This paper focuses on the dissemination process and use of Solar Home Systems (SHS) in Sri Lanka. The introduction of this technology in remote rural areas of Sri Lanka is combined with the provision of microloans which allow potential users to finance these systems. An explorative empirical survey was conducted in Monaragala, one of the poorest districts of Sri Lanka, analysing the contribution of the implementation of SHS towards poverty reduction. The survey is based on qualitative interviews with 40 users of SHS and expert interviews with the main implementation actors in this field (e.g. the financing institution, developing engineers). The majority of the interviewed users highlighted improved quality of life due to the availability of electricity, but also expressed discontent with the limited capacity of SHS and frequent functionality issues. Depending on their economic situations, different types of households vary in their capabilities to react to these limitations. Especially poor SHS users do not have the financial resources to replace inoperable equipment during the period of loan repayment. Access to electricity via SHS has not necessarily led to better productivity in agriculture or other productive sectors. The study concludes that robust technologies, adequate maintenance and financing strategies as well as embedding provision of energy supply in broader regional development strategies are necessary if implementation of SHS is going to effectively contribute towards poverty reduction in remote rural areas.