce to manufacture, install, and service solar panels. Capital requirements are low, so production does not need to be centralized. This will allow us to establish multiple manufacturing sites around San Pedro Sula and Tegucigalpa to maximize the number of jobs we can offer and communities we can serve. 

Our primary goal is to create good jobs for peri-urban youth that have been marginalized due to extreme poverty and violence. We will focus on young people in impoverished communities around San Pedro Sula, the largest city in Honduras, who cannot afford school and whose job options are almost non-existent. Jeremias began vocational training with these youths two years ago, but even with training, there are few jobs available. Manufacturing and installing solar panels will create the jobs needed to transform their lives. Eventually we will expand to communities around Tegucigalpa, the second largest city in Honduras.

We will achieve our primary goal by bringing solar energy to rural households. Currently these households can only access expensive solar panels and overall systems that often have quality issues. The panels themselves are imported and thus expensive, and those who install them don’t always understand how to add the other required components, like batteries and converters, to create reliable systems. Jeremias has spent many years fixing systems improperly built by others, so he understands the needs and frustrations of rural customers. With locally produced panels and a trained workforce, he can make quality solar energy accessible to the rural poor. 

Jobs aren’t available in communities marginalized by poverty and violence, particularly when the population lacks a post-elementary education. Honduran youth are intelligent and industrious, but lack opportunities. 

Approximately 300,000 rural Honduran households, typically in mountain communities, have no access to electricity. Solar panels are the only viable option, but currently all panels are imported, so costs are high. 

Jeremias has access to a trained labor force (those who complete his vocational training classes) to manufacture and install panels locally, which would lower panel costs by 25-30%. This will allow rural households to access affordable, quality systems. 

There are no solar panel manufacturers in Honduras – all solar panels are imported. There is nothing innovative about the technology, but moving the production close to the demand greatly reduces the cost and improves the service given to the end customer. 

There are other solar panel installers in Honduras, but their panels are more expensive since they are imported. Moreover, they don’t always make an effort to understand their customers’ needs so they often sell just one 100w panel to each household even if the electrical goals of the household require more. Worse, they frequently try to reduce cost by using low quality parts for other components of the system that must work in conjunction with the panels, for example they may use electrical converters made for cars rather than for solar panels. The competitors don’t always understand the science behind the solar panel systems, so they often piece together incompatible parts that don’t function well and don’t last. 

Our local partner, Jeremias Vobada, has spent years working with families in rural communities - often trying to fix the issues created by other solar panel installers. He understands their needs, and with the capability of constructing solar panels locally, he can construct and install the panels to meet their specific goals.

The technology used in the solar panel construction is not new – it is basic and dependable. Photovoltaic cells made of silicon are the core of the technology. The electrical power generated then passes through diodes to a controller that reduces the panel voltage to the capacity of the battery. The photovoltaic cells will be constructed as part of our manufacturing process to create the panels. All raw materials are available locally. 

The simplicity of the technology is what will allow us to develop this project with minimal capital and only modest training of the youth in our target neighborhoods. And the clean nature of the technology will bring energy to remote, rural communities in a sustainable way, with a very low carbon footprint.

By manufacturing the panels locally and understanding how the components work together, we will be able to create high-quality systems that are reliable and affordable. We will also be training up a large workforce that will understand the technology, and, in time, this will greatly improve the solar energy sector in Honduras. 

This is indeed a widely used and accepted technology. Outside the primary cities in Honduras, solar panels are generally the only viable option for electricity. The same is true for much of Latin America. Jeremias has installed and serviced many such panels, and the technology is very reliable. 

Jeremias has also constructed two dozen panels from scratch using this technology, and they all function perfectly. The demand is high, the labor pool is eager, and the technology poses no barriers. The only thing lacking is a little capital to get going. 

The vast majority of peri-urban youth in Honduras (and around the world) are either unemployed or employed in the informal sector at extremely low wages. With limited educations and no good job prospects, hunger and poverty drive many to join gangs and engage in criminal activities, since gangs provide two meals a day to their members. As a result of the pervasive gang activity, Honduras has one of the highest intentional homicide rates in the world (UNODC 2018). In the community where we have our pilot, gang involvement is so pervasive, that about 75% of the households have an incarcerated family member. Jobs are desperately needed for these marginally educated poor.

Our pilot project provides vocational training in electricity and solar panel installation, and this greatly improves the employability of these youths. Upon graduation from our classes, many students work independently or get jobs with contractors, but there are a limited number of jobs available. 

To increase employment opportunities, we want to expand our vocational training to include solar panel construction and start manufacturing and installing solar panels. With a training center and manufacturing site in a local community, young people will have a productive use for their time, they will strengthen social relationships with others from their community who participate in training and work, and they will earn an income that will free them from economic dependence on the gangs. 

Though few formal studies have been conducted to show the impact of jobs on gang activity, a pilot study conducted by USC found “an increase in employment was significantly related to a reduction in gang involvement.” Anecdotally, it has been very rare for the students who receive our electrical training to subsequently join a gang. In time, reduced gang membership will mean safer neighborhoods and fewer incarcerations.  

Currently, 30 people in communities on the outskirts of San Pedro Sula (the largest city in Honduras) are receiving vocational training in electricity and solar panel construction. In the previous 2 years there were a total of 30 graduates of the training – approximately 5 graduates per trimester, but the class sizes are growing and spreading to multiple neighborhoods. We added a fourth community this year, are about to start a fifth class on the outskirts of Tegucigalpa (the capital of Honduras), and have been approached by a government official in a sixth community in a neighboring state requesting vocational classes for at-risk kids there. 

13 of the previous graduates are currently working on our pilot solar panel manufacturing, building fifteen 200w panels for a water system that will serve 600 families and ten 100w panels for sales in rural villages. The other graduates have either migrated away or are working at other jobs. As a result of the program, local leaders of the two largest gangs in the area have agreed to a truce, so whole communities are enjoying an unusual time of peace. 

In one year, we expect the number of students will grow to 200-300 per year, with 50 full-time employees making solar panel sales to 5000 households per year. In five years, we hope this will grow to 500 employees and 50,000 panel sales per year. At that point we will scale up the project both vertically in Honduras and, indirectly, horizontally to other countries. 

Our goal within the next year is for the solar panel manufacturing to move from the prototype to the pilot phase, over the subsequent three to four years we will expand through the growth phase, and in five years we will start moving to scale. With no other local solar panel manufactures, our approach is to replicate small manufacturing facilities in multiple communities around San Pedro Sula and Tegucigalpa. We can purchase all needed components locally, even those that are imported, but as our production grows, we will directly source the imported components and negotiate volume discounts on locally produced components.

We will manufacture, install and service solar panel systems throughout Honduras to the two million people with no access to electricity (CIA World Fact Book 2017). The jobs should bring much needed income and hope to impoverished communities surrounding the two big cities, and gang activity should drop. An ever-increasing share of rural households will have access to basic electricity using environmentally sustainable solar panels. 

We intend to scale in two ways. We will invite representatives from other non-profits and social enterprises to learn from our approach. Many developing countries lack access to jobs and electricity, and, in this way, we can expand the benefits horizontally beyond Honduras. Our own focus will remain on Honduras, and we will add other types of production jobs to our training and manufacturing sites. We provide vocational training in multiple trades, so, in time, we want to create a variety of job options.

Our first barrier is access to capital. Money is needed to acquire land and construct buildings for the manufacturing operations. We must also purchase parts to begin the panel construction and grow to scale. Finally, we need a vehicle, and eventually multiple vehicles, to access rural villages. 

Our second barrier is Covid-19. The country is currently on lockdown. Movement is still allowed within a given neighborhood so vocational training continues, but police blocks are prohibiting movement across district boundaries. No sales can be made in rural villages until the lockdown is lifted. Even then, sales may be depressed. Prior to coronavirus, canvassing in rural villages suggested the initial market would be about 10% of the households in each village. With the drop in incomes due to the shutdown, uncertainty over the health of the economy moving forward, and fear of the disease, people may be hesitant to make a major capital expenditure for the foreseeable future. 

The third key variable is the risk of gang violence. Jeremias has developed good relations and strong support from the local gang leaders where our pilot is just beginning, but as we expand beyond our pilot area the gangs will be less predictable. 

We will be pursuing grants and donations to acquire the initial capital needed. We are confident we can raise threshold quantities, but the extent of our fundraising success will determine the speed of our growth. We are a small nonprofit, but our donations have been growing about 50% per year so we have a healthy trend.

There is very little we can do to overcome the Covid-19 barrier except to wait and continue vocational training. We are expanding the training to new neighborhoods around San Pedro Sula and will be starting the first training group in Tegucigalpa. As part of the training, we will also be manufacturing, installing, and servicing solar panels in the San Pedro Sula area in very small quantities. Though standard electricity is available in the urban areas, blackouts are common and can be prolonged, so households with money prefer having solar as a backup. This is not our target market, but it is a good training ground until we return to a post-virus equilibrium.   

To avoid trouble with gangs, we are planning multiple small manufacturing sites rather than one centralized site. Each neighborhood is controlled by a specific gang, and crossing gang boundaries can be dangerous, so sites will be chosen to ensure employees can live and work without crossing a gang boundary. We are also building good relationships with the gangs. Among other things, we are providing toilet paper to inmates. Yes, toilet paper is a hot item all over the world right now!

NA

On the U.S. team, which works on the strategy and fundraising end of the venture, we have one full time staff and 2 part-time staff. In Honduras, there is one full-time staff and 10 part-time staff, not including the training graduates that are being hired for solar panel manufacturing. 

The American team, which focuses on strategy and fundraising, is made up of three individuals with degrees in Economic Development, Business Administration, and Engineering. All three worked together at Intel Corporation for many years. One retired from Intel to work full-time on international economic development, another took a job at Apple, and the third still works at Intel. We all have extensive experience with international project management.

The Honduran team is led by Jeremias Vobada. The solar panel manufacturing project is his brainchild. He has been installing and servicing solar panels for 11 years. He learned how to construct the panels 10 years ago, and, since then, he has been doing market research in rural villages. Lack of funding has been his key obstacle, but his partnership with the American team will resolve that. 

In addition to his electrical expertise, Jeremias lives and works in the very communities we are trying to serve. He began vocational training for neighborhood youth two years ago and is very well-connected, not just with the residents surrounding San Pedro Sula, but with construction companies and businessmen throughout Honduras. 

Importantly, he is also on very good terms with the local gangs. He has met with local gang leaders, who are enthusiastic about the project and have offered their support. Gang members are currently providing free labor for other projects we are working on with Jeremias, and they have great respect for him and his efforts to help the communities.

Jeremias works with several independent contractors in San Pedro Sula and Tegucigalpa. They help with the vocational training and allow students to receive hands-on-training at actual job sites. 

Note: Jeremias was abandoned as a baby and grew up in an orphanage, then a boarding school run by the same Catholic nuns. As a result, he has hundreds of brothers throughout Honduras – in business, politics, construction, gangs… and they are interested in supporting this project!

Un/underemployed youth are eager to receive training that allows them to earn decent wages. Our training program is financed by donations. Graduates of our vocational training program become the skilled workforce we need for solar panel manufacturing and installation. Grants and donations will provide the initial investment capital to set up a manufacturing site, and, thereafter, revenue from panel sales will finance the ongoing operation of the business. 

Rather than grow a centralized operation, our model is to establish several small training and manufacturing sites around San Pedro Sula and Tegucigalpa to distribute jobs around a multitude of communities. Though this will increase our total capital costs, it will maximize the social benefits of our work, which is our priority. 

Some measurable social benefits will be

• # vocational training graduates
• # jobs created
• # murders in the communities where we operate

Customers of the panels will be rural households that lack electricity, and beneficiaries will include school children who must currently study by candlelight. By manufacturing solar panels locally, we will be able to offer quality solar systems at a lower price than competitors, and this will help bring solar energy within reach for rural households. We will identify our customers through a combination of visits to local villages and referrals by general contractors - we have contacts throughout Honduras. 

We can measure our impact on rural electrification with:

• # solar panels sold
• # households that received electricity for the first time
• # households that received upgrades or backups

Initially, 100% of our funding will come from grants and donations. This funding will pay for the land, building, and raw materials to get the business off the ground. Employees are paid per panel constructed, and there will be no debt for the land and buildings, so almost all costs will be variable. Within three months, each assembly site should become financially self-sufficient through solar panel sales. Grants and donations will then be used to develop another site which in turn should become self-sufficient within three months.  

Over the course of five years, we intend to develop multiple assembly sites around San Pedro Sula and Tegucigalpa, using grants, donations and profits to establish each new site. At the end of five years the project should be completely self-sufficient financially. 

The vocational training is conducted by volunteers, but, to ensure each graduate is employable, we give a high-quality electrical tool kit to each graduate so they can begin work right away. The tool kits are the sole cost of the vocational training, and currently those costs are covered by donations. Ideally, profits from the solar panel business will cover the tool kits when we are no longer expanding our production sites.  

Eventually, we will establish one training site that can accommodate students from other parts of Honduras and representatives from other non-profits and social enterprises that want to learn from our model. Grants and donations will cover the construction of a living facility, but participants will cover food and utility costs. 

This will be our first venture into manufacturing as a non-profit. Although Jeremias has the technical skills and contacts necessary for success, he, too, is lacking experience in running a manufacturing operation. Thus, there are multiple areas where we would benefit from mentorship, but I’m going to focus on two.

Monitoring: With no other local solar panel manufactures, our approach will be to replicate small manufacturing facilities in multiple communities around San Pedro Sula and Tegucigalpa and sell throughout Honduras to the two million people with no access to electricity. A hurdle we need to solve is how to maintain quality control in a distributed manufacturing model. We are committed to this model because that is how we will achieve our social goals, which is our motivation for this project, but we know the more sites and install teams we have, the harder it will be to maintain the quality that we desire. We are eager to learn from the experiences of others!

Legal: We can purchase all needed components locally, even those that are imported, but, as our production grows, we want to reduce costs by directly sourcing the imported components and negotiating volume discounts on locally produced components. Importing components, like some electrical circuits, will be a new activity for us. We know little about the hurdles of importing parts, like the legal requirements, paperwork etc. We would benefit from advice in this area. 

.

Learning by trial and error can be costly. We are quite talented in many areas, but we are novices when it comes to establishing a manufacturing process and growing it to scale, so we would greatly benefit from mentorship. In addition to the goals described in "Why are you applying to Solve," we could use advice on: 

Funding: We do not want to incur debt, but donations from individuals can only go so far. We could definitely use help in identifying sources of grants that will give us traction.

Marketing: Initially, we feel we will be able to make sufficient panel sales simply by visiting villages and responding to referrals by general contractors (we have several alliances). But as we add manufacturing sites and grow the number of jobs, will we be able to grow sales sufficiently? Marketing advice would be useful.

We do not have specific partners in mind, but we hope our mentors will have international manufacturing experience. Really, anyone who could help mentor us in the areas we list above would be wonderful! If that partner spoke Spanish, it would be a huge bonus!

We would benefit from an organization that has expanded a solution beyond an initial country, whether or not manufacturing were involved. We want to maintain our focus on Honduras, but there are many other countries that could benefit from locally manufactured solar panels. We would be happy to host interested people from other non-profits and social enterprises who operate in other countries and teach them our approach. That will be down the road, after we have successfully established our work in Honduras, but a partner could teach us how to initiate contacts to get that going. Another solve team that previously received a GM grant for job creation in a developing country would be ideal. 

The primary purpose of our project is to create good jobs in untapped communities and train workers for those jobs or for independent work, if they prefer. We will do so by utilizing an established technology that has a large market in the surrounding communities. Currently all solar panels are imported from abroad, yet the technology is simple enough that a local workforce can easily be trained. Capital barriers are low and production can be decentralized, so jobs can be created in multiple needy communities. 

This is a locally-driven solution. For ten years, our partner, Jeremias, has dreamed of the possibilities and benefits of local solar panel production. He lives in a neighborhood that lacks running water among people that had little hope until he started sharing his dreams. The community is excited, and even gang leaders are coming alongside him to encourage this dream. 

Jeremias is one of the most industrious people I know, as well as very talented, honest, and highly respected among the marginalized communities we want to serve. He has every ingredient of success you can imagine except one: money. The GM Prize would unleash the potential of this amazing man. This is Inclusive Entrepreneurship at its best.