The United States Agency for International Development (USAID) and the US International Development Finance Corporation (DFC) announced a $41 million loan guarantee program to finance investment in renewable energy solutions, including rooftop solar installations by Indian small and medium enterprises (SMEs). These loans are expected to enable SMEs to access reliable power and cut costs.
USAID/India’s Acting Mission Director Karen Klimowski said, “Investments in solar solutions, secured by these credit guarantees, will improve access to clean, steady, and affordable energy as well as further progress towards India’s clean energy transition and climate change mitigation.
As per the statement carried by PTI, India’s commercial and industrial (C&I) sectors pay high fees for their electricity, making rooftop solar a sustainable, cost-saving investment. SMEs and residential consumers continue to face obstacles in securing the financing needed to install and use rooftop panels. SMEs account for 48% of the total energy consumed in India’s industrial sector.
The joint statement further added that rooftop solar power generation offers a win-win situation, adding that lower monthly energy costs drive important social benefits, including job creation and economic growth while reducing carbon emissions and improving air quality.
USAID and DFC partnered with the New York-based Encourage Capital, an environment-focused investment firm, two Indian non-banking financial companies, cKers Financial and woman-owned Electronica Finance Limited (EFL), to address this challenge.
Encourage Capital has invested $15 million in EFL, which will use the USAID-DFC loan portfolio guarantee to stimulate the rooftop solar market – representing a $9 billion market opportunity – for SMEs.
In June 2019, Encourage Solar Finance had announced the first closing of a private equity fund, Encourage Solar Finance, at $40 million. The equity fund catered to the Micro, Small, and Medium Enterprises (MSME) sector in India. In India, specialized financial institutes were to receive investments from the fund to develop and scale commercial rooftop solar finance solutions for MSMEs.
In June last year, the DFC had approved $1 billion (₹75 billion) to enhance sustainable development processes in Africa, Latin America, the Indo-Pacific, and other emerging markets, including India.
Rahul is a staff reporter at Mercom India. Before entering the world of renewables, Rahul was head of the Gujarat bureau for The Quint. He has also worked for DNA Ahmedabad and Ahmedabad Mirror. Hailing from a banking and finance background, Rahul has also worked for JP Morgan Chase and State Bank of India. More articles from Rahul Nair.