Many poor communities in rural India lack access to reliable energy services, which forces people to rely on traditional sources for their daily energy needs. Renewable energy development is hampered by a lack of access to financing and a lack of suitable products that directly help generate income.
In 2006-2007, a REEEP-funded project began to address this issue. SELCO Solar Light Pvt. Ltd. worked in tandem with local financial institutions to gain an understanding of individual energy needs. They also created products and innovative financing solutions which linked energy services to income generation, such as solar-powered sewing machines and lights available on a pay-per-use basis. This project aimed to scale up SELCO-implemented projects to create sustainable linkages between energy services, microfinance and income generation.
In the course of this project, implementation partner SELCO carried out 26 individual projects which provided customised solar lighting systems, benefiting an estimated 1,700 people, including street vendors and self-help groups. The projects were financed by local banks and microfinance institutions, are broadly running as planned and have had long-term positive impacts on the quality of life of the people involved. SELCO has demonstrated that given appropriate financing, the poor are willing to invest in renewable energy services and that the provision of such financing and services can be financially viable and sustainable. This is a departure from the conventional wisdom that subsidies are always necessary to provide renewable energy access to the poor. The project also showed that renewable energy services have the capacity to enhance inclusive economic development, and the potential to lift millions of people out of poverty. This link between energy services and income generation furthermore serves to enhance the confidence of financial institutions.
The outputs of the project are of high quality and can be used as a handbook for financial institutions, helping them to develop microfinance products to make renewable energy technology accessible to the rural poor.