In less than three years, almost 100,000 people in rural areas of southern India obtained clean and reliable electric power because of one main reason: their family could get a loan from a conventional bank that was previously unavailable. More than 19,200 families were part of the Indian Solar Loan programme of the United Nations Environment Programme (UNEP), which has been working with the finance sector for some time on new approaches to finance renewable energy.The loans for the photovoltaic solar home systems (SHS) came from Canara and Syndicate Banks, two of India’s largest banks.
Even a few hours of 20 to 40-watt solar-powered lighting in homes and small shops nightly has been credited with better grades for schoolchildren, better productivity for needlework artisan groups and other cottage industries, and even better sales at fruit stands, where produce is no longer spoiled by fumes from kerosene lamps. Behind these quality-of-life upgrades is an innovative UN-led project to persuade Indian bankers to finance small loans for solar systems – typically $300 to $500 for a system to power two to four small lights or appliances.
With just $1.5 million, the project has posted very high returns in four years, causing a 13-fold increase in the number of solar systems financed in the pilot area of Karnataka state, Southern India, from 1,400 to 18,000. In addition to the many social and health benefits produced, the project has created much new employment at factories producing solar panels and related products, at sales dealerships and for maintenance workers.