About seven out of every 10 households in rural India have no access to electricity.
Many of these households still use less efficient energy sources that are harmful to the environment, such as kerosene. Even in places where electricity is accessible, shortages are frequent and the supply is inconsistent. The situation is ideal for solar energy use, however many homes cannot afford to power their homes with solar energy. In fact, India’s solar photovoltaic (solar cells used for energy) manufacturing sector has grown since the 1990s, but mostly for export.
In 2003, a five-year effort was launched to help the rural poor finance alternative energy sources such as solar panels for their homes. The project, a partnership between the UN Environment Programme and two of India’s largest banking groups—Canara Bank and Syndicate Bank—as well as associated Grameen banks, helped the banks develop lending portfolios specifically to finance solar home systems. With our support as well as from the Shell Foundation, the project is able to provide an interest subsidy lowering the cost of the solar home system for customers.
With 20,000 loans to date, the program has created a vibrant credit market for solar home systems, and several other banks are now launching competing products on an unsubsidized basis.