BRUSSELS, 12 April 2007
- After helping more than 100,000 people
in 18,000 Indian households finance clean
energy from their PV solar electric home
systems, the United Nations Environment
Programme's Indian Solar Loan Programme
has been honoured with a prestigious Energy
Globe.
The Energy Globe (www.energyglobe.info)
is the "World Award for Sustainability"
and considered today's most prestigious
and acknowledged environmental award bestowed
on projects from all over the world "which
make careful and economical use of resources
and employ alternative energy sources".
"The award shows that improving access
to finance can help to influence the shift
towards cleaner energy in the developing
world," says UNEP Executive Director,
Achim Steiner. "In the past there has
been a lot of investment in market development
schemes, particularly subsidies to lower
capital costs, but with little success."
Launched in 2003 with support from the
UN Foundation and Shell Foundation, the
four-year Indian Solar Loan Programme is
a partnership between UNEP, the UNEP Risoe
Centre, and two of India's largest banking
groups to establish a consumer credit market
for financing solar home systems (SHS) in
Southern India where the conventional electricity
grid is absent or unreliable. The innovative
financing arrangement involves an interest
rate reduction, market development support,
and a process to qualify solar suppliers.
The interest rate reduction was phased out
during the Programme and today the market
for financing solar home systems is on purely
commercial terms.
Although the solar home sector was a small,
cash-only business in 2003, today the market
is growing with more than 50% of sales financed
by banks. There are now 20 banks with networks
of more than 2000 branches offering solar
financing.
UNEP Programme Manager, Eric Usher who
attended the gala award ceremony in Brussels
on the evening of 11 April, says the Programme
provided a strong market signal, rather
than the market distortion that often accompanies
larger development projects. Even though
the banks did not profit directly from the
$1 million interest rate reduction fund
since the benefits where passed on to the
customer, they still eagerly promoted solar
lending because they saw the opportunity
to develop a new credit market. Further,
the economics of the solar systems changed
only very slightly with the interest rate
reduction, so the growth of the market had
little to do with the lower cost of systems.
It's about access to finance, he says, adding
that when banks are motivated to lend to
a new sector the barriers to market uptake
start to fall.
The UNEP approach was to find banking partners
who wanted to develop this sector but needed
a small amount of help to get going. "Acting
small can sometimes be better than acting
big," says Usher, "and people
partner for better reasons with a better
alignment between international and national
actors".
UNEP has used the success of the Indian
Solar Loan Programme to expand into other
areas, including solar water heating loan
programmes now underway in Morocco and Tunisia
and others in development for Algeria, Indonesia,
Mexico and Chile.
For more information on the project see
www.uneptie.org/energy/act/fin/india/
Robert Bisset, UNEP Spokesperson
Image: UNEP
