Output-Based Aid in Bangladesh: Solar Home Systems for Rural Households

A renewable energy program in Bangladesh that brings solar power to rural households is one of the most successful solar home system (SHS) programs in the world. It has demonstrated an inexpensive and reliable way to bring electricity to rural households. Several OBA features have contributed to the success. Notably, the subsidy payment makes the installation of a working solar home system affordable to poorer households, and is combined with longer-term consumer credit. This note explores the distinctive features and results of the program and draws lessons for future projects.