conceptual model for marketing solar based technology to developing countries

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Renewable Energy 25 (2002) 511–524 www.elsevier.com/locate/renene Conceptual model for marketing solar based technology to developing countries Raja Peter a,* , B. Ramaseshan b , C.V. Nayar c a Curtin University of Technology, Bentley, Perth 6102, W.A. Australia b School of Marketing, Curtin University of Technology, Bentley, Perth 6102, W.A. Australia c Centre for Renewable Energy Systems Technology Australia, Curtin University of Technology, Bentley, Perth 6102, W.A. Australia Received 30 January 2001; accepted 15 February 2001 Abstract Developing countries are faced with large shortfalls of electric-power generation, shortages of usable indigenous fuels, and transportation bottlenecks for those fuels. The loss of revenue that is forced upon the industry due to power cuts and frequent interruptions of power supply is substantial. Renewable sources of energy have an important role to play in providing much needed power in the context of growing global concern about sustainable energy supplies and protecting the environment from the adverse effects of fossil fuel utilization. The purpose of the study is to identify the factors that influence the adoption of solar-based technology. An examination of the literature in the area of diffusion of technology has led to the identification of different variables. The possible relationships that may exist between these variables is depicted in the conceptual framework. This paper attempts to clarify the relationships between the variables that have been identified and the decision to adopt. 2001 Elsevier Science Ltd. All rights reserved. 1. Introduction It is estimated that fossil fuel accounts for about 80% of the world annual energy use, whereas renewable energy accounts for 13% of the energy use. However it is anticipated that these roles will change as energy demand rises and fossil fuel * Corresponding author. Tel.: +61-8-9266-4452; fax: +61-8-9266-7694. E-mail address: [email protected] (R. Peter). 0960-1481/02/$ - see front matter 2001 Elsevier Science Ltd. All rights reserved. PII:S0960-1481(01)00080-5

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Renewable Energy 25 (2002) 511–524www.elsevier.com/locate/renene

Conceptual model for marketing solar basedtechnology to developing countries

Raja Petera,*, B. Ramaseshanb, C.V. Nayarc

a Curtin University of Technology, Bentley, Perth 6102, W.A. Australiab School of Marketing, Curtin University of Technology, Bentley, Perth 6102, W.A. Australia

c Centre for Renewable Energy Systems Technology Australia, Curtin University of Technology,Bentley, Perth 6102, W.A. Australia

Received 30 January 2001; accepted 15 February 2001

Abstract

Developing countries are faced with large shortfalls of electric-power generation, shortagesof usable indigenous fuels, and transportation bottlenecks for those fuels. The loss of revenuethat is forced upon the industry due to power cuts and frequent interruptions of power supplyis substantial. Renewable sources of energy have an important role to play in providing muchneeded power in the context of growing global concern about sustainable energy supplies andprotecting the environment from the adverse effects of fossil fuel utilization. The purpose ofthe study is to identify the factors that influence the adoption of solar-based technology. Anexamination of the literature in the area of diffusion of technology has led to the identificationof different variables. The possible relationships that may exist between these variables isdepicted in the conceptual framework. This paper attempts to clarify the relationships betweenthe variables that have been identified and the decision to adopt. 2001 Elsevier ScienceLtd. All rights reserved.

1. Introduction

It is estimated that fossil fuel accounts for about 80% of the world annual energyuse, whereas renewable energy accounts for 13% of the energy use. However it isanticipated that these roles will change as energy demand rises and fossil fuel

* Corresponding author. Tel.:+61-8-9266-4452; fax:+61-8-9266-7694.E-mail address: [email protected] (R. Peter).

0960-1481/02/$ - see front matter 2001 Elsevier Science Ltd. All rights reserved.PII: S0960 -1481(01 )00080-5

512 R. Peter et al. / Renewable Energy 25 (2002) 511–524

resources are depleted [1]. An energy shift, towards a cluster of new renewableenergy technologies, is in its initial stages [2].

Approximately 30% of global energy use is accounted for by developing countries.Over 50% of the increase in global energy consumption is expected to come fromthe developing countries in view of the continued economic growth and populationgrowth. The growing demand for electricity in these countries is inevitable as thegovernments try to cope with providing basic services. Those not catered to by apower grid rely on fossil fuels such as kerosene and diesel for their energy needs.Many developing countries have to import these fossil fuels and therefore bear thebrunt of the vagaries in both global price fluctuations and disruptions in supply.Technological innovation is the key to meet the challenges of growing world energydemand [3].

Globally we are entering a period of commercial acceptance of energy from alter-nate sources. Renewable energy technologies offer alternatives to fossil fuel use,which not only has constraints in terms of resources availability but is alsoaccompanied by environmental deterioration. Renewable energy technologies areincreasingly recognized as one of the central pillars in the development of a sus-tainable energy strategy [4]. Wind, biomass and solar are the three promising renew-able energy technologies. Among these renewable energy sources, solar energy hasenormous potential for alleviating dependence on oil imports and contributing to asustainable development process [5].

Solar radiation striking the earth is 175 000 terawatts (1 TW=1 million millionwatt). 49% of this is absorbed and reradiated or reflected back to space by the atmos-phere, 4% is back scattered from the ground and 47% is absorbed by the earth’ssurface [6]. The total commercial energy used for all human activities in the worldis less than 15 TW. A major part of the sun’s energy can clearly be tapped intosolar power. Many developing countries are situated near the equator and thereforehave plenty of sunshine bestowing upon these nations with a free and abundantenergy source that is also locally available.

Oliver and Jackson [4] have specified that the technologies with the largest physi-cal resource are those which capture solar radiation directly. Photovoltaics (PVs)have attracted increased attention in recent years. Since 1954 photovoltaic technologyhas progressed in leaps and bounds. Improvements in effectiveness, continuedreductions in cost and increasingly high reliability have facilitated the internationalexpansion of PVs [7]. Solar energy is a reasonably clean and economical energyalternative. In the context of developing countries it reduces their dependence onexpensive fossil fuel imports and therefore reduces their dependence on fossil fuelledelectricity [3]. Solar energy has the potential to provide significant and increasinglevels of electricity generation in developing countries.

2. Solar based technology in developing countries

Currently 90% of the PV production takes place in Europe, the USA and Japan,but less than 50% of the worldwide installed capacity is in these regions. The remain-

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ing 50% is in developing countries. Although only 10% of world PV production isoutside Europe, USA and Japan, it constitutes a very large and important market.In several countries power supply through the conventional grid can be very unre-liable. The ensuing blackouts and brownouts can have drastic effects on commercialenterprises. The high reliability of PV makes it well placed to sell into this marketas a backup power supply and examples of this can already be found in countriessuch as India.

PVs are making inroads in developing countries since large areas lack access toelectric grids. PVs are able to have an enormous impact as potentially they canprovide power to nearly 2 billion people living in the rural areas of the developingcountries and meet their basic energy needs [3]. It is necessary to understand thefactors that successfully promote the marketing of high-tech products in general andsolar-based technologies in particular. At present a greater share of trade in solar-based technology is within the developed world. However solar-based technologiesare in a good position to meet the growing need for energy in the developing coun-tries [7].

The availability of a new technology or innovation does not guarantee adoptionof the same. It is therefore necessary to understand the factors that influence potentialadopters during the various stages of the decision making process. These factors,the adoption decision-making process and adoption theory are discussed in thenext section.

3. Theoretical background and conceptual framework

The PV commercialization process is inextricably linked to the basic componentsof adoption theory. The classical adoption process includes the following steps inthe decision to purchase or reject a new product (technology): awareness, interest,evaluation, trial and adoption/rejection [8]. The existing models of technology adop-tion propose that potential adopters develop an interest in a product by obtainingand assimilating knowledge about it [9]. This knowledge helps people form viewsand develop attitudes, which persuade them to either adopt or reject the product. Thusa persuaded individual can make an adoption decision that a person with inadequateknowledge cannot [10]. Conventional adoption models suggest that the more oneknows about an innovation, the more likely one is to adopt it.

The limitations of the adoption process models are:

� It does not recognize sufficiently that a need or problem recognition stage mayprecede the awareness stage.

� It does not satisfactorily provide for the rejection of a product after its trial.� It does not adequately acknowledge that evaluation occurs throughout the

decision-making process and not solely at the evaluation stage.� It does not overtly include post-purchase evaluation or past performance, which

may reinforce commitment or lead to a decision to discontinue.

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Rogers proposed an innovation decision process to overcome these limitations:knowledge, persuasion, decision, implementation and confirmation [8,11].

Rogers’ innovation decision model comprises a sequence of stages progressingfrom knowledge acquisition to persuasion or interest followed by theadoption/rejection decision [10,11]. At every step of this process, communicationchannels, which include formal and informal social networks, cues, mass media etc.,can influence cognitive, affective or even behavioral states [12]. According to Rogers[11] the innovation process is primarily an information seeking and information pro-cessing activity in which the individual is motivated to reduce uncertainty about theadvantages and disadvantages of the innovation.

The critical issue in the innovation decision process is the way information isacquired, processed and used. Rogers emphasizes knowledge as the means to per-suading decision makers to adopt or reject an innovation. Implementation, confir-mation and evaluation of the innovation are natural corollaries to the decision toadopt. A series of “prior conditions” such as previous practice, felt needs/problems,innovativeness and norms of the social system serve as antecedents to the knowledgestate. Rogers also identifies socioeconomic characteristics, personality variables andmeasures of communication behaviour as basic characteristics of the decision-makingunit. All these contribute to knowledge acquisition and relate directly to two primaryelements in the model, knowledge and persuasion.

The adoption and acceptance of PV systems depends on a variety of socio–techno–economic factors [13]. The proposed conceptual framework as shown in Fig. 1 positsthat the dependent variable adoption decision is influenced by interest and familiarity.It is also envisaged that finance, product and supplier characteristics would have a

Fig. 1. Conceptual framework for adoption of solar based technology.

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direct effect on the adoption decision. Experience and knowledge is expected to havea positive relationship with familiarity and interest. The predictor variables motiv-ation, product characteristics, context, government initiatives, demonstration sites andsupplier characteristics influence finance, knowledge and experience. A detailedexamination of the literature in the following section reveals the possible linkagesand relationships between these variables.

3.1. Motivation

Although Rogers did not emphasize motivation in his model others have indicatedmotivation to be an important antecedent to interest. Rogers proposes “ felt need” asa precursor to knowledge, but it does not lead to other variables in his model. Kaplan[14] suggests a more comprehensive concept of motivation that explains not onlyknowledge but other stages of the early decision process.

Motivation can be economic factors that encourage firms to get interested in tech-nologies or incentives that are universal as a motivating factor both intrinsically andextrinsically to the decision maker [14,15]. Investment tax credits are the most com-mon market development incentives and they have the demonstrated ability to mot-ivate the private sector to invest in new technologies and also encourage customersto purchase applications of these new technologies although they are untried andhave a high-perceived risk in terms of both performance and reliability [16]. A studyundertaken by Hass et al. [17], revealed that the dominating motives to invest in aPV system are environmental protection, alternative to nuclear power, technical inter-est and the availability of financial incentives.

Griesser [18] has proposed autonomy as another motivational factor that influenceschoice of technology. Commercial entities may have greater motivation to exploresolar energy in view of their desire to be free from electricity providers [14]. Sali-ence, the degree of local merit in an innovation can be an important factor too.Managers may consider PVs an economically viable alternative with positiveenvironmental qualities, but they are also driven by specific utility needs and politicalreceptivity. It gauges the impacts a potential adopter perceives of expected conse-quences from adopting or rejecting a technology.

Motivation is a precursor to interest or persuasion, but is an insufficient predictorof interest. Motivation alone may not guarantee the development of interest in aparticular solution, which the innovation may offer. Although interest is not guaran-teed when motivational signals are strong, another factor, which is likely to influenceinterest is prior demonstration of perceived need for an innovation [14].

3.2. Product characteristics

Characteristics or attributes of an innovation that affect its adoption include: rela-tive advantage, compatibility, complexity, trialability and observability [10]. Relativeadvantage is the degree to which an innovation is perceived by the adopter to besuperior to preceding ideas. Compatibility is the extent to which an innovation isperceived as being consistent with the potential adopter’s experiences, values and

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needs. Complexity is the degree to which an innovation is seen as being difficult tounderstand and use. Trialability is the degree to which an innovation may be experi-mented with or used on a limited basis. Observability is the degree to which theresults of an innovation are seen by others.

3.3. Context

Context essentially consists of a series of exogenous control variables coveringenvironmental, organizational and personal characteristics. This is equivalent to theorganizing concepts identified in Rogers’ original model. Environmental variablesinclude stage of economic development, political stability, cultural forces, trade regu-lations and exchange rate. Organizational characteristics relate to (1) individualcharacteristics, (2) internal organizational structural characteristics, and (3) externalcharacteristics of the organization. Individual characteristics is measured by the indi-vidual leaders’ attitude towards change. External characteristics is reflected by systemopenness, which is the degree to which members of a system are linked to otherindividuals who are external to the system [10].

Internal characteristics of organizational culture relate to centralization, com-plexity, formalization, interconnectedness, organizational slack and size of theorganization. Centralization is the degree to which power and control in a systemare concentrated in the hands of relatively few individuals. Complexity is the degreeto which an organization’s members possess a relatively high level of knowledgeand expertise. Formalization is the extent to which an organization emphasizes fol-lowing rules and procedures in the performance of job duties. Interconnectedness isthe degree to which units in a social system are linked by interpersonal networks.New ideas can flow more easily among an organization’s members if the organizationhas more network interconnectedness. Organizational slack is the degree to whichuncommitted resources are available to an organization. The size of an organizationis consistently found to be positively related to its innovativeness [10].

3.4. Role of government

According to Adurodija [19] the government can play a leading role, throughthe formulation of favourable policies, by showing a practical commitment and byenhancing public awareness of the potential of PV in all walks of life. Often, themajority of the people constituting the potential market are unaware of the existenceand systems’ capabilities of PV technologies [20]. The lack of information aboutrenewable energy benefits, economic and financial costs is a major barrier to adoption[21]. It is therefore crucial that appropriate and well-targeted information be providedto certain key groups of potential users. The dissemination of information is a keyfactor in the diffusion of PV systems.

The government could institute a financing system which favours PV diffusion,provide temporary tax exemptions for the purchase of PV equipment and facilitatereduction in energy price distortion. The government could also provide financingand access to affordable credit line plans in order to convert potential users into actual

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users. Additionally, allowing duty free imports of solar equipment, components andappliances would help in lowering the initial costs of PV systems.

It can also play a role in forging collaborations, technology transfers and providinginstitutional support for local and international research institutions. The governmentcould also facilitate an appropriate economic and political climate to attract inter-national investment in the production of PV systems. The government could ensurea healthy market by restricting monopolies, fostering development of standards andof codes of practice. The government should also encourage the promotion of publicand industry awareness of the environmental and other benefits of PV. This can beaccomplished through advertising campaigns, PV documentation programs that reachthe people through radio, TV, newspapers, highway billboards and setting up demon-stration sites. Government intervention is therefore necessary in a number of waysto promote solar energy [22].

The success of the wind energy programme in India is attributed to the proactivepolicies of the Ministry of Non-Conventional Energy Sources (MNES), Governmentof India. The key elements of this programme include wind resource assessment,government-sponsored demonstration projects, awareness creation and providingoperating experience to industry and State electricity boards (State-run utilities).Incentives were made available to wind-power plant entrepreneurs which includedtax concessions such as accelerated depreciation, tax holidays, customs and exciseduty reliefs, soft loans and liberalized foreign investment procedures [13].

Government intervention for fostering diffusion renewable energy technologiesinclude provision of information to consumers and manufacturers, taxes and sub-sidies, credit services and direct support of the distribution system [20,21].

3.4.1. SubsidiesTechnologies such as grid power and diesel generators have enjoyed a series of

subsidies, such as tariff support and tax holidays, in both developed and less-developed economies [20,23]. Incentives, which include tax concessions such asaccelerated depreciation, tax holidays, customs and excise duty reliefs, soft loansand liberalized foreign investment procedures, will foster the diffusion of renewableenergy technology [13]. Governments should consider subsidies for PV technologiesin order to stimulate the PV market [20,23].

3.4.2. Institutional frameworkFor renewable energy the absence of institutional frameworks and legal structures

that create the proper climate for investments in renewable energy have been barriersin many countries [21]. There is a need to develop system standards for all the mainsystem components. Standards also are required to be established for certification orqualification for designers and installers. In addition to specific PV standards, eachcountry has regulations governing the connection of independent generators to theutility grids. These regulations are often inappropriate for PVs and therefore haveto be revised.

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3.5. Demonstration sites

Another major hindrance to the utilization of PV systems is the dearth of demon-strations plants, which tend to enlighten the public on the benefits of PV. Althoughdemonstration plants are currently being set up in developing economies, the numberof demonstration sites are too few to make a significant impact on public enlighten-ment, considering the huge size of some of these countries. Therefore, more demon-stration sites are needed in different parts of these nations for the level of awarenessto be measurable [19].

Despite the excellent solar climate, in several developing countries PV powerinstallations are very low in number. The contributing factors to the paucity in thenumber of these installations are chiefly lack of awareness about its potential andthe current national economic trends. On the other hand, this situation has not pre-vented some efforts to popularise PV usage, capitalising on its inherent advantagesover diesel generators and its low effect on the environment [19].

3.6. Supplier characteristics

A key variable, which is likely to influence the decision to adopt a product, is theassessment of suppliers by potential buyers. Industrial buyers use choice criteria tocompare competitive offerings and determine their preference of one supplier overanother [24]. Key attributes identified by Lehmann and O’Shaughnessy include over-all reputation of the supplier, financing terms, experience with supplier, reliability,service support and training offered by the supplier. Ellram [25] categorised differentfactors into financial issues, organizational culture issues, and technology issues.Katsikeas and Al-Khalifa [26] found the important variables to be product quality,reliable delivery, competitive price, effective communication, and parts availability.A listing of important supplier characteristics that impinge upon adoption decisionsof buyers is necessary. However it must be recognised that the individual weightingand relevance of these factors could vary with the situation.

3.7. Finance

The capital needs are high when investing in renewable energy technologies.Therefore, well-adapted financial schemes and financial support are essential for thedissemination of these technologies [27]. Lack of long-term capital is a key barrier[21]. Financial institutions are not always interested in giving or opening lines ofcredit for private PV investors [20]. In India, the government recognized the limi-tations of conventional banks and set up the Indian Renewable Energy DevelopmentAgency (IREDA) in 1987 to finance new and renewable energy technologies [13].

The budding domestic PV supplying capacity in India is due to the considerableguaranteed funds both from the government and multilateral donors such as the Glo-bal Environmental Fund [3,16]. The World Bank, USAID and other grant and lendingorganizations have sponsored programs that have led to the formation of a promisingPV market in developing countries. Financial institutions must be encouraged to

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cooperate in financing PV technologies and thereby facilitate private PV initiatives[20].

3.7.1. Availability of creditIn several developing countries the availability of credit has made it possible for

more people to buy household PV systems in the rural areas. Joint projects with theGEF are designed to promote PV lighting systems in rural households, communities,consumer-operatives and small-scale farms. These projects have a credit scheme forthe end-users and this has been the key to the success of the dissemination pro-cess [28].

3.7.2. Initial costsThe initial costs of PV systems are high [29] and hence the acceptance of PV

systems will depend on the financial viability of investments in PV systems [13].The high outlay required of these systems is a major barrier for a broader marketpenetration of this technology [17]. An important determinant that will acceleratethe penetration of PV systems into energy markets is price [30].

3.7.3. Comparative costsIn a first-order cost analysis of Photovoltaic (PV) power generation and DG power

generation, Koner and Dutta [31] analysed six years of field data for urban emergencyload. The unit cost of emergency load is calculated using different parameters. Theseinclude interest rate of commercial loan, depreciation cost, operation and mainte-nance costs of PV and DG sets, and fuel cost of DG set. It is found that the unitcost of PV electricity is cheaper or comparable with that from DG power at presentmarket price. The effect of various parameters affecting the PV system design andhence the cost has been investigated and it is found that PV remains cost effectivefor various situations.

According to Roy and Gupta [22] the traditional accounting procedures do notaccount for pollution costs and scarcity value of diesel. If these are included in thecost calculation of widely used conventional diesel-based decentralized systems, thensolar photovoltaic (SPV) technologies may be an ideal alternative to conventionaloil-based systems in the decentralized power-generating sector.

3.8. Knowledge

Rogers examines three types of knowledge relevant to a potential adopter: aware-ness, how-to, and principles knowledge. Awareness precedes the others and when apotential adopter perceives that an innovation is needed to solve a problem, he beginsto seek information about the innovation’s operation, its features and its applicationto the situation. The information thus obtained is classified as “how-to” knowledge.Principles knowledge refers to information about the principles that govern the work-ing or functioning of the innovation — e.g. basic theories of how energy is gener-ated [10,32].

Innovation decisions are therefore dependent on the capacity to assimilate these

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types of knowledge and to comprehend the best use for the innovation, its fit andeffectiveness in a situation. According to Kaplan [14], principles knowledge neednot be a pre-requisite for adoption. Gaining interest in a car does not require theproficiency of an automobile engineer. There is likely to be differences in viewsabout the principles that govern adoption decisions. However, these differences neednot interfere with the process.

3.8.1. Technical knowledgeIn this discussion knowledge refers to objective knowledge, information that can

be obtained from books, conferences, technical journals etc. Knowledge involves afactual objective base of information and it includes comprehension of data, findings,and technical presentation: e.g. cost–benefit ratios for solar generators, PV appli-cation matching etc. A lot of PV knowledge has been created in the last 20 yearsand potential adopters are likely to be aware of this information. However, potentialend users of PV systems are also likely to resist new technology until reliability isfield proven [30].

3.9. Experience

Rogers [10] states that “previous practice” is the root of experience and is expectedto be a key contributor not just to knowledge but also to behavioral intentions andactual adoption. This variable accounts for three significant aspects of experience:exposure, direct and indirect — or vicarious experience, and innovativeness, whichrefers to the inherent ability to innovate [14]. Studies on experience demonstrate theimportance of measuring sources of learning and information other than technicalknowledge [33]. Expertise is more than the result of book-learning [34]. Likewise,extramural knowledge used by early adopters who cannot base their decisions onexisting technical information is acquired from sources such as peers at the forefrontof the diffusion cycle [35].

Direct and indirect experience can be measured in different ways and they havea number of dimensions. It helps to explain perceived risks of product failure inbuyer behaviour research. Consumers will seek information, increase brand loyalty,stick to known brands, and take measures to reduce the risk of product failure whenthey are faced with purchasing risks associated with having to purchase a competingbrand [36]. Clearly experiential factors can play a critical role in decision-making,but are ignored because they fail to fit conventional models of knowledge [37].According to Kaplan [14], decision makers can be influenced by experience and theydevelop a sense of familiarity about their options even when many technical factsmay be missing.

3.10. Familiarity

The cognitive state resulting from experience is familiarity. It speaks of a degreeof close acquaintance and suggests a level of comfort that would not arise fromobjective technical knowledge alone. It needs exposure to and experience with the

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object and a concrete attachment to an innovation can contribute to evoking a positiveadoption decision. Familiarity also demonstrates a degree of confidence inherent inneither experience nor technical knowledge [38]. Familiarity emerges from theseprior attributes.

Contrary to popular belief, research provides evidence that familiarity does notbreed contempt [39–41]. Studies of familiarity in judgment and decision makingindicate that we can get by with lower-quality information in perceiving familiaritems than we need for perceiving unfamiliar items. Through familiarity we gatherour understanding and awareness of an innovation and break it into simpler and moreorganized forms, making its presence in our memory more accessible [42].

Kaplan [14] cites our experience with computers as an example of the combi-nations that knowledge, experience and familiarity foster. Most people are comfort-able using computers but are ignorant about how it works. The empirical basis forutilizing the technology is experiential rather than verifiable. The user has greaterfamiliarity than knowledge. This is also reinforced in the context of brand loyaltywhere consumers demonstrate fierce loyalty to products with which they are fam-iliar [43].

3.11. Persuasion/interest

Another major variable in Rogers’ model is persuasion, the formation of a favour-able or unfavourable attitude toward the innovation being considered for adoption[10]. The few studies that employ this variable as the endpoint of analysis recastthe variable, such as study on advertising explaining how brand choice affects con-sumer choice [14,44]. Studies claiming to explain persuasion jump to the nextdecision stage, since behavioural patterns are much easier to measure than intentions.In post-hoc studies the actual behaviour has already occurred and is readily measur-able and hence are concerned very little about expressions of interest.

Kaplan [14] proposed a better way of explaining how potential adopters matureto a level of innovation interest. He examined the factors that influenced the interestof utility managers in adopting solar-based technology. Increased interest is the pro-duct of heightened knowledge of the technology. Knowledge is the product of motiv-ation and experience. Exogenous variables such as socioeconomic characteristics,personality variables and norms of the social system remain. In an attempt to fillthe gap between knowledge and interest, Kaplan included experience and familiarityand identified causal relationships that have hitherto been ignored.

Further investigation of the literature in the area of diffusion of solar-based tech-nology has led to the identification of other variables. The effect of independentvariables such as government initiatives, and demonstration sites on experience,knowledge and interest have not been studied in the context of diffusion of solar-based technology in developing countries. Finance, experience, knowledge and fam-iliarity have been identified as intervening variables in this model. The proposedframework attempts to establish the relationships between the variables that havebeen identified and the decision to adopt.

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4. Conclusion

Renewable sources of energy are expected to play a crucial and expanding rolein meeting the energy needs of the developing countries. Their penetration and contri-bution will depend on technology development and dissemination. Solar-based tech-nology is quickly moving past the experimental stage in these countries and isbecoming a serious market contender. The costs and performance of solar-basedtechnologies have reached the stage where the number of economical applicationsin developing countries is increasing, particularly in the grid and off-grid marketsfor electricity.

The potential for solar-based technology is large and the economics are beginningto look reasonable. It is trying to establish itself in an institutional, market and indus-trial context, which is still largely governed by conventional types of energy tech-nology. Stimulating the market is an important challenge for solar-based techno-logies. Sustainable global development urges that developing countries do not followthe industrial nations’ detour via fossil fuel power generation while abandoning tra-ditional renewable technologies as well as neglecting modern high-tech renewablepower generating options, which provide clean and cost-effective energy solutions.

The crucial factors for a broader diffusion of PV systems are: financial incentives,government led initiatives, reduction of investment costs, increase in reliability, dis-semination of information and environmental awareness.

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