Solar Loans Powering Rural India

The BBC reports on a UN program to fund solar power systems in the rural part of the southern state of Karnataka, India capable of powering two to four small appliances, or lights, costs about $300-$500 . The UN Indian Solar Loan program recently won the Energy Global Award.

So What is this program?

India’s solar PV manufacturing sector has grown significantly since the 1990s, mostly for export, however the market for solar home systems has been slow to develop, in part due to a lack of consumer financing options. The aim of this effort is to help Canara bank and Syndicate bank develop lending portfolios specifically targeted at financing solar home systems (SHS). With the support of the UN Foundation and Shell Foundation, the project provides an interest rate subsidy to lower the cost to customers of SHS financing.

The BBC reports:

Since the project began in 2003, there has been a 13-fold increase in the number of the solar power units being financed within the scheme’s pilot area in southern India.

Project workers have credited solar powered lighting with helping schoolchildren achieve higher grades, and better productivity for cottage industries.

There are also health benefits associated with making the switch. The majority of homes in rural India are poorly ventilated, leaving the occupants exposed to harmful particles emitted by the lamps.

In terms of greenhouse gas emissions, the UN says a single wick lamp each year burns about 80 litres of kerosene, which produces more than 250kg of carbon dioxide. An estimated 100 million families in India use kerosene lamps.

Solar power systems are capital intensive products whose price may equal paying upfront an amount equal to 20 years of electricity bills.” The wick lamp is a major problem too. George Monbiot quotes Godfrey Boyle in his book Heat (p xvi).

It is quite remarkable that the complex process of choosing to burn a litre of kerosene in an engine, to drive a generator, to power a fluorescent lamp, can produce 250-450 times more useful light than burning the same amount in an oil lamp.

A similar incentive is needed in other places around the world to increase the adoption of solar power systems. This program shows the power of one of the oldest social innovations in the world – the power of credit.

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