Virendra Pandit
New Delhi: India’s Small and Medium Enterprises (SMEs) engaged in renewable energy solutions, which face difficulty in financing, can now breathe easier with the United States Agency for International Development (USAID) and the US International Development Finance Corporation (DFC) announcing a USD 41 million (Rs. 297 crores) loan guarantee program to finance investment.
“USAID and DFC are jointly sponsoring a USD 41 million loan portfolio guarantee to help finance investments by Indian SMEs in renewable energy solutions, including rooftop solar installations. These loans will enable SMEs to access reliable power and cut costs,” according to a statement on Friday.
SMEs account for 48 percent of the total energy consumed in India’s industrial sector.
Karen Klimowski, Acting Mission Director, USAID/India, said that 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.
India’s commercial and industrial sectors pay high fees for their electricity, making rooftop solar a sustainable, cost-saving investment, but SMEs and residential consumers face obstacles in securing the financing needed to install and use rooftop panels.
Rooftop solar power generation offers a win-win solution as it lowers monthly energy costs and drives important social benefits, including job creation and economic growth while reducing carbon emissions and improving air quality.
The USAID and DFC have partnered with the New York-based Encourage Capital, an environmentally-focused investment firm, and two Indian non-banking financial companies (NBFCs), cKers Financial and woman-owned Electronica Finance Ltd (EFL), to address this challenge.
Encourage Capital has invested USD 15 million in EFL, which will use the USAID-DFC loan portfolio guarantee to stimulate the rooftop solar market, which represents a USD 9 billion market opportunity, for SMEs.
USAID will continue its support by providing technical assistance to address quality and safety concerns in the rooftop solar market. Once these credit guarantees lower the financial hurdle for installing rooftop solar, India will realize numerous benefits resulting from the transition to this green technology.
These guarantees have the potential to unlock lifesaving social benefits and robust economic growth.
